Context: At 14.23 per cent, India’s wholesale inflation rate in November 2021 was the highest in three decades. It did reduce marginally to 13.56 per cent in December.
What is the concern?
Wholesale price index (WPI) inflation is always a cause of concern as it can raise retail inflation.
The price rise has been continuous — December 2021 was the ninth straight month of double-digit percentage increases in the WPI. Experts predict the situation to remain the same through the end of this financial year (March 30, 2022).
High December inflation was unexpected: The government had reduced taxes on fuels.
Why does inflation remain high?
Food inflation — particularly the rise in prices of vegetables and a few grains — has been a driver of this episode of overall inflation. India’s wholesale price inflation peaked in November 2021 due to a surge in primary food inflation that hit a 13-month high.
Prices of seasonal vegetables jumped unprecedentedly in many states due to extreme weather events.
This trend is not limited to India. On January 7, 2022, the Food and Agricultural Organization’s (FAO’s) Food Price Index showed that food prices were at a decade-high, with an average rise of 28 per cent over the previous year. Adjusting for inflation, the average food prices in the first 11 months of 2021 were at the highest in 46 years.
History of Food Inflation in India
Between 1956 and 2010, there were nine double-digit inflation episodes. Of these, seven were caused by drought conditions, according to the Reserve Bank of India (RBI).
In the past six decades, there have been three major episodes of significantly high food prices globally: 1970s, 2007-08 and 2010-14. All these were triggered by weather shocks followed by factors such as increase in oil prices, trade policy interventions and biofuel consumption.
The current episode seems to be entirely driven by weather anomalies.
Warming world, hotter prices
Extreme weather events had damaged crops, leading to a collapse of the supply of vegetables at a time of the year when they usually flood the markets.
The current global food inflation is driven predominantly by wheat, which reported price rise due to drought and high temperature in major producing countries.
Real global food prices were higher than in 2011, when food riots contributed to the overthrow of governments in Libya and Egypt.
Droughts are expected to be more frequent in some areas, especially in north-western India, Jharkhand, Orissa and Chhattisgarh. Crop yields are expected to fall significantly because of extreme heat by the 2040s.
Groundwater: More than 60% of India’s agriculture is rain-fed, making the country highly dependent on groundwater. Even without climate change, 15% of India’s groundwater resources are overexploited.
The fact is by changing the rain and its distribution, climate change is altering the very axis of agriculture.
Climate-smart agriculture (CSA) to the rescue
Climate-smart agriculture (CSA) is an integrated approach to managing landscapes—cropland, livestock, forests and fisheries–that address the interlinked challenges of food security and climate change. It broadly works on three parameters-
Increased productivity: Sustainably increasing agricultural productivity and farmers’ incomes from crops, livestock and fish, without having a negative impact on the environment. This, in turn, will raise food and nutritional security.
Enhanced resilience: Adapting to climate change by reducing the exposure of farmers to short-term risks, while also strengthening their resilience by building their capacity to adapt and prosper in the face of shocks and longer-term stresses. Practices such as inter-cropping, multiple cropping and crop rotation are some of the practices farmers are using to fight climate change.
Reducing greenhouse gas emissions (GHG), wherever possible. Avoiding deforestation from agriculture, managing soils and trees in ways that maximizes their potential to acts as carbon sinks etc.
The Way Forward
Concepts such as Low External Input Sustainable Agriculture (LEISA), which seek to optimise the use of locally available resources replacing external inputs is receiving increased attention as a sustainable alternative to chemical farming.
The Zero Budget Natural Farming (ZBNF) concept is a low-input, climate-resilient type of farming that encourages farmers to use low-cost locally sourced inputs. It eliminates the use of chemical fertilisers and pesticides.
Farmers should make the shift to a package of practices that lower the use of water (through in-situ soil moisture conservation and other demand management measures), promote the use of bio-fertilisers and bio-pesticides as a means to reduce the cost of cultivation and lower the environmental footprint of cotton cultivation.
A combination of tools and techniques covering capacity building, field demonstration, extension and outreach will enable faster adoption. A robust extension and knowledge sharing system in partnerships with the agriculture department, institutions and universities to scale the adoption of sustainable farm practices.
Provide better market linkages so that farmers are able to get assured and higher returns for their produce.
Conclusion
From the powerful economies to the less-developed countries; from countries in Europe and Americas to island nations in the Pacific, the impacts of climate change are real and here to stay. Our efforts to combat climate change will have to focus on mitigation and adaption efforts across all sectors. For agrarian countries, the task will be to ensure increased production without increasing the environmental footprint of agriculture by enhancing the knowledge and skills of our farmers.
Can you answer the following questions?
Climate change is already having profound impact on the lives of rural poor in India. Unless a mitigation strategy is inbuilt in the farming and related activities, food and livelihood security of the rural poor can’t be ensured. Analyse
