Impact of Monsoon on Agricultural Commodities in India

Impact of Monsoons on Agricultural Commodities in India

From the very ancient period, India’s agriculture depends on the monsoon, making it a crucial aspect of monsoon agriculture in India. Directly or indirectly, half of the population is dependent on the monsoon. A happy Monsoon leads to the happy crops of the season, whereas a deficient monsoon leads to bad crop production and Inflation. 

Monsoon doesn't show an even distribution of rainfall in all regions. It leads to a difference in the agricultural production of different areas, which also affects the trading of agricultural commodities.

What are Agricultural Commodities?

An agricultural commodity is a broad category of commodity trading, and all plant or farm-based commodities are termed Agricultural Commodities.

Top Agricultural Commodities

India is an agricultural country whose economy mainly depends on trading farm commodities and comprises 12% of the overall commodity trading.

Here is the list of top agricultural commodities in India that are divided into 6 categories:

1. Oil Seeds: Oil seeds have high oil content, and after oil extraction, seeds are utilised for meal and feed. This makes oil seeds highly preferable for agricultural as well as trading purposes. The multiple crops of oil seeds are:

• Castor Seed
• Cotton
• Crude Palm Oil
• Mentha Oil

2. Cereal Grains: Humans and animals feed on cereal grains and create various oil sources. These are major cereal crops:

• Wheat
• Corn
• Oats
• Barley
• Rough rice

3. Soft commodities: Soft commodities refer to agricultural products grown rather than mined or extracted. These are the major soft commodities:

• Cocoa: Cocoa refers to the dried seeds of the cacao tree.  
• Coffee 
• Frozen Concentrated Orange Juice (FCOJ)
• Sugar

4. Other Miscellaneous Agricultural Commodities

• Lumber: Lumber refers to wood processed into beams, planks, or boards. It is primarily used in construction and furniture production.
• Wool
• Rubber (from the rubber tree)

Commodities Promoted by NCDEX

National Commodity & Derivatives Exchange Limited (NCDEX/the Exchange) is a professionally managed online commodity exchange with a wide range of product offerings that sets the standard for the non-agricultural and agricultural commodities derivatives markets. Here is the list of major commodities being traded in NCDEX.

How Monsoon Impacts Agricultural Commodities?

Monsoons play a crucial role in India's agricultural sector, as they provide the much-needed water supply to crops.

The arrival and performance of monsoons directly impact agricultural commodities in the country. 

Here are the various ways monsoons influence agricultural commodities in India and the implications they have on the economy:

Dependence on Monsoons

India's agriculture heavily relies on monsoons, as many regions have limited irrigation facilities. 

A good monsoon season ensures a sufficient crop water supply, increasing agricultural productivity and yield. Conversely, a weak or delayed monsoon results in water scarcity, crop failure, and reduced production.

Crop Selection and Timing

The timing and intensity of monsoons influence farmers' decisions regarding crop selection. Certain crops require specific weather conditions, such as rice requiring a high level of rainfall. 

Farmers need to plan their crop cycles based on the arrival and duration of monsoons to maximize their yield potential. 

A delayed or erratic monsoon can disrupt this planning, affecting crop choices and the availability and prices of agricultural commodities.

Impact on Food Prices

Monsoons directly affect agricultural commodities' supply and demand dynamics, influencing food prices. 

A good monsoon increases production, resulting in higher supply and lower prices for crops such as rice, wheat, pulses, and vegetables, contributing to crop production in India. Conversely, a weak monsoon can lead to reduced production, lower supply, and higher commodity prices.

Rural Economy and Farmer Livelihoods

Agriculture significantly contributes to India's rural economy, employing many people. Monsoons play a vital role in determining the income and livelihoods of farmers.

A favourable monsoon season can boost agricultural incomes, improve rural purchasing power, and stimulate economic growth in rural areas. On the other hand, a poor monsoon can lead to financial distress for farmers, impacting their well-being and the overall rural economy.

Government Policies and Interventions

The Indian government closely monitors monsoon patterns and takes proactive measures to mitigate the impact of erratic or weak monsoons on agricultural commodities. 

The government may implement policies such as crop insurance schemes, providing subsidies for irrigation systems, and ensuring adequate food supply through public distribution systems. These interventions aim to stabilise agricultural production and protect farmers from the adverse effects of monsoons.

Conclusion

Monsoons profoundly impact agricultural commodities in India, influencing crop selection, production levels, food prices, and the overall rural economy. Understanding the relationship between monsoons and agricultural commodities is crucial for policymakers, farmers, and businesses involved in agriculture, highlighting the role of monsoons in Indian agriculture. 

By anticipating and adapting to monsoon patterns, stakeholders can better plan for the challenges and opportunities presented by India's unique climatic conditions, ultimately contributing to sustainable agricultural growth and food security.

Frequently Asked Questions

1. What is the impact of monsoon on Indian agriculture?

Ans: Monsoon impacts agricultural production in India the early monsoon leads to better harvests for farmers growing crops like cotton, soybean, rice, and pulses.

2. What is a monsoon and how did it affect trade in India?

Ans: The monsoon of India decides the trade of agricultural commodities in India, where a good monsoon leads to increased trade of agricultural commodities, and a bad monsoon leads to a bad harvest and reduced trade with an increase in the prices of agricultural commodities.

3. Why is Indian agriculture called a gamble of monsoon?

Ans:  Weak monsoon in India leads to crop failure and low production of commodities which results in a price hike and affects the economy in a negative manner.

4. Which type of farming depends on monsoon?

Ans: Kharif crops are grown in the monsoon season. Bajra rice, maize, corn, & peas are a few kharif crops that require wet and hot conditions for production.

5. What percentage of agriculture is dependent on monsoon?

Ans: More than 40% of the agricultural production depends on the monsoon, where factors like an equal distribution of rainfall decide the good production of the crops.