The Continuing Threat Of El Nino Is Quite Ominous In 2027

Uneven temporal and spatial distribution of the southwest monsoon during the June-September cycle has already resulted in a significant decline in production of major agricultural crops, including rice, pulses, coarse cereals, oilseeds, cotton, and sugarcane.

Surprisingly, even by early November, the Union Ministry of Agriculture has not released the first advance estimate of Kharif 2026-27 crop production. The usual release is the last week of September every year. The FPJ carried this writer’s private estimate (proprietary research) on October 16.

A greater danger of further crop losses in Rabi 2027 is looming large. The India Meteorological Department (IMD) has forecast a more severe El Nino during the October-December months, a period that coincides with the Kharif harvest and the planting of Rabi crops, mainly wheat, oilseeds (rapeseed/mustard and groundnut) and pulses (chickpeas and lentils).

The key states for Rabi crops include Punjab, Haryana, Uttar Pradesh, Rajasthan, and Madhya Pradesh. Most of them faced varying levels of rain deficit and dry conditions. No wonder the Rabi area coverage of all major crops is sharply down as compared with this time last year.

Although it is too early to pass any judgement on the final picture of Rabi planting, it is quite clear—farmers are rather reluctant to plant because of poor subsoil moisture in many meteorological subdivisions that faced a serious precipitation shortfall by the end of September.

Water levels in major reservoirs are less-than-satisfactory and below the levels seen this time last year. Importantly, there is no guarantee that the much-needed winter rains will materialise to improve soil moisture conditions. Also, a possible heatwave in February/March can potentially hurt yields.

Elsewhere, El Nino in 2026-27 is raising drought risk in Southeast Asia and Southern Africa. These are drought hotpots. Rice, palm oil, and coffee crops face a higher drought risk. Lower output of key crops raises the food inflation risk. Although food stocks will cushion the impact, it would be felt unevenly.

According to a research report, re-built maize stocks should temper food price pass-through in Southern Africa, but thinner buffers in Southeast Asia place rice, palm oil, and coffee supplies at a higher risk. While drought in Southeast Asia puts rice (Thailand, Vietnam), sugar (Thailand), palm oil (Indonesia, Malaysia), and Robusta coffee (Vietnam) at risk, the region faces the largest population impact, with around 90 million more people exposed to drought on average in past events.

As for India, despite the adverse El Nino impact on Kharif rice production (down 8-10 million tonnes from last year’s Kharif) and a looming risk for the upcoming wheat crop, the country is less vulnerable. The country’s foodgrain stock in the central pool stood at 87 million tonnes as of November 1, well above the buffer norms.

Of this, the central pool rice stocks stood at 39 million tonnes, and the total inventory is an estimated 59 million tonnes. Some policy interventions have begun. On November 6, the government mandated a weekly stock declaration for rice and paddy every Friday on the Food Stock Portal.

The five southern states—Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, and Telangana—have been authorised to impose stock limits on rice and paddy through January 31, 2027, to prevent hoarding.

Moreover, the Open Market Sale Scheme (OMSS) target for domestic rice sales was doubled from 2.5 million tonnes to 5.0 million tonnes for 2026–27 to stabilise open-market and retail prices.

Given the rice stock data, there is belief that New Delhi may not have to consider imposing any export restrictions, unlike in 2022-23. But restrictions on the diversion of rice for ethanol may be considered.

For wheat 2026-27, the target for production is 121.5 million tonnes as compared with the estimated production of 120.6 million tonnes last year. While last year’s government estimate is widely seen as overstated by about 10%, on current reckoning, the upcoming harvest in April/May 2027 is most likely to fall short of the target. This can potentially result in the tightening of supply-demand fundamentals.

Overall, portends are ominous. The farm situation is likely to be rather challenging in many parts of the world, India included. Geopolitical developments, especially around the Persian Gulf region, have already elevated the cost of production of agricultural crops in the form of higher crude oil and fertiliser prices. Established supply chains are disrupted because of the threat of military action. Ocean freight costs and insurance premiums are at unusually high levels, while voyage time is longer and tedious.

All of these coincide with elections in Uttar Pradesh, Punjab, and Gujarat in the first three months of 2027.

G Chandrashekhar is an economist, senior journalist and policy commentator, and provides policy inputs for the government. Views are personal.

Published on: Monday, November 09, 2026, 09:05 PM IST