El Niño's Impact on Indian Fertilizer Sales and Food Inflation

Sales of all fertilisers are down in April-September compared to the same period of 2025. That includes urea, the most widely used and cheapest fertiliser. The drop in sales — despite higher year-on-year production and imports — is a clear indication of subdued farmer demand because of the El Niño-induced dry weather conditions. All-India rainfall was 12.6 per cent below-normal during the southwest monsoon season (June-September), with significant shortfalls across the South, Marathwada and Vidarbha, Saurashtra and Kutch, Rajasthan, Bihar and the Northeastern states. Its impact is, perhaps, best reflected in fertiliser consumption. Nutrient offtake was low because the monsoon rains weren’t adequate for farmers to buy and apply these on their crops. Thus, while overall kharif acreages may not have fallen much, the reduced fertiliser application could translate into lower crop yields. It isn’t kharif alone. October, too, has registered a 31.4 per cent rainfall deficit, pointing to the effects of an intensifying El Niño. Global weather agencies are projecting the current strong-to-very strong event to persist through January-March, before turning moderate-to-weak towards April-May 2027. Subpar precipitation means that much less soil moisture for the rabi (winter-spring) crops, the sowings of which have just commenced. Since El Niño is known to also result in warmer-than-usual winters in India, one can assume both acreages and yields to take a hit in this rabi season. That could put further pressure on consumer food inflation, which has already climbed from 4.2 to over 7.7 per cent year-on-year between April and September. India’s last major episode of food inflation, when it averaged 8.5 per cent-plus, was from July 2023 to December 2024. The villain was, again, a long and strong El Niño. This time, it’s a “super strong” El Niño. For the government, the immediate options are to permit duty-free imports of pulses (including masoor, chana and yellow peas), raw sugar and cotton till March 31. It must also consider scrapping the basic customs duty on crude palm and soyabean oil. An extended zero/low duty window would give importers greater confidence to contract sizeable quantities of these commodities to make up for the inevitable domestic production shortages. For the longer term, policymakers need to accept climate change and geopolitical tensions as baseline “default” realities, not merely temporary “risks”. This would mean investing more in climate-smart breeding and making farmers more efficient users of water, fertilisers, energy and other scarce resources. It calls for a fundamental reordering of the current inefficient subsidy regime and fiscal priorities. That’s a political, more than an economic, challenge.