In the last two years, global agricultural markets have begun to undergo structural changes. These changes are driven by a combination of demand and supply-side factors, including: (a) Expanding food consumption demand (for instance, in Asia, due to rising incomes and demographic pressure); (b) Weather aberrations and diseases that continue to affect and threaten world food production and food supply systems (drought in Australia for two years in a row; and avian influen za in many Asian countries); and (c) Emergence of biofuels (bioethanol and biodiesel) that use traditional food crops for fuel purposes, creating an entirely new demand segment. This has led to competition for acreage among crops. In the US, corn (maize), wheat and soyabean fight for acreage.
The demand-supply effects of recent developments are unlikely to ease anytime soon. This has resulted in tightening availability and shrinking inventory of major grains across the world, especially in major exporting countries. Unchecked flow of funds (hedge funds that speculate in the commodity market) is seen creating extreme volatility bearing no logical relationship with the physical market fundamentals.
Agflation threat
This is leading to what is now described as ‘Agflation’, that is, inflationary conditions created by a sharp rise in agricultural commodity or food prices. In the last few months, prices of corn, wheat, soyabean, cotton, milk, meat and several other products have risen sharply. A rising tide lifts all boats.
The surge in major agri-commodity prices is sure to have a ripple effect on a wider range of agricultural goods, including, of course, spices. A new dimension has recently been added to the already uncertain market conditions and that relates to global warming and climate change. There is now heightened awareness about risks associated with global warming. Interestingly, the close inter-linkage among food security, bio-energy and global warming is beginning to be realised. High mineral oil prices and state support have boosted the biofuels sector, especially in the US and the EU.
Biofuels are gaining acceptance and support on the back of renewable energy tag and green fuel tag. On the other hand, agriculture itself contributes to global warming through greenhouse gas (GHG) emissions. Ammonia, methane and carbon dioxide are released into the atmosphere because of agricultural practices as also related activities such as livestock rearing. Admittedly, agriculture can be a source and a sink for GHG emissions.
Perils of global warming
What does climate change or global warming entail? There could be greater variability in temperatures and rainfall. Average temperatures are likely to be higher. More frequent and more intense floods and droughts are more likely. Water availability for irrigation of crops would get reduced. Because agriculture critically depends on such natural inputs as sunshine, ambient temperature and water, a greater variability in these is likely to affect production.
According to experts, tropical countries are at far greater risk of being affected by global warming than countries in, say, the temperate zone. Climate change is seen as potentially devastating for tropical agriculture. Crop yields would not only be lower but also turn uncertain.
Small farmers in tropical and sub-tropical regions are most vulnerable to climate change, the negative impact of which will be varied. This will include lower soil moisture overall, some cultivated areas turning unsuitable for cropping, and certain tropical grasslands turning arid. In some areas, there will be higher rainfall, but unevenly distributed.
One of the most pernicious effects of changing atmospheric conditions would be rise in pest attack. It is predicted that South Asia will receive less rain. This raises a spectre so alarming that we can ignore it at our own peril.
More acute weather vagaries will bring greater fluctuations in crop yield and, thereby, total output. This translates into uncertain prospects for production, supplies and, of course, prices. Food companies and food users have to take cognizance of the emerging uncertain scenario.
Heightened concerns over global warming and its impact on agriculture should bring all stakeholders in the food chain together to evolve joint responses. What can be done? Even though global warming is seen largely as inescapable, all is not lost.
We need appropriate policies for climate change adaptation and mitigation. We also need to put in place plans for disaster risk management. This is possible only if we first recognise the impending problem.
Agro-meteorological data
The way forward is becoming increasingly clear. First, it is absolutely necessary to provide tools and information relating to agro-meteorological data. Next, tools for assessing extreme weather and guidance as to the line of action are required. Assessment of vulnerability — places, people, resources — is critical. Land cover mapping using satellite and remote sensing technology must be done. Setting up regional weather forecasting stations to help growers change crop or timing of planting would be of immense help.
Growers will need guidance when to plant — may be a few days ahead of the normal time or a few days late; and also when to harvest. Plant breeders will have to begin to work on evolving new varieties that are able to withstand predicted changes such as temperature and water availability. An improvement in flood mitigation as also water storage systems would go a long way in fighting weather aberrations.
Creating and maintaining these assets and facilities is not easy. Huge investments are needed. As the first step, assessment of technological, financial and human resources requirement to fight climate change needs to be made. Investment in research as also in methods and tools is required.
A regulatory framework to track developments and progress on investments should be put in place. Most important is capacity building among stakeholders. Especially, small growers need to be trained to respond to weather changes. By its very nature, capacity building is an arduous task. Appropriate policies and programs for continuous education and training are necessary. Partnerships are the way forward.
Capacity building is not something that should be left to the government. Public-private partnership and even trans-border partnerships should be explored.
Agenda for Spices Board
The emerging threat from climate change poses a serious challenge to the Kochi-headquartered Spices Board. In the context of climate change, the first job of the Spices Board is to make an assessment of downside risk that climate change poses.
Heat tolerance among crops is a critical factor to be ascertained. Are the various spices crops grown in different parts of the country at the limit of heat tolerance? If so, how best to substitute varieties or change agronomic practices? Researchers will have to be seized of these questions.
Because climate change can result in erratic weather patterns and moisture-stress, yields will be affected. Pest attacks may become more frequent and intense. It is imperative to evolve high-yielding short-duration varieties that are resistant to biotic and abiotic stresses.
Time is of the essence of these programmes. Admittedly, the costs of adaptation and mitigation far exceed resources available. To ensure long-term sustainability, multi-stakeholder efforts are needed to address issues. These stakeholders include not only domestic growers, processors and policymakers but also overseas buyers and users of Indian spices and products.
Go for global tie-ups
It is necessary for the Spices Board to look for global partnerships and alliances to set up adaptation and mitigation programmes. In their own self-interest, international buyers of Indian spices must join hands with Indian producers to create conditions for sustainable production of spices. Although foreign direct investment (FDI) in the agriculture sector is generally not allowed, 100 per cent FDI is permitted in the Indian food processing sector. Industrial consumers overseas can tie up with local partners here to ensure uninterrupted supplies of their requirement from India.
The Spices Board will have to redefine its role. Its approach to strengthening the spices sector should be holistic in nature. Rather than sectoral, end-to-end solutions are called for. In fighting climate change, corporates in the spices sector will have an important role to play.
They need to invest in establishing backward linkages and, importantly, to help build capacity among small growers. Supply chain management will help corporates capture value in a market that is becoming increasingly competitive. It will also help them meet the twin obligations of ‘traceability’ and ‘compliance’.
India’s robust economic growth is sure to drive up internal demand for all food products, including spices. Export surpluses enjoyed at present may soon begin to disappear.
In the domestic market, given the skew in income distribution, there will be demand at every price point. It is necessary for agribusinesses to achieve global competitiveness — that is to have the ability to produce globally acceptable quality at globally comparable cost. Achieving global competitiveness needs commitment and patience.
The demand-supply effects of recent developments are unlikely to ease anytime soon. This has resulted in tightening availability and shrinking inventory of major grains across the world, especially in major exporting countries. Unchecked flow of funds (hedge funds that speculate in the commodity market) is seen creating extreme volatility bearing no logical relationship with the physical market fundamentals.
Agflation threat
This is leading to what is now described as ‘Agflation’, that is, inflationary conditions created by a sharp rise in agricultural commodity or food prices. In the last few months, prices of corn, wheat, soyabean, cotton, milk, meat and several other products have risen sharply. A rising tide lifts all boats.
The surge in major agri-commodity prices is sure to have a ripple effect on a wider range of agricultural goods, including, of course, spices. A new dimension has recently been added to the already uncertain market conditions and that relates to global warming and climate change. There is now heightened awareness about risks associated with global warming. Interestingly, the close inter-linkage among food security, bio-energy and global warming is beginning to be realised. High mineral oil prices and state support have boosted the biofuels sector, especially in the US and the EU.
Biofuels are gaining acceptance and support on the back of renewable energy tag and green fuel tag. On the other hand, agriculture itself contributes to global warming through greenhouse gas (GHG) emissions. Ammonia, methane and carbon dioxide are released into the atmosphere because of agricultural practices as also related activities such as livestock rearing. Admittedly, agriculture can be a source and a sink for GHG emissions.
Perils of global warming
What does climate change or global warming entail? There could be greater variability in temperatures and rainfall. Average temperatures are likely to be higher. More frequent and more intense floods and droughts are more likely. Water availability for irrigation of crops would get reduced. Because agriculture critically depends on such natural inputs as sunshine, ambient temperature and water, a greater variability in these is likely to affect production.
According to experts, tropical countries are at far greater risk of being affected by global warming than countries in, say, the temperate zone. Climate change is seen as potentially devastating for tropical agriculture. Crop yields would not only be lower but also turn uncertain.
Small farmers in tropical and sub-tropical regions are most vulnerable to climate change, the negative impact of which will be varied. This will include lower soil moisture overall, some cultivated areas turning unsuitable for cropping, and certain tropical grasslands turning arid. In some areas, there will be higher rainfall, but unevenly distributed.
One of the most pernicious effects of changing atmospheric conditions would be rise in pest attack. It is predicted that South Asia will receive less rain. This raises a spectre so alarming that we can ignore it at our own peril.
More acute weather vagaries will bring greater fluctuations in crop yield and, thereby, total output. This translates into uncertain prospects for production, supplies and, of course, prices. Food companies and food users have to take cognizance of the emerging uncertain scenario.
Heightened concerns over global warming and its impact on agriculture should bring all stakeholders in the food chain together to evolve joint responses. What can be done? Even though global warming is seen largely as inescapable, all is not lost.
We need appropriate policies for climate change adaptation and mitigation. We also need to put in place plans for disaster risk management. This is possible only if we first recognise the impending problem.
Agro-meteorological data
The way forward is becoming increasingly clear. First, it is absolutely necessary to provide tools and information relating to agro-meteorological data. Next, tools for assessing extreme weather and guidance as to the line of action are required. Assessment of vulnerability — places, people, resources — is critical. Land cover mapping using satellite and remote sensing technology must be done. Setting up regional weather forecasting stations to help growers change crop or timing of planting would be of immense help.
Growers will need guidance when to plant — may be a few days ahead of the normal time or a few days late; and also when to harvest. Plant breeders will have to begin to work on evolving new varieties that are able to withstand predicted changes such as temperature and water availability. An improvement in flood mitigation as also water storage systems would go a long way in fighting weather aberrations.
Creating and maintaining these assets and facilities is not easy. Huge investments are needed. As the first step, assessment of technological, financial and human resources requirement to fight climate change needs to be made. Investment in research as also in methods and tools is required.
A regulatory framework to track developments and progress on investments should be put in place. Most important is capacity building among stakeholders. Especially, small growers need to be trained to respond to weather changes. By its very nature, capacity building is an arduous task. Appropriate policies and programs for continuous education and training are necessary. Partnerships are the way forward.
Capacity building is not something that should be left to the government. Public-private partnership and even trans-border partnerships should be explored.
Agenda for Spices Board
The emerging threat from climate change poses a serious challenge to the Kochi-headquartered Spices Board. In the context of climate change, the first job of the Spices Board is to make an assessment of downside risk that climate change poses.
Heat tolerance among crops is a critical factor to be ascertained. Are the various spices crops grown in different parts of the country at the limit of heat tolerance? If so, how best to substitute varieties or change agronomic practices? Researchers will have to be seized of these questions.
Because climate change can result in erratic weather patterns and moisture-stress, yields will be affected. Pest attacks may become more frequent and intense. It is imperative to evolve high-yielding short-duration varieties that are resistant to biotic and abiotic stresses.
Time is of the essence of these programmes. Admittedly, the costs of adaptation and mitigation far exceed resources available. To ensure long-term sustainability, multi-stakeholder efforts are needed to address issues. These stakeholders include not only domestic growers, processors and policymakers but also overseas buyers and users of Indian spices and products.
Go for global tie-ups
It is necessary for the Spices Board to look for global partnerships and alliances to set up adaptation and mitigation programmes. In their own self-interest, international buyers of Indian spices must join hands with Indian producers to create conditions for sustainable production of spices. Although foreign direct investment (FDI) in the agriculture sector is generally not allowed, 100 per cent FDI is permitted in the Indian food processing sector. Industrial consumers overseas can tie up with local partners here to ensure uninterrupted supplies of their requirement from India.
The Spices Board will have to redefine its role. Its approach to strengthening the spices sector should be holistic in nature. Rather than sectoral, end-to-end solutions are called for. In fighting climate change, corporates in the spices sector will have an important role to play.
They need to invest in establishing backward linkages and, importantly, to help build capacity among small growers. Supply chain management will help corporates capture value in a market that is becoming increasingly competitive. It will also help them meet the twin obligations of ‘traceability’ and ‘compliance’.
India’s robust economic growth is sure to drive up internal demand for all food products, including spices. Export surpluses enjoyed at present may soon begin to disappear.
In the domestic market, given the skew in income distribution, there will be demand at every price point. It is necessary for agribusinesses to achieve global competitiveness — that is to have the ability to produce globally acceptable quality at globally comparable cost. Achieving global competitiveness needs commitment and patience.
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