• West Asian conflicts are indirectly affecting India’s agricultural sector.
• Increase in crude oil prices will raise the cost of farming operations, transportation, irrigation.
• As India relies heavily on importing fertilisers, it makes the country vulnerable to global fertiliser shocks.
• Disruptions in shipping routes may affect cost of farming operations.
Conflicts in West Asia and the closure of the Strait of Hormuz may seem far removed from India’s agricultural landscape. In fact, these events have disrupted India's energy systems and is hurting the country's agriculture sector in multiple ways.
India’s dependence on crude oil imports in 2023-24 was a staggering 87.7 per cent. This makes it one of the most energy-dependent major economies in the world. Moreover, it imports almost all its potash fertilisers and 85-90 per cent of its phosphatic fertiliser’s raw materials. This makes it highly dependent on imports.
Modern agriculture is closely linked with energy. Diesel is used to power tractors and harvesters, and to transport the produce from the farms to the market.
Thus, fluctuating crude oil prices directly affect the agricultural sector, pushing up costs of irrigation, tractor operation, transportation of produce from farms to markets.
The relationship between geopolitics and agriculture becomes even clearer when considering the fertiliser aspect. Nitrogen-based fertilizers, such as urea and ammonia, require large amounts of natural gas as raw material. Gas-abundant West Asian nations such as Qatar and Saudi Arabia have a significant impact on fertiliser availability worldwide.
Even though India has expanded fertiliser production in the recent past, it still relies heavily on imports.
The government, in an effort to insulate the farmer from such price fluctuations, implements fertiliser subsidies. However, such subsidies have a fiscal cost. According to the Union Ministry of Finance, India’s fertiliser subsidy burden crossed Rs 1.9 lakh crore in 2022-23, a reflection of the increasing burden of price volatility.
However, energy supplies and fertilisers are not the only routes through which conflicts in West Asia affect agriculture. The role of maritime routes is also important in this regard.
The Red Sea and Suez Canal connect Asia and Europe and carry a considerable amount of international cargo. Sometimes, when conflicts in this region increase, ships are diverted to go around the Cape of Good Hope in southern Africa.
These routes increase the time required to transport goods and also increase freight costs. Agricultural products, fertilisers, edible oils and grains are some of the agricultural commodities that are often traded through these routes. A hike in freight costs causes an increase in food prices globally.
For a country with a huge population, a marginal increase in food prices can cause significant economic problems.
Despite these weaknesses, the agricultural system in India also has some strengths. The country grows most of its staple food items locally and is one of the top producers of rice, wheat and pulses in the world.
Interventions by the government, like the Minimum Support Price system, Public Procurement and Public Distribution, are helpful in stabilizing the food market in the country.
Geopolitics, therefore, does not directly affect food availability in the country. The effect lies elsewhere. The question is not whether crops are grown, but how much it costs to grow them.
The repetition of global crises, ranging from pandemics to geopolitical conflicts, underlines the need to enhance agricultural resilience.
Breaking dependence on imported fertilisers and fuels could be an important area for improvement. Increasing production of domestic fertilisers, focusing on bio-fertilisers, and optimising fertiliser use are some options.
Another area for improvement could be renewable energy. Solar-powered pumps for irrigation, promoted under PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan), can reduce dependence on diesel fuels by farmers.
In an increasingly interlinked world, a geopolitical conflict thousands of kilometres away can quietly alter the economics of farming in India. Improving domestic input systems and renewable energy use in agriculture will be critical to protect farmers from the next global crisis.
K Rajarajan is a senior scientist and A Arunachalam is the director at ICAR-CAFRI, Jhansi. Views expressed are the authors’ own and don’t necessarily reflect those of Down To Earth.