Super El Nino: The next inflation shock may begin in India’s fodder fields
The 2026 southwest monsoon has brought delayed onset and prolonged dry spells in several regions, even as national rainfall averages mask sharp regional shortfalls, particularly over northwest and central India.
Green fodder crops such as maize, sorghum, bajra and cowpea depend on timely monsoon rainfall; delayed rains postpone sowing, and extended dry spells suppress biomass growth, while excess rainfall elsewhere causes waterlogging and fungal damage to standing fodder.
Livestock feed accounts for 60-70% of milk production costs in India; when green fodder becomes scarce, dairy farmers are forced to buy costlier commercial concentrate feed, adding to production costs.
Heat stress from elevated temperatures further reduces feed intake and productivity in dairy animals, compounding the effect of fodder scarcity.
Analysts have warned this combination could feed into milk price inflation, given milk's significant weight in India's Consumer Price Index (CPI) food basket, with India unable to rely on imports to stabilise domestic milk supply due to its dominant reliance on domestic production.
El Nino-Southern Oscillation (ENSO) and the Indian Monsoon
El Nino is the warm phase of the El Nino-Southern Oscillation, a recurring Pacific Ocean climate pattern. During El Nino, trade winds weaken and warm surface water shifts from the western to the central/eastern Pacific, raising sea surface temperatures there by 0.5°C or more (2-3°C in a strong/"super" event) and pulling the monsoon's rain-bearing systems away from South Asia, typically producing weaker monsoon winds and drier conditions over India.
Key Details
- Events are classified by the Oceanic Nino Index (ONI): weak (+0.5), moderate (+1.0), strong (+1.5) and very strong/"super" (+2.0 or higher) sea surface temperature anomalies.
- Only three El Nino events since 1980 have been classified as "very strong" or "super," the most recent prior one being 2015-16.
- The India Meteorological Department (IMD) recorded 15 El Nino years between 1951 and 2022, and nearly every drought year in that period coincided with an El Nino year.
The current monsoon's uneven and deficient rainfall pattern is being read against a "super" El Nino signal, which historically correlates strongly with below-normal Indian monsoon rainfall and consequent stress on rain-fed fodder cultivation.
Fodder Security and the Livestock Economy
India faces a chronic, structural shortfall in green and dry fodder relative to livestock population, a gap that widens sharply in deficient-monsoon years. Fodder availability directly affects milk yield, since feed costs form the majority of the cost of milk production, linking monsoon performance to both farm incomes and consumer dairy prices.
Key Details
- The Indian Grassland and Fodder Research Institute (IGFRI), under the Indian Council of Agricultural Research, is the apex body researching fodder-crop improvement and grassland management.
- India holds the world's largest livestock population and is the largest milk producer, making fodder-linked productivity shocks nationally significant for food inflation.
- Government interventions in this space include fodder development components under the National Livestock Mission and state-level fodder subsidy/distribution schemes during drought years.
The described fodder-cost squeeze is a direct application of this structural vulnerability, now sharpened by an El Nino-affected monsoon reducing green fodder biomass in key producing states.
Monsoon-Driven Food Inflation and Monetary Policy
Food and beverages carry a weight of roughly 46% in India's Consumer Price Index (Combined), making agricultural and livestock supply shocks a major transmission channel for headline retail inflation. Under India's flexible inflation targeting framework, the Reserve Bank of India (RBI) is mandated to keep CPI inflation at 4%, within a band of +/-2%, but supply-side shocks like monsoon-driven food price spikes fall outside the direct control of monetary policy.
Key Details
- The flexible inflation targeting framework was formalised via the RBI Act amendment in 2016, based on the Monetary Policy Committee (MPC) structure.
- Milk and dairy products form a distinct, high-weight sub-group within the food category of the CPI basket.
- Supply-side food inflation shocks typically prompt fiscal/administrative responses (buffer stocks, import relaxation, fodder support) rather than monetary tightening alone, since dairy is difficult to import at scale to cover domestic shortfalls.
A monsoon-linked fodder shortage feeding into milk price rises illustrates how a climatic shock can transmit into the CPI food basket, testing the limits of monetary policy tools and requiring coordinated agricultural and livestock-sector responses.
- Livestock feed constitutes 60-70% of the cost of milk production in India.
- "Super" or "very strong" El Nino events require sea surface temperature anomalies of about +2.0°C or more on the Oceanic Nino Index.
- Only three El Nino events since 1980 have reached "super" intensity, most recently in 2015-16.
- Food and beverages carry roughly 46% weight in India's CPI (Combined) basket.
- The RBI's flexible inflation target is 4%, with a tolerance band of +/-2%, under the framework formalised in 2016.