Economic Impacts of Drought on Agriculture Scrutinized

Drought affects a range of economic sectors but its impacts are usually most evident in agriculture. Its dire impacts on agricultural productivity and livelihood of farmers have been reviewed by Fatemeh Pasban, a board member of Agricultural Planning, Economic and Rural Development Research Institute in a write-up for Tehran Chamber of Commerce, Industries, Mines and Agriculture’s news portal. The translation of the full text follows:

Agricultural production is tied to numerous intertwined factors from farm inputs to climate to the government’s policies and global markets. Among these, water is a critical input that plays a pivotal role in agricultural production

To produce one kilogram of rice requires 3,500 liters of water and to produce one kilogram of meat requires 15,000 liters of water.

Twenty percent of all agricultural land in the world use irrigated cultivation systems and account for 40% of total rain-fed farming and therefore allows for the production of various agricultural commodities in large amounts; that is, the more agricultural water becomes accessible, the greater volume of food would be produced. 

On the other hand, rain-fed farming relies heavily on precipitation, such that drought leaves negative impacts on non-irrigated cultivation of crops.

According to the Agriculture Ministry’s statistics, rain-fed farming accounted for 40% of wheat, 96% of chickpeas and 92% of lentils produced in the country in the year ending March 2020. Bread and pulses are important dietary sources of energy and nutrients, given the high price of meat. Non-irrigated cultivation of clover and barley used as animal feed also accounted for 53% and 33% of their total output in Iran respectively. 

A decline in precipitation and drought poses a serious threat to rain-fed farming. According to the National Center for Drought and Crisis Management of Iran Meteorological Organization, the average rainfall since Sept. 20, 2020, was 100 mm, indicating a 34% decrease compared with Iran’s long-term average. 

Precipitation rate has been lower than normal in all provinces, while the provinces of Sistan-Baluchestan, Hormozgan, Kerman and Khorasan Razavi are facing a severe depletion of water. 

Decline in land under cultivation and quality of products, particularly rain-fed crops, pest outbreaks, crop wastage, tree diseases and insect invasions, forest fires, land subsidence and their negative impact on food production are some of the effects of drought. 

Lorestan Agricultural Organization says drought has reduced non-irrigated cultivation of wheat by 65-70%. 

According to East Azarbaijan Agricultural Organization, this year’s unprecedented drought has shrunk at least 50% of the output of rain-fed farming in the northwestern province. Water shortage has reduced more than 412,000 tons of agricultural products in Kurdestan Province. 

Drought and consequently the decline in agricultural and food production would reduce food supply and cause a price hike in the market. Import and outflow of foreign currency would increase to meet domestic demand; even importation is a difficult option under the sanctions regime and failure to comply with the requirements of the Financial Action Task Force — the global anti-money laundering watchdog.

Cheap imports would be an anti-protectionist move and imports at prices higher than local prices would lead to a price hike in domestic markets. In any case, the rise in food prices restricts access to food and hurts households who have witnessed a decline in their purchasing power in recent years. Poor diet leads to a decline in health and productivity of individuals and future generations. 

On the other hand, the decline in animal feed and increase in prices will drive up production costs and prices of livestock. Drought endangers the livelihoods of agricultural producers as they are already struggling with the pricing policy. 

Notably, smallholding constitutes 75% of Iran’s agriculture. According to statistics released in the year ending March 2015, three quarters of farmers in Iran work on small-scale farms of less than five hectares. A decline in income and savings results in the rise in debts and improves their motivation to migrate. 

Under the circumstances, the government might provide some compensation for drought-hit farmers. That would put pressure on the budget whereas this budget could have been allocated to investments in new technologies to fight this natural disaster. 

Now that the alarm has been raised again on water shortages, to provide the country’s food security and protect producers and related businesses, it is necessary to direct efforts for designing drought forecast tools and boosting investment in research and development for implementing the latest technologies to fight drought and improve the food system’s resilience.