As El Niño strengthens, Indonesia is experiencing its most severe dry season in four years, fueling wildfires and threatening production of the country’s palm oil, coffee, and rice.

Indonesia typically experiences hotter, drier weather during El Niño years. For example, in 2015 and 2019, both El Niño years, the country saw the lowest levels of aggregated precipitation in over two decades, according to Gro’s Climate Risk Navigator for Agriculture. 

While current drought levels are not as extreme as 2015, they still bear monitoring. So far in October, which officially marks the beginning of Indonesia’s wet season, aggregated precipitation is 45% below the 10-year average.

Dry conditions brought on by El Niño increase risk of wildfires, which can feed for months on the large peat deposits on Indonesia’s islands, as shown by Gro’s Observed Fire Indicator, which displays wildfire severity globally by percentage of land area affected. 2015 was particularly severe, with fires burning around 3 million hectares of forests and peatlands on the east coast of Sumatra and in central Kalimantan. 

Indonesian crops and exports also are expected to be hurt by El Niño. Palm oil yields are forecast to suffer in the coming months due to the declining soil moisture and increasing drought, as Gro wrote about here. Indonesia is the world’s largest producer and exporter of palm oil — the most popular edible oil — and palm plantations need regular precipitation to replenish water tables that are constantly being depleted by the thirsty trees. 

Indonesia’s robusta coffee crop, the world’s third-largest, also is being impacted by El Niño. Current drought readings in Indonesia’s coffee-producing areas are among the highest for this time of year, ranking only behind 2015 and 2019, as measured by the Gro Drought Index. The country’s robusta production fell by 12% in 2016 as a result of the strong El Niño event the preceding year. 

Robusta coffee futures prices hit a 20-year peak in June in anticipation of El Niño arriving in Southeast Asia, although prices have since retreated as conditions in Brazil’s coffee-growing regions have improved. 

Following a poor harvest earlier this year, Indonesia’s rice production could again be curtailed in the 2023/24 crop year. Drought readings, weighted to acres planted to rice, began rising significantly in mid September and currently show “moderate” levels of drought, as measured by the Gro Drought Index. In addition, soil moisture levels in rice growing areas are the lowest in at least 20 years, as seen in this Gro Navigator display. 

In the most recent El Niño years of 2015 and 2019, Indonesia’s rice production fell year over year by 2% and 8%, respectively. Approximately 60% of Indonesian harvested rice area is irrigated, with the rest rain fed. 

The Indonesian government is ramping up rice imports in anticipation of tighter domestic supplies. State-owned enterprise Bulog has been told to import 2 million tonnes of rice by the end of December. In addition, the Ministry of Trade signed a memorandum of understanding with the Indian government to import 1 million tonnes of Indian rice. Indonesia’s traditional suppliers of imported rice are Vietnam, Thailand, and Pakistan.

Source - https://www.gro-intelligence.com