Impoverished farmer and high product retail prices the new normal

Indian farmers hot by coronavirus outbreak
The Food Corporation of India has allotted an additional 12.14 million tonnes of foodgrain including 11.01 million tonnes of rice for April-June period.

By Ashok Vishandass and Nitisha Thakwani

The Covid-19 outbreak has brought the most powerful nations on their knees. The deadly virus has infected more than 1.3 million people worldwide, killing more than 75,000 people at the time of publication of this article. The entire world is struggling to tackle the spread of the disease and limit its economic fallout. Albert Einstein said in 1946: “I know not with what weapons the World War III will be fought, but the World War IV will be fought with sticks and stones.” What he meant was that the impact of another great war would be so devastating that it would destroy the entire world civilisation. Forget about imagining the aftermath of another world war as we would struggle to comprehend what the world would be like after the end of the Covid-19 outbreak.

The new coronavirus outbreak will create a peculiar situation for agriculture sector throughout the world. The gap between the retail prices and those received by farmers will widen to unprecedented levels. The farmers are likely to get low prices due to subdued demand due to the closure of eateries, while the consumers will end up paying high prices due to a disruption in transportation facilities, labour shortage and limited suppliers. This will create an oblique market without in the absence of competition. The situation is getting exacerbated due to a delay in harvesting of matured rabi crops such as wheat and chana.

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A large number of migrant farm workers have returned to their villages, and now they will be scared to come back sue to the feat of the coronavirus pandemic. Harvesting of crops, a labour-intensive activity, will be badly affected. At the same time, a labour shortage has hit the trade of fruit and vegetables, leading to the accumulation of perishables at the farmers’ end. Farmers across the country face damage to their ripened perishable produce. Though about 1,600 mandis selling fruit and vegetables are operational now, several of those mandis have reported subdued demand. Nearly 30 truckloads of fruits and vegetables could not be sold in Vashi on April 4. Although the Union home secretary has clarified that farming operations are exempted from the nationwide lockdown, the farmers are still struggling to find farm hands even in remote areas.

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There is no shortage of grains and pulses in the country at present. The Food Corporation of India has allotted an additional 12.14 million tonnes of foodgrain including 11.01 million tonnes of rice for April-June period. Since the beginning of the lockdown on March 24, FCI has transported about 1.69 million tonnes of food grain. The government has announced that the beneficiaries of the public distribution system can avail three months’ ration at one go. It needs to be ensured that fair price shops deliver the provisions in an orderly manner and the supply lines are intact.

The prices of key staple vegetables are shooting up. Average mandi prices of onion jumped 3.5 times from last year’s level to Rs 1,967 per quintal during the second half of March. Average prices of potato more than doubled to Rs 1,328/quintal during the period. There has been a significant drop in the prices of tomato with average mandi rates dropping by 56% to Rs. 569 a quintal. Farmers are currently holding their vegetable crops as much as possible since there is a labour shortage. The situation has to be eased in the next 7-10 days or so, else huge quantities of vegetables will be wasted. Besides, the availability of drivers has dipped, affecting the transport sector. With horticulture production at 313.35 million tonnes in 2019-20 outstripping foodgrain production by 21 million tonnes, many farmers are already finding it difficult to dispose horticultural produce.

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The government has recently announced a welfare package of Rs 1.7 lakh crore which constitutes just 1% of the GDP. This is too small to boost the economy ravaged by the new coronavirus outbreak. Several economists suggest a stimulus package worth 5% of the GDP would be necessary to tide over the crisis. Farmers ought to be compensated for the loss of income and one way to do it is through the PM-KISAN scheme. The disbursal of the first instalment due in April has been announced. However, efforts should be made to include tenant farmers and farm labourers who are as much dependent on agriculture as the land-owning classes.

About 30% of agri-export orders have been cancelled across various product categories. Overseas buyers are using the crisis to renegotiate contract terms and to seek a cut in prices. Domestic manufacturing units are shut and logistics chains are tenuous, though ports are functioning.

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As most parts of the world are in a lockdown, pollution burden on mother Earth has come down. The fundamentals of India’s economy may be strong, but our systems are fragile. The government has been nudging farmers to diversify from traditional foodgrain to high value crops like fruit and vegetables through policy initiatives. Consequently, the production of horticulture crops has outstripped the production of foodgrain and the former is more vulnerable than later, given their short shelf life. Selling these perishables (fruits, vegetables and milk) in a packaged form in mobile vans is a task to be executed on priority.

Unless some credible measures to ensure supply of labour to farmers under MGNREGA for harvesting, agriculture sector could post a negative growth in the current financial year. The state governments could help by providing combined harvesters, sanctioning automatic overdraft facilities to farmers to improve the cash flow of farmers, and enabling farm exports after April 15 on a fast track mode. Such extra-ordinary measures are the need of the hour in extra-ordinary conditions prevailing in these days.

(Dr Ashok Vishandass is Professor (Applied Economics) at Indian Institute of Public Administration and former Chairman, CACP, ministry of agriculture. Nitisha Thakwani is a management professional.)

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