The sudden announcement of the nationwide lockdown by Prime Minister Narendra Modi has shaken the rural economy. The economically marginalised and those engaged in the unorganised sector have been the worst affected. In this article, a few matters concerning the rural economy and the agricultural sector is being considered. The articlehas been divided into two parts. The first part deals with the immediate impact of the lockdown and provides certain economic suggestions that can help to cope with the problem. The second part deals with the long-term agenda toincrease the well-being of the people involved in agriculture and the rural poor in general.
State of agriculture and food security
In this section, one has to consider the national and international situations. Immediately after the announcement of the lockdown in India, almost all agricultural activities stopped for a while. But as agricultural activity is a necessary activity, it was allowed to operate with due precautions and in a regulated manner. Had this been not allowed, the foodsupply chain would have broken and the country could havebeen pushed towards a deeper crisis. Such situations wereexperienced in several countries and the Food and AgriculturalOrganization (FAO) - in the wake of this global pandemic ˗ warned of a food crisis in many countries of the world.
To deal with the situation, countries would need to protect their vulnerable sections from hunger and malnutrition. Howeverglobally, in many cases, farmers could not till their lands. This hampered their harvest and remuneration.
Professor R. Ramakumar of the Tata Institute of Social Sciences, Mumbai, has drawn attention to some pertinent problems through his article published recently in a national daily. He has stated that for India’s agricultural economy, the most important crisis has been the disruption in the procurement of food grains by the government. This has been the high time for procurement of Rabi crops and sluggish government procurement has negatively impacted the sector. Secondly, the disruption in the collection of harvest from the farms by traders is another important problem. Thirdly, there have been a shortage of workers for harvesting and other agricultural activities. In the early phase of the lockdown, a large section of the population was panic stricken and refused to venture out, despite the government relaxing its regulations for the agricultural sector. The situation has somewhat changed in the later phase of the lockdown. Fourthly, shortage of truck drivers has also detrimentally impacted the sector. Fifthly, there have been road blockages due to containment procedures and that disrupted the supply chain. Sixthly, operators of APMC mandis became limited and several of the retail markets faced heavy obstacles to remain operational. Professor Pranab Sen, the former Chief Statistician of the Indian government, has pointed out in an interview published during the early phase of the lockdown, that the wholesale and retail markets are very important for the livelihood of a sizeable number of Indians. Disruptions to these markets due to the lockdown has hit the agrarian economy.
Some of the reported incidents will be of help to understand the impact of the rupture of the agricultural supply chain. Tomato prices fell to an extent that tomato growers from Maharashtra only received Rs. 2/ kg. Wheat prices in Madhya Pradesh fell from Rs 2200/quintal to about Rs 1600/quintal. Notably, in Punjab, vegetable prices fell from Rs10 to 15/kg to as low as Rs 1/kg.
The worst situation has been recorded for the paddy and milk segments. As migrated labourers remain stranded in many places and could not return to their native villages in the time for harvest, harvesting has been widely disrupted. Reports from various states indicate that a significant portion of crops have been destroyed in the fields due to lack of labour. Even rice mills have been unable to buy paddy from the farmers as the mills remain closed due to lack of labour. Such turn of events has been detrimental for lakhs of farmers who are staring at massive financial losses. The situation warrants a comprehensive governmental intervention.
For milk and milk products - the situation is equally grave. It is reported that milk trucks were able to load at their destinations but were unable to sell their full stocks. This has broken the milk product supply chain. Additionally, shortage of truck drivers aggravated the problem. The Managing Director of the Amul Co-operative Society has reportedly informed the media that Amul’s production has been largely disrupted.
Are their enough stock of food
Ramakumar has shown that India’s food grain output is projected to be about 292 MT (Million Tons) in 2019 – 20. As on March 1, 2020, the total stock of wheat and rice with the Food Corporation of India (FCI) was 77.5 MT. But our buffer norms for food grains stock - that is operational stock plus strategic reserve - has been 21.04 MT as on mid-March. Additionally, after the Rabi harvest in April and May, the buffer stock will increase further. So, there is no question of food shortage in India.
The global food stock is also at a comfortable level. According to FAO, as on April 2, 2020, the total stock of cereals in the world was about 861 MT. This translates to a stock-to-use ratio - that is the proportion of consumption available as stocks is 30.7%. The FAO considers this figure to be comfortable. But the FAO has also warned that as some of the biggest exporters of food have already stopped export of food, a food crisis cannot be ruled out in many countries of the world.
Professor Sudipta Bhattacharya of the Visva-Bharati University and a former agricultural economist has said that immediate task for the government will be to restore the normalcy of the food chain. Additionally, massive expenditure in rural areas is needed to create jobs. Moreover, the government has to purchase agricultural outputs at Minimum Support Prices (MSP) from all willing farmers.