India’s Gross Domestic Product (GDP) contracted by 7.3% in the last FY 2020-21 - as per the recently released provisional national income estimate. There is a common notion that the impact of the pandemic has been minimal on the agricultural sector in India. However, that is not the whole picture although it is true that other sectors of the economy like industry and service sectors were heavily affected in the Covid related pandemic - much more heavily than the agricultural sector. In the first quarter (Q1) of the FY 2020-21, the fall of GDP was about 24% compared to that of the first quarter of last year. The overall growth rate of agriculture was around 3.6% while the other two sectors were in negative territory. This is why it was thought that the agricultural sector remained relatively untouched by the pandemic. It should be noted that the agriculture sector includes agriculture and allied sectors (dairy, horticulture, poultry, fishing, forestry etc.). A significant part of the allied sectors was heavily impacted in the pandemic in the last FY 2020-21. In the recent provisional estimate agriculture, forestry and pisciculture grew by 3.6% but other allied sectors grew negatively.
Why is agriculture so important?
Agriculture contributes about 17% of India’s GDP and employs around 50% of the country’s population. Its performance affects secondary and tertiary sectors through various backward and forward linkages. In 2008, a World Bank report emphasised that the growth of agriculture was and, on an average, at least twice as effective as in reducing poverty as growth outside agriculture. It is because agricultural growth reduces poverty directly by raising farm incomes and indirectly through generating employment and reducing food prices. The idea is not a new one. In the time of David Ricardo, in the early nineteenth century, the debate over import of cheap food was in full swing. The theoretical basis was whether cheap food items should be allowed in England. At the same time, cheap imports had reduced the income of the landlords who were responsible for generating a lot of demand in the economy. Actually, cheap food prices are the most important factor for economic growth. Cheap food prices mean low wage rates which means low cost of production in the economy and that increases more competitiveness. Ultimately, the Corn Law was repealed in England in 1846.
Impact of Covid on agriculture and allied sectors in FY 2020-21
The National Bank for Agriculture and Development (NABARD) has done an impact assessment of the Covid 19 pandemic on Indian agriculture and the rural economy. This study was published in August 2020. The survey observed that about 47% of sample districts was adversely affected by the pandemic. It was noted that the magnitude of agricultural production was not significantly affected. This was because the impact of the pandemic took up pace when harvesting of rabi crops like wheat was almost complete by April 2020.
The allied sectors were significantly affected. According to the survey, poultry production dropped by 19.5%. This was followed by the fisheries sector that took a dip by 13.6% and the sheep/goat/pig sector that dropped by 8.5% due to drastic fall in the demand of meat. Dairy production decreased by 6.6% due to disruption of the supply chain.
Impact on pricing
The impact assessment observed that farm gate prices of corn were not much significant. But the prices of allied sectors declined in the range of 2% to 18%. This decline was highest in the poultry sector (-17.8%), followed by horticulture (-7.6%), dairy (-5.6%), fisheries (-4.8%), ship/goat/pigs (-2.9%) respectively. The price impact was mainly due to supply disruption as a result of movement restrictions in the lockdown period. About 54% of the sample districts witnessed adverse impact on farm gate prices.
Impact on availability of inputs
Due to restriction on mobility of men and commodities, the availability of agricultural inputs like fertilisers, seeds, pesticides, fodder etc. was highly disturbed. The decline of seeds availability (-9.2%), fertilisers (-11.2%), pesticides (-9.8%), fodder (-10.8%) were not insignificant. At the all-India level, 54% of the sample districts were impacted.
Impact of agriculture marketing
The impact assessment noticed that local procurement centres were mostly open depending on the jurisdiction of the states. The local haats were closed in most cases due to strict lockdown restrictions. That created marketing problems for agricultural products and impacted farmers’ incomes.
Wastage of food in India
Government data show that wastage of corn under FCI is negligible. Government records indicate that in 2019-20, the government purchased 75.17 MT of food grains. Out of this only 1,930 tonnes were wasted (0.002%). It is reported that in 2017-18 and 2018-19, wastages were 0.003% and 0.006% respectively. But several ground reports (India Today, December, 2020) noticed that wastages were much higher. Reports on the basis of PIB, ICAR data indicated that wastage of cereals were to the tune of 4.65% to 5.99%, wastage of pulses were between 6.36% to 8.41%, wastage of oil seeds were between 3.08% to 9.96%, wastage of fruits and vegetables were between 4.58% to 15.88%, wastage of milk was around .92%, meat around 2.71% and wastage of poultry meat was around 6.74%. From these data, the report concludes that though India spends about `1.5 lakh crore as the annual cost of food security but at the same time, the annual cost of wastage of farm produce on the basis of 2016 data had been `92. 651 crore.
A recent estimate published on March 26, 2021, on the basis of United Nations’ FAO data states that wastage of food is not an Indian phenomenon only. Globally, 931 MT of food waste were generated in 2019. Out of this 61% came from households (nearly 570 MT), 26% from food services and 13% from retail. Indian households wasted around 68.7 MT of food in 2019.
What are the sources of food wastages?
Food wastages in India are driven by lapses in many stages of the supply chain. To combat such wastages, up-gradation of cold chain storage facilities, exports, transportation, processing facilities and marketing options are needed.