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Context: Impact of COVID-19 pandemic on the agricultural sector.
The coronavirus lockdown will have an adverse effect on the agriculture sector in India. The nationwide lockdown has entrenched the economic system. The sector is facing alot of trouble with labourers and movement of goods. Even as agriculture produce is exempted from lockdown directives being an essential commodity, policemen are creating alot of problems for the sector.
This brings us to the questions of agriculture sector amid COVID-19. In this article, we will explain the below:
- What is the condition of agricultural sector in India?
- What are the likely impacts of lockdown on the agriculture sector?
- What can government do to reduce the farm distress?
What is the condition of the agricultural sector in India?
- Real rural wages growth has fallen to an all-time-low of minus 3.8% in September, further confirming the deep structural slowdown in ‘Bharat’ that is also evidenced in sluggish fast-moving consumer goods (FMCG) and two-wheeler sales.
- The daily wage rate in rural India for male workers across 25 occupations (12 agricultural and 13 non-agricultural) averaged Rs 331.29 during September 2019, as per field data compiled by the Labour Bureau.
- This was 3.42% higher than the corresponding level for the same month of 2018. But in “real” terms, after adjusting for inflation based on the all-India consumer price index (CPI) for rural labourers, the wage increase worked out to minus 3.77% year-on-year.
What are the likely impacts of lockdown on the agriculture sector?
- Double Hit Due to Lockdown: Indian agriculture sector, which suffered recently due to uneven monsoon, will face another hit due to disruptions from the coronavirus. As Rabi harvest season approaches, farmers worry about their standing crops. Farmers growing wheat, mustard and pulses already complained about their crops damage due to untimely and heavy rainfall recently. This led to farmers fixing their crops but amid Coronavirus lockdown most of the labourers available fled to their homes.
- Labourers Fleeing to their Homes: As the restriction on movement of goods continues amid the lockdown, the farmers are likely to feel the pinch in their income. The government has also received reports on potatoes lying harvested on fields due to a shortage of labour.
- Lockdown Hampers Movement of Goods: Coronavirus lockdown has impacted the supply chain of agricultural commodities. By taking a toll on the loading and unloading of agricultural produce. Also, the lockdown has hampered the movement of trucks carrying essential commodities. Several cold storage and warehouse owners complained regarding the dearth of laborers. Unwillingness to work fearing police beating, many labourers are staying home or leaving for their hometown.
- Rural Unemployment: The lockdown causes the laborers going back to villages can cause a sudden rise in rural unemployment levels.
- Further, the poultry, fisheries and buffalo meat sectors are facing challenges. Due to spreading rumors about COVID-19 and meat consumption.
- In all, the COVID-19 caused clampdown has caused disruption and will eventually lead to a dip in farmers income.
- Impact on Horticulture products: With breakdown of supply chains and lack of cold storage facilities, the farmers of horticulture products are facing the burnts.
- Decilne in agricultural prices: There are already signs of a collapse in agricultural prices, which predates the outbreak of the pandemic. The food price index of the Food and Agricultural Organization (FAO), which was showing a rising trend in food prices until January 2020, reported a 1% decline in prices month-on-month in February 2020. This is likely to worsen further, particularly for cash crops.
What can government do to reduce the farm distress?
- Government agri-research body ICAR is assessing the impact of Covid-19 lockdown on agriculture and allied sectors and taking measures to minimise its effect on the country’s food security.
- Food Corporation of India (FCI) reporting 77 million tonnes of cereals in stocks as against the buffer requirement of 21 million tonnes as on April 1. Also, the Central government has already announced that for the next three months, 5 kg of free grains will be distributed in addition to what people are entitled to under the National Food Security Act. Thus, it is time for the government to release the food stocks through the public distribution system at the earliest.
- The state is expected to intervene and assure remunerative incomes to farmers. This can be done by ensuring reduction in the input costs through existing schemes of subsidies such as the fertilizer subsidy and through price reduction in petrol/diesel meant for agricultural purposes.
- The immediate short-term solution can be compensating farmers for the loss of income through the PM-KISAN scheme. Though the only announcement in this regard is the disbursal of the first installment of the transfer which is due in April.
India is an agricultural country with more than 50% of people directly or indirectly involved in the sector. The lockdown amid COVID-19 has severly hit the sector at the peak of harvesting season. The government should ensure that the bread-earners of the nation can harvest and sell their produce without much hastle and with all the precautionary measures amid COVID-19 pandemic. While income transfers may not be the best way of supporting the agricultural sector at times like these, they are the best available instruments to raise rural incomes and create demand.