Amidst the COVID-19 crisis, India has announced a nationwide 21-day lockdown, shutting down all businesses except essential services. The government has assured that the supply of food items and other necessities won’t be hindered during this period. While social distancing has been adopted as a measure to reduce the rate of spread of COVID-19, experts including the World Health Organisation (WHO) have observed that countries like India cannot afford to have a long lockdown as it may create a severe economic crisis. As a result, a large share of the population may be exposed to hunger, malnutrition, exodus, destitution and other problems which may be more harmful than the disease itself. However, to make the situation less panicky, both the Centre and state governments have to act quickly on a number of measures such as availability of food, necessary items, medicines, financial help, shelter to the needy and smooth transition of migrant workers.
Food availability during lockdown
One of the biggest challenges is to keep the delivery of food items intact at existing/lower prices and creating the capacity of masses to afford them. The Centre has announced a relief package of Rs 1.7 lakh crore through various ongoing schemes and programmes such as direct cash transfer through PM Kisan, pension to widows, Jan Dhan Yojana and three-month payment to the cardholders of MGNREGA. However, these measures are not enough to solve the problem of food affordability at the time when the middle class is hoarding for months and due to shortage in the markets, prices are going way higher for necessities. So the problem with government is not to address only the supply-side problems but also demand-side issues.
To keep things going in the right direction, clear and quick policy response is needed to maintain the availability of food and also ensure the income of rural masses. To start with, these measures will require timely planning for the forthcoming Rabi harvest and Kharif sowing. However, there is a serious lack in devising the quick policy and communication for handling the harvest of the Rabi crop and preparation for the Kharif season during the time of lockdown. Without any clear communication to the farmer community, both the Union and state governments are at high risk of facing food shortages and may find it difficult to keep the prices at affordable rates for the common masses.
Emerging problems at the outset of rabi harvest
Wheat is the major Rabi crop, which is expected to be harvested after April 10. The MSPs for six Rabi crops, including wheat and mustard, were announced on October 23, 2019. However, farmers are worried about the timely procurement of their harvest given the present situation. Currently, the farmers are struggling with two-fold problems namely, conducting harvest operations and post-harvest management.
Let us first discuss the problems related to pre-harvest operations. Farmers require labour, machinery and other resources such as diesel for harvesting activities. The labour shortage will be huge in this Rabi season, both due to the fear of the virus and the restrictions imposed during the lockdown.
In Punjab, a vegetable farmer of Ludhiana district has reported that peas in 10 acres have rotten as he was unable to harvest the crop on time. Similar problems have been faced by a farmer of Sri-Gangangar district of Rajasthan. He is struggling to find labour to harvest mustard. Machinery and diesel are required for harvesting activities such as cutting and threshing. Farmers require credit to pay wages, and for machinery and diesel. As most of the farmers rely on commission agents and traders for credit needs, they are finding it really hard to get sufficient funds from them. Farmers in the states of Gujarat, Rajasthan and Punjab have reported that commission agents are not ready to give them credit as they cannot take the risk of repayments during the shutdown. So, at this juncture, even if the government will assure to procure the entire produce (as the Punjab government has announced to start the procurement of wheat early next month), the farmers may make a deal in advance with traders/commission agents for selling the produce at lower than MSPs as against credit support.
The second problem related to the post-harvest activities is in the form of managing the produce and selling through mandis. Farmers cannot afford storage for their surplus produce and wait for the government to buy at MSP in mandis. Farmers as well as the rural population as a whole also require money to buy necessities during the lockdown. In such a situation, farmers may opt for easy selling but at lower prices to the traders/money lenders to get the funds without any further delay.
Implications for dairy farming
The implications of labour and credit shortages are not limited to the crop sector but also on the dairy farming and livestock sector. The limited availability of credit, labour and machinery are hindering the integrated harvest management. The residue of rabi crops, especially from wheat, is widely used for feeding the cattle. Farmers from Punjab have reported that the price of husk in 2019 was around Rs 700 per quintal, which used to be an additional source of income for farmers as well as a rich source for cattle feed. The current scenario may lead to a decline in the quantity of cattle feed and also in absolute income of the farmers. The price of feed may also increase. The implication of this development may lead to a rise in the price of milk and related products.
What should be the immediate solutions?
The depressed sale of Rabi crops, especially wheat, will affect both supply-side as well as demand-side management. It may lead to lower availability of foodgrain stocks in the government’s reserves and it may also affect the affordability of masses during the lockdown. The depressed sale through traders and money lenders may lead to hoarding, especially at this time when there are huge implications of food shortage. This situation may bring unrest to vulnerable sections who have already fallen prey due to loss of livelihood and employment.
So, the depressed sale of crops should be immediately addressed. For instance, despite the announced MSP for mustard at Rs 4,425 per quintal, the farmers used to sell it around at Rs 3,200 per quintal to private traders even during the normal years. The government should procure all Rabi crops from all the farmers and ensure the MSP. Since the lockdown has severely affected the logistics, the government should also ensure the transportation and handling support at the village level. Enriching the food stocks will then definitely address the problems of affordability and regular supply.
Given the economic situation and the near future prospects of demand, it may be expected that the demand for cash crops would be lower whereas foodgrains would be preferred more. Therefore, the policies should be directed towards producing more foodgrain crops in the Kharif season than cash crops.
Gurpreet Singh is with the Centre for Budget and Governance Accountability. The views expressed in this piece are those of the author, and don’t necessarily reflect the position of CBGA.