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Rural sector stressed as Covid-19 disrupts supplies, spikes unemployment

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Deepak Sharma, a potato farmer from Sambhal district in Uttar Pradesh, is a worried man.

Just when he was trying to recover from the damage caused to his standing potato crop due to unseasonal rains in late January, the Covid-19 crisis and the nationwide lockdown that followed it has buried his second harvest as well.

“During the past three months, this is the second big blow to my potato crop and this time the situation is grim because I don’t have any window left for replanting which I could do after January damage. In the absence of labour, I will have to simply let the crop rot in my field,” Sharma says over telephone.

He has cultivated potatoes in almost 15 acres of land of which the harvest in around three acres is standing in the field while the rest has been shifted to a nearby cold storage,

“Due to the Covid-19 clampdown, labourers aren't available to either harvest the crop or move it from warehouses. Even if a few workers are somehow convinced to load the trucks, the mandis are shut and transporters aren’t willing to move the goods for fear of police action,” Sharma said.

He said the situation is more acute in the major potato-growing districts of Firozabad and Agra in UP, as the bulk of the new crop is standing in the fields for want of labour.

From a high of almost Rs 20 a kilogram, potato prices at the farm-gate level have crashed to almost Rs 12-13 a kg, as there is simply no mode of harvesting the crop.

Almost 900-kilometers away, Bhagwaan Singh Meena, a young farmer leader from Madhya Pradesh is concerned about how farmers in his state will sow the summer-moong crop as none of the shops selling seeds, fertilisers and other vital inputs are open due to Covid-19.

He fears the standing wheat, chana and mustard crop in his field and on his neighbours' farms could get damaged as the mandis have stopped operating.

“Lots of farm machines like combines and harvesters are lying stranded on the highways as there is no one to operate them,”” Meena said.

For millions of farmers like Deepak Sharma and Bhagwaan Meena, the Covid-19 lockdown could not have come a worse time.

Just when the rabi harvest was picking up pace for many crops, first the unseasonal rains in some parts and then the clampdown due to Covid-19 disturbed the distribution channels to an extent that India’s much-talked about rural recovery now looks extremely shaky if farm incomes dip sharply.

In several places, cultivators have simply started dumping their produce in the absence of buyers, while in other places, they are leaving it to rot in the fields.

“To me, more than production, it is the breakdown of distribution channels that will impact the rural economy harder unless clear and transparent guidelines are immediately passed on to the district and local level administration on the movement of essential goods and supplies,” said Madan Sabnavis, chief economist at CARE Ratings.

He said the 2019-20 GVA for agriculture and allied activities at constant prices, projected at 3.7 per cent and up from 2.4 per cent in 2018-19, might not see a big change as production has been good, but what will be impacted is the growth in farmers’ income.

“A bigger problem is rural labour, which is coming back in droves from the cities due to stoppage of work, and if farm fields don’t absorb them it could lead to sharp jump in rural unemployment and crisis,” Sabnavis said.

According to a Reuters report, more than half of India's 1.3 billion people depend on agriculture for their livelihoods, so profitable harvests tend to boost aggregate consumption, while smaller crops or low prices can cause a slowdown.

“We would like to urge the Government that potential measures put in place to promote “social distancing”, secure borders and guard against the spread of COVID-19 should not unintentionally cause disruption in the import, production, transport and availability of crop protection products and other agricultural inputs in the country,” said Asitava Sen, Chief Executive Officer, CropLife India in a statement said, highlighting another dimension of the crisis that can have bearing on the farm sector.

The Jharkhand Janadhikaar Manch, a social organisation working among tribals and the poor, said that to address the rural distress issues, the government should set up community kitchens at urban, semi-urban and block-level public centres to provide free cooked food and dry rations to anyone in need.

It said free meals should be made available to all patients and to functionaries at all health centres, while cooked food and dry rations comprising 6 eggs a week to children (in school and Anganwadis), pregnant and lactating mothers should be provided in rural areas. This is over and above immediately providing paid leave or unemployment allowance to all NREGA workers and registered workers, and clearing all pending payments.

Poultry sector 

The rural scenario also looks fragile because of the potential harm to the country’s poultry, fisheries and buffalo meat sectors over unfounded rumours of Covid-19 spreading due to egg and meat consumption.

The livestock sector contributes nearly 40 per cent to GVA of agriculture and allied activities.

In the last few weeks, millions of chicken and eggs have been destroyed by the poultry sector due to a sharp drop in demand over rumours surrounding Covid-19.

Weak demand from the poultry sector has resulted in a sharp decline in feed prices too, with both soybean and maize prices falling by nearly 25 per cent in the past two months.

The poultry market consumes around half of soybean and maize production in India.

The cost of production of chicken in India is pegged at Rs 75­80 per kg. The average price at which chicken is selling stands at Rs 15 per kg from the farms.

Top industry players said culling had also been undertaken by farmers since it is impossible for them to continue feeding birds indefinitely.

Industry estimates peg the weight of birds now around three kg each, which is a 50 per cent jump over the weight of birds reported earlier.

Typically, the poultry market works on quick turnaround cycles to avoid being stuck with old stock. Business cycles, however, have been thrown out of gear due to the virus.

In the case of buffalo meat exports have slumped due to Covid-19 scare in major exporting countries like Vietnam.

GVA for agriculture and allied activities
Year Constant Prices (2011-12) Current Prices Inflation (proxy for farm prices)
11.52% 1.50% 10.02%
2013-14 14.99% 5.60% 9.39%
2014-15 -0.20% 8.68% 8.80%
0.60% 6.29% 5.64%
6.30% 11.60% 5.31%
2017-18 3.40% 4.50% 1.10%
2018-19 2.40% 4.50% 2.10%
2019-20* 3.70% 11.30% 8.00%
*As per second advanced estimate; Source: CSO

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