The report says its analysis shows that while the purchase of wheat is still close to the Minimum Support Price (MSP), that of other crops such as mustard and gram is ruling below the state-mandated benchmark. “The State needs to proactively intervene so that farmers don’t suffer,” the report said.
In the case of perishable items like fruits and vegetables, CII said high price volatility is distressing farmers growing these crops.
It said that in the case of perishables another problem is that there has been a 20-25 per cent drop in demand from bulk consumers such as hotels and restaurants, which isn’t being offset from rising domestic demand.
“Demand from consumers for staples like tomato, onion, potato is increasing however, it is not able to offset the surplus much,” the report said.
Welcoming the Centre’s announcement of additional working capital through Nabard for crop loans, the CII report said food processing sector also has the capacity to consume the surplus, but this industry is presently challenged in terms of capacity utilisation from last year due to poor offtake and working capital.
“If the scenario continues demand from processors will fall which will have an adverse impact on uptake of the surplus produce available with farmers,” the industry group said.
It said that additional working capital loans should be provided to food processors to purchase raw material.
In case of retailers of high value crops such as cherries and litchies, the CII report said that they are facing difficulties in transporting as production is highly localized.
“As production of such high value crops is highly localized pan Indian movement has become costly and the logistics constraint has resulted in escalating their transportation charges,” the report said, while farmers are suffering in the absence of offtake of their crop.
“This is particularly the case for the hill states of Himanchal and Uttarakhand where in the local demand is negligible given the complete failure of the tourist season,” the report said.
“Going forward, to ensure remunerative prices to the farmers it is also imperative that efforts being made to streamline logistics are more focussed on perishables,” the report said.
It also added that Centre’s target of achieving a record 298.3 million tons of food grains production in 20-21 will largely depend on normalcy in the supply chains of agriculture inputs.
Giving the example of tractors, the report said that its manufacturing is under immense pressure as around 50 per cent of the manufacturing facilities are lying in the containment zones.
“As per tractor makers, manufacturing is running at bare 3-5 per cent, that too on available inventory, and if the scenario continues the sales opportunity in the monsoon window (June) will also be missed hugely impacting the revenue of the
segment,” the report said.
The other key concern facing the farm mechanization sector is the liquidity crunch, CII said.
“This is primarily owing to challenges in retail finance with banks not very forth coming in lending at present,” CII said
The report said that as companies ramp up operations, there is an urgent need to enhance the labour footprint in Green and Orange Zones up to 75 per cent of original levels, in order to support manufacturing or else things won’t move.