Resilience At Farm-Gate Amidst Covid-19 Pandemic

NeML Blog

Living within means comes naturally to a Smallholder Farmer (SHF) in India. It is estimated that almost 70% of Indian farmers are SHFs.  It is also true that Small Scale Enterprises (SSEs) account for the bulk of industrial production in the country.

The gritty and resilient entrepreneurs in these industries are accustomed to working in tough conditions. Both SSEs and SHFs are critical to sustain the growth of the country’s Gross Domestic Product (GDP).

The Covid-19 pandemic that has led to the toughest lockdown anywhere in the world has created significant hardships to the households, not to talk of the industry. This came as an unannounced shock for both SSEs and SHFs. SSEs, which significantly contribute to the $2.7 trillion Indian economy, had no choice but to down their shutters. An estimated 100 million workers in mining, construction, manufacturing and services sectors are rendered jobless due to the lockdown. The pain of an entrepreneur running an SSE cannot be expressed in words. We just hope that normalcy returns sooner than later.

SHFs did not have a choice to down their shutters. Farms were almost ready to be harvested when the announcement of a lockdown came. With every passing day of the lockdown, the crops were maturing to a golden hue for their harvest. Coupled with unseasonal rains in the Wheat and Pulses growing areas, the situation of farmers was getting tougher.  The famed golden fields of Wheat were getting wet and were not fit to be accepted at government procurement centres.  Such a wet crop cannot be moved to the home or a warehouse. With social distancing and restrictions on the movement of people, labour is scarcer than ever before.

The scene is no different for innovative, new cash crop growers. Exports dried up for Grapes. Not only did the international demand plummet, but the export prices crashed lower than the domestic prices. Even drying Grapes to Raisin fetched less than 50% of the export prices. The situation was no different for those growing flowers. Flower crops are input-intensive and need financial support to grow. Since flowers do not figure in essential commodities, not only did their domestic demand fall, but their exports dried up too. Valentine’s Day gave no solace for flower growers as the world was reeling under COVID-19. The domestic demand also dried up due to lockdown. Other high-value crops that faced similar fate include shrimp farming. The condition of those growing horticultural crops is no different. Prices of key crops like Bananas and Mangoes not only crashed at consumption centres but at farm-gate too.

While a bank would give moratorium, it would charge interest on the outstanding dues leading to increased finance costs. One full season has been wiped off with an uncertain future. When futures traders lost their money due to a crash in WTI Crude prices, it was widely covered by the press. However, the loss suffered by farmers has been more than ten times.

The government has responded with:

a) Supporting farmers through Minimum Support Prices (MSPs) and chip-in by procuring the agri produce from farmers at MSPs.

b) Supporting SSEs by exploring avenues to set up a special fund to pay for defaults of small-business loans to the tune of Rs.3 lakh crore.

Food Corporation of India (FCI) and National Agricultural Cooperative Marketing Federation of India (NAFED) are at the forefront of procurement of agri produce and companies like NCDEX e Markets Ltd. (NeML) are stepping up their support to ensure uninterrupted procurement services to farmers.

A silver lining has been the efforts by farmer groups and entities including co-operatives, Farmer Producer Companies (FPCs) and intermediary entities providing these services to directly reach the consumers. Housing Societies are receiving supplies from farm-gate through these farmer aggregators. What could not be achieved in years – a direct link between farmers and consumers, was achieved in less than four weeks of the lockdown. Thanks to SHFs and farmer aggregators, we are now getting our essential fresh produce supplies directly from the farms.

Regulated agricultural markets in India (APMC/Mandis) are likely to see their role redefined as an electronic market ecosystem where the app system is not taking a principle risk and e-commerce payers buy directly from farmers and resell. Government initiatives at the state level like Rashtriya e-Market Services (ReMS) in Karnataka and Electronic National Agricultural Market (eNAM) at the central government level are likely to make these markets more efficient.

Covid-19 is here to stay. Our farmers would surely beat the scare and would become better equipped for direct supplies to consumers than ever before. They would be maintaining the social distancing and other norms prescribed by the Government of India.

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