India is on the brink of an economic disaster as the humanitarian disaster of the Covid-19 pandemic unfolds. The country’s agricultural sector is facing the real heat of the 21-day national closure, which is disrupting the entire supply chain for agricultural products. An unexpected exodus of migrant farm workers from many parts of the country has left many farmers destitute, causing a labor shortage and interrupting harvesting, marketing and supply operations.
Aware of the economic loss and the fact that preparations for the harvest season would be affected due to the blockage, the central government intervened quickly by lifting restrictions on essential services related to agricultural activities. With the aim of putting money in the hands of farmers and, at the same time, ensuring that they are not hungry, the Center announced an immediate transfer of 2,000 pounds sterling to all eligible farm households as part of the PM-Kisan program. Will it be enough to cover the losses that farmers are currently facing as a result of the coronavirus shutdown?
State of Agriculture
The lockdown occurred in the middle of the crucial harvest season for rabi crops, shattering the hopes of many farmers who lost their crops due to excessive rain and drought during the kharif season and were waiting for this rabi crop to repay their loans. For farmers who are harvesting wheat, gram, mustard and potato in Madhya Pradesh, Rajasthan, Uttar Pradesh, Punjab and Gujarat, the flight of migrant workers has sowed the trouble.
Despite the Centre’s decision to exempt essential services related to the agricultural sector from foreclosure, farmers are still struggling to sell their harvested produce due to lack of transportation and the closure of most markets. However, some state governments have come forward to take immediate action to deal with the crisis. In Gujarat, all APMCs have been instructed to resume auctions to keep grain and legume supply chains uninterrupted, while the Punjab government has issued a notification on potatoes, authorizing their harvest and transport .
Frustrated with their inability to sell their harvested agricultural products, farmers who produce perishable goods have once again resorted to dumping their products on roads and sewers or feeding livestock. Dairy farmers in Assam and Karnataka dump thousands of liters of milk into rivers and streams every day, while farmers in Kolar district throw their grapes ready for harvest in compost pits.
In response, the Karnataka government decided to purchase the surplus milk purchased by the Karnataka Milk Federation and distribute it free of charge to people living in slums and to the poor, through local municipal authorities. The agricultural sector is undoubtedly looking at a massive and completely new agricultural crisis.
Besieged agricultural sector
For the past two decades, farmers have been in distress, with burgeoning crop costs, low compensation for growing crops, widespread agricultural suicides and debt. The poor remuneration of the crop continues today to trigger suicides of farmers. Under normal market conditions, farmers’ incomes and consumer spending remain practically the same today, offering them little hope of a decent livelihood.
Poor markets and purchasing infrastructure, MSPs not being set according to the cost of cultivation, the serious limitation of the granting of agricultural credits and distress sales, especially during the bumper harvest, continue play a decisive role in negating a reasonable price for farmers’ products.
The annual storm of floods and drought has ravaged the agricultural sector, leaving farmers unable to manage their growing cycles, threatening the country’s agricultural incomes and food security. The ongoing coronavirus shutdown has added to existing woes, pushing farmers to the brink of despair.
What needs to be done
At this critical time, urgent and immediate action must be taken to ensure that our agricultural markets and the millions of lives that depend on them are secure and supported as much as possible.
First, farmers should be allowed to harvest and sell the harvested crops without restrictions from any agency. The relief program announced for farmers under PM-Kisan is certainly a welcome step that will meet their immediate cash needs. However, the size of the stimulus is insignificant and is unlikely to be of much use in a medical emergency. It would have been appropriate for the PM-Kisan payment to have been equal to the expected wage rate for MGNREGS workers for another three months, which will be approximately ₹ 6,000 per month. Any loss due to crop or market disruption should be covered by PM Fasal Bima Yojana and the benefit should be extended to all farmers, including those who are not registered.
At a time when the supply of harvested products is paralyzed, one possible solution is to allow and encourage decentralized supply at the farm level. Telangana has announced such a program in which the entire paddy and maize crop will be purchased from farmers at support prices through village-level shopping centers. States such as Madhya Pradesh have used SMS-based pre-registration systems with enough success in the past to try to regulate arrivals and manage logistics. This should be rolled out and further strengthened everywhere.
It is also time for the Center / States to consider the implementation of the e-NAM (national electronic agriculture market), allowing farmers or farmers’ organizations to sell products on the farm. FOs can play the role of aggregating the farmers’ harvest, which could then be raised by the Center or public supply organizations. Farmers who grow horticultural crops face greater problems than others in harvesting / selling their crops and, therefore, the government can initiate a mobile supply of these crops with the help of NAFED.
Against the RBI’s announcement of a three-month moratorium on loan repayment, which is only a temporary relief for farmers, a moratorium for a period of one year, subject to review after review by the pandemic, would be better. Given the seriousness of the supply chain disruptions due to the freeze, no interest should be charged on agricultural loans for at least six months.
The imputation of any cessation, levy and tax to farmers on the market can also be interrupted for at least six months. Only these agreements can protect our vast system of interconnected agricultural production and marketing, prevent the danger of food insecurity and protect the interests of farmers.
Narayanamoorthy is a former (official) member of the CACP. Alli is a senior assistant professor of economics, Department of Social Sciences, Vellore Institute of Technology. The views are personal