In India and around the world, COVID-19 has upended life as usual. Governments have sprung into action to protect the lives of people with the disease, safeguarding healthcare and frontline workers and containing the spread of the disease. The Indian government’s order to lock down the country to rein in the pandemic has already had major economic and social impacts, particularly for informal sector workers whose livelihoods, health, safety, and food security have been compromised.
The situation is particularly dire for smallholder farmers, who account for over 86% of the farmer population in India and contribute significantly to the nation’s food security and productivity. Due to present restrictions, not only have they lost their farm income, but also their daily wage incomes.
At present, restrictions on human and vehicular movement have given rise to a slew of short-term supply and demand issues in the agricultural system. In terms of supply, India is currently in the rabi crop season, and the fields are full of wheat, maize and other commodity crops ready to be harvested and taken to the mandis for procurement. The migration of farm labour and lack of access to farm machinery due to transport restrictions means that in the most immediate sense, harvest is at risk. The lack of access to markets, especially in a situation where most wholesale markets are shut down, means that farmers are unable to sell even the products that they’re able to harvest. This is a particularly tough situation for farmers growing perishable commodities such as horticulture crops, many of whom are having to dump their bounty due to the lack of buyers and post-harvest storage facilities. On the demand side, the situation is equally bleak, with several short and medium-term challenges. There has been significant demand contraction due to changes in consumer behavior, the shutdown of large-scale consumers such as processing and hospitality industries, and global demand and export reduction.
While the government is making efforts to address the immediate bottlenecks and allow smoother movement, significant supply chain disruptions have already occurred. And with demand disruptions expected to last for the foreseeable future, farmer economics will be devastated. Most small-scale and subsistence-level farmers have limited assets and savings to fall back on during times of crisis and an economic shock of this scale is likely to impact not just their present livelihoods, but also their future crop cycles.
COVID-19’s impact on the agricultural sector will have far-reaching effects beyond food-security, across industries, and on our economy as a whole. Governments, businesses, and non-profits need to respond to the challenges with a foresight to protect farmer livelihoods in the medium to long term and prevent cataclysm in our agricultural systems in the future. The Government’s immediate crisis response is focused on ensuring food supply, but significant efforts need to be made to minimize supply chain disruptions and to enable smooth movement and downstream processing to avoid long-term economic consequences that will be hard to reverse.
Farmer Producer Organisations have emerged as viable mediums for TechnoServe’s crisis response relief work across projects, and can be leveraged at scale by governments and non-profit organizations across the country to help circumvent logistical bottlenecks, address immediate farmer issues, provide access to markets and help plan for the next sowing season. Concurrently, immediate policy action needs to prevent demand shrinkage. While the demand for certain processed foods has increased significantly, some markets have crashed, particularly those associated with fresh produce. Smooth supply of raw materials and functioning of processing units needs to be facilitated to prevent demand shrinkage, not just for commodity crops but also for high-value crops.
These are unprecedented times, and governments, businesses, civil society, and people are still learning how to keep up with rapidly evolving scenarios. The future is uncertain with the influx of new information every day, but what is clear is that the economic impact of COVID-19 will last longer than the pandemic itself. As individual responses evolve, how our economic future develops depends on the extent of co-ordination between various sectors. Governments, private sectors, and development institutions must develop a new framework of collaboration and come together in innovative ways to engage in reconstruction efforts, mitigate the economic disruption and formulate a post-COVID world while ensuring our farmer livelihoods and food systems are preserved.
TechnoServe in India presently works with over 60,000 farmers, in 40 Farmer Producer Organizations across 6 states and 24 districts in India, and is supporting them through the COVID-19 crisis and lockdown period. Utilizing its decades of front-line agricultural value chain and local economic development experience, TechnoServe has published a report on “Assessing the Degree of COVID19 impact on Farming Clusters in India, and Suggested Response“, which dives deeper into the different scenarios of COVID-19’s spread across India, its macroeconomic implications. The report includes a 2-year projection to assess impact on agricultural value, demand, supply and farmer economics over time, an assessment of vulnerability of farming clusters across the country and recommended intervention strategies.
The report forecasts are directional and will provide high-level guidance and actionable insights to inform interventions and policies, which will be relevant for government stakeholders, corporates, NGOs, intermediaries and anyone else looking to engage in preserving India’s agricultural systems.