Labour & logistics issues leave farmers in despair

Agriculture is the primary source of livelihood for close to 58 per cent of India's population. Out of which, close to 85 per cent of households are small and marginal farmers, of which a significant chunk are landless farm laborers. The lockdown has resulted in huge disruptions in the first two weeks of April, with a sharp decline in arrivals of agricultural commodities. As per CRISIL research, there are four primary reasons behind this - delayed rabi harvest, labour shortage, lack of transport, and reduced mandi operations. Some farmers are also hoarding grains so as to sell them when the situation normalises.

In quantitative terms, Rabi crops have seen a 98% decline while the prices have risen by 29% in the first two weeks of April 2020. As per CRISIL, delayed Rabi harvest coupled with lack of labour availability has impacted arrivals at mandi. The Impact will be more severe on large landholding states of Punjab and Haryana when compared to others. As per the research report, going forward, bumper crop output, lower industrial demand and limited exports to exert downward pressure on wheat prices.

When it comes to paddy and grains, the supply as well as prices have seen a dip in the first two weeks of April 2020. CRISIL research states that arrivals have fallen as a result of restrictions on inter-state movement of goods and non-availability of logistics partners. The fall in prices of coarse grains is a result of decline in demand by industrial and animal/poultry feed.

While the supply of Pulses and Oilseeds has reduced by 93% in the first two weeks of April, prices have surged by 28%. Higher demand for pulses could be attributed to hoarding amid the lockdown and limited availability of fruits and vegetables. The weak supply has led to a surge in mandi prices.

The supply as well as prices of Fibre crop have declined by 99% & 31% respectively in the first two weeks of April 2020. As per CRISIL, mandi prices have logged a sharp decline despite significantly lower market arrivals. Which can be attributed to lower domestic and export demand for cotton crop.

In a season of mangoes and grapes, lockdown has left tastebuds craving. As per CRISIL, fruits have seen a 85% drop in arrivals at mandi. The prices too have taken a 95% hit. The reason for declining mandi prices is lower exports of seasonal crops such as mango and grapes and limited domestic off-take amid the lockdown.

75% less vegetables reached mandi in first two weeks of April 2020 as compared to April last year. However the prices of vegetables have shot up by 83% as arrivals have plunged due to restricted market access to farmers. Amid this turmoil, intermediaries are profiting as middlemen are estimated to be procuring at much lower prices from farmers given their limited bargaining power due to perishable nature of commodities.