Covid-19 Crisis: Farming Needs Urgent Action
- The Covid-19 crisis is likely to pose a serious challenge to agriculture and rural economy.
- Immediate supply-chain disruptions could translate into demand contraction later in the rural economy, which could have an adverse Impact on Economic Growth.
Covid-19 Crisis: Implications on Farming:
- In the short run (before the lockdown ends), the problems are twofold. Farmers are unable to harvest and market Rabi crops (wheat, gram, mustard), and also fruits and vegetables.
- This is because of non-availability of labour and machinery for harvesting, lack of transport facilities and closure of markets/mandis.
- They are unable to use cold storages for crops like potato because of closure of cold storages and short supply of ammonia needed for cold storages.
- It can lead to crops wasting away on the field, local distress sales and lower prices for farmers.
- The Second Problem is for Agricultural Labour (55% of Total Agricultural Workers).
- This segment is unable to earn a living because of movement restrictions and lack of adequate income and safety Nets.
- But the problems will not disappear after the lockdown. Immediately upon its lifting, large-scale arrivals are very likely in the markets.
- This could result in sudden depression of wholesale prices due to excess supply, which could adversely Affect Farmers.
- Farmers’ incomes in the Rabi season are likely to be much lower owing to likely crop losses and the likely depression of prices due to sudden rush in agricultural markets.
- Farm labourers are certain to face lower earnings because of movement restrictions and low agricultural activity. A slowdown in the construction sector, which absorbs majority of agricultural labour in lean seasons, will aggravate this Crisis
- Postponement of procurement is needed to avoid overcrowding of FCI centres. To this end, higher MSP may be provided for delayed sales to FCI.
- To make immediate direct payments to farmers and labourers. The government has announced frontloading of Rs 2,000 under PM-Kisan. This amount may be increased to Rs 6,000.
- Similarly, a payment of Rs 2,000 may be made immediately to all active MGNREGA job Card Holders.
- The crisis also provides an opportunity to usher in policy reforms. Moving away from price and input subsidy-based approach to direct income-based approach is the First One.
- When the policy objective is to ensure minimum income for farmers and rural workers, direct income transfer may be a better policy instrument than indirect instruments such as output price support or input subsidies
- A well-functioning eNAM could have helped not only in better price discovery for farmers, but also in maintaining Physical Distance.
Source: Financial Express