Agri Business

Agriculture in the time of Covid-19

Indra Shekhar Singh | Updated on April 03, 2020 Published on April 03, 2020

Our survival is dependant on agriculture and a good harvest depends on quality seeds delivered to farmers by the seed sector, both public and private. As we are in the midst the coronavirus crisis, it is imperative that good seeds and other farm inputs reach farmers in time for the kharif season.

India needs about 250 lakh quintals of seeds for the kharif season. The preparation of seeds happens between March and May. It begins from the farmers’ fields, where pollination etc are monitored by teams, and after harvest, drying and selection, the seeds are sent to processing plants. From there they are sent to labs for testing and, finally, are packaged for supply to the farmers.

Collective effort

This is a time-consuming process. The complete seed production ecosystem is complex and requires the help of allied sectors such as transport, testing labs and the packaging industry.

Meanwhile, in a recent statement, the International Seed Federation (ISF) quoted the European Food Safety Authority (EFSA), Centre for Disease Control and Prevention (CDC), and the Bundesinstitut für Risikobewertung (BfR), as saying that “there is currently no evidence that food, including seed, is a likely source or route of transmission of the virus. Transmission via surfaces which have recently been contaminated with the virus is, nonetheless, possible through smear infections. However, this is only likely to occur during a short period after contamination, due to the relatively low stability of the coronavirus in the environment.” To paraphrase, we have no evidence yet to say seeds are a gateway. But fear grows faster than Covid-19.

Govt efforts

The Centre and State governments have done a great job to allay the fear and quickly announced exemptions for the agriculture sector – seeds, labourers, and farm related activities. States such as Telangana and UP among others have been very proactive. Special packages have also been announced for different sectors. The railways have been roped in to ease transport logistics. ICAR has also issued an agro-advisory to maintain hygiene and social distancing. But all is not well in seed paradise.

Despite exemption orders, the seed and allied sectors are experiencing harassment and in some cases violence at the local levels. Seed hubs and production facilities are under pressure to shut and labourers and village level henchmen are using this opportunity to make unreasonable demands. Vigilantes in certain areas are blocking roads and not allowing the movement of labour. Transport services are not allowed to operate either.

Apart for higher wages, there is news of a higher percentage of inventory losses and rejections which is over and above rising transport costs. Within the seed sector, overall cost of production has spiked due to some of these factors and the small and medium companies are facing the brunt.

A requiem for S&M seed firms

India has a large segment of small and medium seed companies that working very hard to be competitive, and make ends meet. They often compartmentalise and outsource their work to various service providers, for example - drying, packaging or storing, etc. Many of them also take credit either from banks or private money lenders to run their operations. And even a slight spike in costs, could sound the death knell for their operations.

For example, if a S&M company has produced 1000 tonnes of seed, it needs to sell more than 85% to make a slight profit and if they sell 80 percent, they literally make no business at all. These companies work with such low margins. Plus if 15%-20% stock remains unsold, they have to bear high reprocessing, carrying costs, et al. which steal their profits away.

The distributor-retailer networks has also dried up due to corona fears, and hence companies are reporting low pre-booking numbers. As a result, prices of seeds sold by the retailers, may also shoot up. But the worst hit still are the companies that have borrowed money, privately. They will see mounting costs and interest rates, and one fears, they may be in some serious trouble.

Big and R&D are also suffering because of this crisis, but are more resilient. But COVID will have a major impact on the smaller companies, many of them are Indian.

Way out

The government needs to immediately step in stop harassment and violence by authorities. Despite the notification, police is forcing farm input shops - seeds, fertilisers, etc. to remain shut. A strict notification should be immediately issued to the Police.

Railways have a big role to play. First they should actively start transporting farm inputs - including seeds, etc. from seed hubs to all states and grain and fresh produce from the hinterland to the cities. The passenger coaches - AC and non-AC should be used to transport smaller quantities and possibly even perishables. This will bring additional revenue for the railways and also help tackle food security concerns.

The agri-input ecosystem is collapsed right now, so government should allow all sub-trades and manufacturing units associated with agri-inputs to function. For example, seed industry is also dependent on packaging and paper units, they should be allowed to function.

Finally, the government needs to roll out a special stimulus package for the seed industry with special focus for the S&M companies. This can include low-interest or interest free loans for the industry.

These are frightful times, where we need courage and truth as the lodestar. We need to make informed decisions so COVID-19 doesn’t evolve to threaten our agriculture and food supply.

The writer is Director, Policy and Outreach, National Seed Association of India. Viwes are personal

Published on April 03, 2020

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