How the second Covid wave has affected commodities’ supply chain

From cardamom to coffee, potatoes to pulses, tea to turmeric and pepper to poultry items, the second wave of the Covid-19 pandemic seems to have affected the commodities supply chain.

These commodities were affected to some extent during the first wave last year but then, the rural areas were mostly untouched. But this time around, people in the rural areas also have been affected, throwing spanner in the works of the commodities supply chain.

“The concern this year is rural areas are witnessing Covid cases unlike last year,” said Giriraj Singhania, Managing Director of Raipur-based Shivalik Engineering Industries Ltd. His firm supplies components to tractor and automobile firms.

The biggest challenge with regard to commodities is the supply-chain bottlenecks that had affected exports of plantation commodities last year.

“We fear that this issue will get further aggravated in the second wave of Covid,” said Prashant Bhansali, President of United Planters’ Association of Southern India (Upasi).

Among the first to feel the effect of the second wave of Covid have been commodities such as cardamom, pepper and poultry items.

“Poultry meat was the first to be affected as many States announced shutdowns during Sundays and weekends. Typically, Sunday sales of broiler meat is equal to the sales on the other six days of the week, put together” said a Chennai-based broiler meat supplier to retail units.

Tough period ahead

The situation is set to get more grim with many States starting from Tamil Nadu to Punjab joining other States announcing various lockdown measures since last week.

“The situation is better than last year with regard to transportation. Last year, transportation, too, came to a halt. This year, that is not happening. So, products can go from one State to the other or from one city to another,” said Ashish Guru, Senior Vice-President, Federation of Cold Storage Association of India (FCSAI).

Vijay Setia, former president of All India Rice Exporters Association (AIREA) and a rice exporter, said that people have been managing till now and any effect has been “insignificant.

But there are others who are concerned over the movements due to lockdowns. The poultry sector, in particular, is irked that restrictions on people's and vehicular movements in different States and overall negative sentiment have impacted the industry in Andhra Pradesh, Tamil Nadu, Kerala and Telangana.

Movements hit

Lockdowns and night curfews in Maharashtra, Karnataka and Telangana besides various other States have disrupted the supply chain network of various commodities, including poultry products, limiting suppliers’ ability to transport consignments particularly up North from the South..

"The window for movement in Maharashtra is just between 8 am to 11 am. You can't transport the goods in the night," N Prakash, owner of an egg business, told Business Line.

Ravish Hegde, General Manager of Totagars’ Cooperative Sale Society (TSS) Ltd, a farm cooperative from Sirsi in Karnataka’s Uttara Kannada district, said that buyers are not buying the commodity at some centres due to lockdowns and restrictions.

“Orders have already been made and they are being transported, but no fresh booking is happening,” he said.

Nearly 25 per cent of the transportation, especially in arecanut, has been affected. For example, the Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd is somehow managing the situation through six of its approved transporters.

The movement restrictions from 6 am to 10 pm in arecanut-procuring centres has also had an impact on procurement and processing to some extent. Member-growers who want to bring the commodity to the procurement centres face difficulty in hiring vehicles.

There are also limitations on the number of growers bringing the produce to the centres.

Supplies have been badly affected in consuming centres depending on Kerala as cardamom movement between wholesale and retail markets has been hit due to restrictions. Delhi is the major wholesale market for cardamom and the imposition of lockdown has impacted the dispatch from the auction centre at Bodinayakanur, said P.C. Punnoose, CEO, CPMCS Ltd.

APMCs closure

The shutdowns have led to agricultural produce marketing committee (APMC) yards not functioning in various States. One solace, though, for growers is that procurement of foodgrains for buffer stocks that ensure payment of minimum support price (MSP) to growers continues unhindered.

This has resulted in record procurement of wheat and paddy by the Food Corporation of India and other State agencies. But, APMC yards in many States starting from Uttar Pradesh to Karnataka down south have been shut.

Of the 163 APMC yards in Karnataka, only some 38 reported trading activity amidst thin volumes last week, as the State had imposed partial lockdown to contain the spread of covid.

No APMC yard has been functional in Madhya Pradesh over the past month, says Ajay Agarwal, a potato wholesale trader in Indore. “Sales of vegetables like potatoes are still taking place outside of APMC,” he said.

Stockists’ fear

The shutdown and restrictions on many States has put stockists on the backfoot. “Turmeric markets in Andhra Pradesh, Maharashtra and Tamil Nadu are not seeing any demand. There are no buyers since they fear that they may not be able to send it to the stockists,” said Amrutlal Kataria, a trader in Nizamabad.

This is because stockists are not sure if kirana or grocery shops which buy turmeric or other commodities from them would be fully functional or have the time to take the produce.

Such fears are affecting other sectors such as coffee. Though coffee curing works have been permitted to operate, many of them have decided to close operations from April 8 as nobody wants to take risk, said Ramesh Rajah, President of the Coffee Exporters Association.

HM Krishna Kumar, Managing Director of Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd, said that though there is demand for arecanut in consuming centres, the situation is not conducive in view of restrictions at those places.

The shutting down of outlets by rubber dealers has affected availability of the raw material in the market, despite sufficient stock with farmers.

Woes in Kerala

In Kerala, a mini lockdown has resulted in lower arrivals of pepper at the trading centre in Kochi. This could worsen with the announcement of a full lockdown from Saturday for eight days. Pepper procurement has also been hit as spices dealers in primary markets had to close down their outlets.

In cities such as Kochi, buyers of tea and natural rubber anticipate a delay in deliveries in the short-term following the announcement of full lockdown in Kerala and other States.

Enforcing authorities could start questioning the movement of trucks, while taking delivery from the warehouses, said Venkitraman Anand, CEO, Harrisons Malayalam Ltd.

But the tea trade is not facing any delays as of now in movement of the beverage that is purchased by the buyers at the Kochi, Coonoor and Coimbatore auctions in South India. Tea auctions in South India are witnessing good demand on lower production in North India, particularly Assam that accounts for half the country’s production.

Kishor Shamji, a Kochi-based spices trader, said that lack of buying interest from end-users like masala manufacturers in upcountry markets has affected the sales of almost all spices, including pepper, cardamom, ginger, nutmeg, mace, cloves, turmeric etc.

CPMCS’ Punnoose said that the pandemic has forced institutional buyers of spices such as oleoresin and masala manufacturers to abstain from markets due to uncertainties. Declaration of containment zones in wholesale and retail markets is affecting the spices trade in a big way, he said.

Similarly at the pulses production hub of Kalaburgi in Karnataka, trading and milling operations have slowed down as the pandemic has spread to the interior areas.

Labour shortage

“There is no demand or shortage and some millers are operating at reduced capacity and depending on labour availability,” said Santosh Langar, a pulses trader and processor in Kalaburgi.

The second wave of Covid has affected the labour movement in Kerala, particularly in cardamom and pepper trade. Many workers who left for their homes either for the Holi festival or for voting in elections are yet to return.

Shortage of workers employed for cleaning and grading at the Bodinayakanur trading centre has affected auctions. In turn, this has affected the supplies from reaching upcountry markets.

Campco’s Krishna Kumar said as regards the arecanut sector, many of the paan masala units are not getting labourers, leading to a cut in their production.

Even processing has been affected as many women work in arecanut processing units of Campco. Some of them travel 10-15 km every day. Restrictions on movement have affected them.

Those nearby the processing centres, however, attend work, Krishna Kumar said, adding this is creating problems in processing affecting the supply chain mechanism.

“There is some labour shortage, but it’s very similar to what we used to experience in summer months, not more than that. There is no migration from cities as was the case last year. Moreover, migrants prefer to stay in cities and towns as there they have a better chance of getting medical care compared to their villages,” AIREA’s Sethia said.

During the first wave of Covid-19, normal plantation operations were first to resume operations, ensuring that the production system and workers' employment were not disturbed significantly. The plantation sector hopes it could repeat this year too.

Last year, tea and coffee exports were the most affected as tea exports dropped by 44,570 tonnes, while coffee shipments declined by 16,509 tonnes during the shutdown.

Issues brewing in coffee

As more than 85 per cent of the plantation commodities export happens through the sea route, there were also difficulties reported in the availability of food grade containers.

The problem for the coffee sector is that the March-June period is the peak shipment time for coffee. Since Europe, the main market, also reels under the impact of the second wave of Covid, buyers are also not in a hurry to source coffees.

So, exporters are not in a hurry to ship as the whole support system, including the functioning of clearing agents, the logistics and banking operations among others are operating at a snail’s pace.

Shipments are already affected and there will be a slowdown for next few weeks, Rajah said.

George Valy, President, Indian Rubber Dealers Federation, said the dwindling sales in the replacement market have slowed down rubber consumption by tyre companies.

Rubber production has not been regularised, as the current summer rains delayed the start of the new season by one month to June. Rains have led to some disruptions in protecting the trees through rain-guarding because of closing down of shops selling the required materials for the work, he said.

The Covid pandemic could result in demand for spices such as pepper for medicinal use. But this will mainly depend on the permission from the authorities to start trading activities in the food industry despite restrictions, Shamji said.

“Even exports have not been affected. We are exporting almost as much as we used to export in the earlier year. Last year, India exported 4.6 million tonnes of basmati as against 4.4 million tonnes the year before,” Sethia said.

(With inputs from V Sajeev Kumar, Kochi; A J Vinayak, Mangaluru; T V Jayan, New Delhi; K V Kurmanath, Hyderabad; Vishwanath Kulkarni, Bangalore; and Subramani Ra Mancombu, Chennai)

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