G Chandrashekhar

Food supplies must be augmented at the retail level

G Chandrashekhar | Updated on May 12, 2020

Restricted monetary support, unavailability of labour and inadequate raw materials are hindering agri activity, and may lead to shortage of food supplies

The coronavirus pandemic hit the country at an awkward time, when agriculture transitions from the rabi harvest (March/April) to kharif sowing (May/June).

The nation has been in a state of lockdown since March 25, and we are now into the seventh week of inactivity. It was only towards the end of April that the government relented under pressure to slowly open up the farm sector.

Marketing yards (mandis) are now open for transactions — for growers to dispose of their harvested produce. It is estimated that a majority of mandis (over 70 per cent) is open for business; but the availability of labour continues to remain tight.

From end-March there has been relentless reverse migration of millions of workers and daily-wage earners. They are unsure about their job security and their future. Many are stuck in the absence of transport availability. Labour shortage is seen affecting marketing of crops.

Potential for shortage

Cereals, pulses, oilseeds and other crops have to move from the fields to processing factories, where they will be converted into food ingredients fit for consumption. This process of goods movement is taking time. Processing units are unable to start operating their factories to full capacity because of inadequate raw material and labour shortage.

That’s not all. Despite the RBI’s steep reduction of interest rate and expansion of liquidity, commercial banks are reluctant to fund businesses. Working capital is tightening for units processing food raw material. As a result, they are unable to build raw material inventory. Oilseed-crushing plants, dal mills, rice mills, wheat flour mills and similar processing units are unable to kick-start work.

This is a potentially risky situation. If this state of affairs continues, urban consuming areas may face shortage of staples and other food ingredients in the coming weeks. So far, pipeline stocks in the supply chain helped feed the urban consumers, and no marked shortage was felt.

But if processing units are unable to start functioning, there is the real risk of shortage developing and price escalation. If it happens, it would be tragic irony, because at the macro level there is no food shortage. Food Corporation of India carries over 50 million tonnes of rice and wheat, while NAFED holds over two million tonnes of pulses. Rabi procurement of wheat (about 35 ml t) and pulses (1.5 ml t) will be additional.

In other words, disruption to the supply chain — from farms to processing factories to consumer food plates — needs to be tackled and smoothened without delay.

In times of shortage, there is the natural tendency to jack up prices and make a quick buck. We have seen it happen in case of essential food commodities like dal, atta, rice and cooking oil in recent weeks as consumers start to purchase extra quantities of goods of daily consumption fearing non-availability.

It is necessary to assure the nation that there is no real shortage of essential food commodities. At the same time, it is critical that value chain participants in the food sector, especially processors, feel assured that their degrees of freedom in doing business will not be curtailed in any manner.

Government support

It is necessary for the Government of India to, through the RBI, prevail upon commercial banks to lend in deserving cases by following prudential norms. Attracting labour is going to be a challenge too. Delivery of free rations has left much to be desired. It is tragic no preparatory work was done before announcement. Anecdotal reports suggest even April rations have not reached some people by the first week of May.

Whether policy-makers learn anything from the ongoing glitches is anybody’s guess; but is essential, food delivery, especially the promised free ration, shall not be delayed, come what may. Running community kitchens to support migrant labour would be in order.

Six weeks of lockdown and limited access to food, leave alone nutritious food, for several millions of workers is sure to further adversely impact the already poor nutrition status. It may take several months to regain what has been lost.

Meanwhile, the Centre and the States have to work together to ensure that primary and secondary food processing units receive all the support, including finance, that they need to normalise their operations. The situation on the ground needs to be closely monitored to address issues if any. The local food industry and trade bodies can play a vital role in providing guidance to the administration.

The writer is a policy commentator and agribusiness specialist. Views are personal

Published on May 12, 2020

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