# Effect of COVID-19 on Agriculture in India

COVID-19, originating from Wuhan, China - the epicentre - has eventually spread through the whole world and emerged into a pandemic. India has already become a hotspot for the virus, next to the USA, infecting 9.6 million (14.6% of global infection) as of December 6th, 2020 which has resulted in a decline of 23.9% gross domestic product in quarter 1, FY 2020-21.

${tocify} ## Covid 19 & Indian Agriculture As the world comes to a standstill and public life shuts down across the globe, all have their eyes on the healthcare systems which are buckled under the strain of the COVID-19 pandemic. With the lockdown anticipated to extend for some more time, there are now concerns rising over food supply and people are now scared. The potential negative impacts of Corona on agricultural production, market stability, food supply may now be seen from the surface but it is still difficult to predict quantify the exact damage accurate. ## Impact on Agriculture Production The impact of lockdown imposed in the entire country sowing to COVID-19 on the overall production levels in the agricultural and allied sector has been significant with overall production levels in the agriculture and allied sector declining in 47% of the sample districts. However, 19% of the districts have also reported an increase in the overall level of production in the sector and 34% of the districts have shown no change in the levels of production in the agriculture and the allied sector. ### Magnitude of Change of AGRICULTURAL Production at the State level In the agriculture subsector, most of the states have witnessed a decline in production. States like Chhattisgarh (13%) and Himachal Pradesh (15%) have witnessed a sharp decline in agriculture production. However, some large agricultural states like Telangana (23 % increase), Punjab (5%), Rajasthan (4.4%) and Gujarat (6.7%) have actually shown an increase in agricultural production which may be attributed to the fact that rabi season had witnessed a bumper crop production and harvesting of the crops had been completed in many of the states before the onset of the pandemic and the lockdown. ### Impact on Farm-gate Prices in Agriculture & Allied sector The spread of the pandemic and the subsequent lockdown that was imposed by the government had a significant impact on the farm gate prices of commodities in agriculture and the allied sector. This was mainly due to the fact that with the shutting down of major sectors of the economy, the demand for these commodities also dried up due to lack of transport, shutting down of rural haats/markets and shops which led to a decrease in prices across many districts of the country. A total of 54% districts reported a decline in overall prices of commodities in agriculture and allied sector and 23% districts witnessed an increase in prices which can be attributed to the supply chain disruptions in some parts of the country. The prices remained same in 23% of the districts. ### Impact of COVID-19 on availability of Agri-inputs The overall availability of agri-inputs was reported to have declined in 58% of the sample districts and 38% of the total districts surveyed reported no change in the availability of agri-inputs, whereas only 4% districts reported an increase in the availability of Agri-input. The feedback on availability and prices of various agri-inputs viz. seeds, fertilizers, pesticides, rentals agricultural machinery, fodder/cattle feed, etc. were obtained to gain greater insights into the agriculture sector during the lockdown period. ### Impact on the Prices of Agri-inputs As evident from the previous section, the availability of agri-inputs had declined both at the all-India level and across the States. Theoretically, lower availability is expected to result in higher prices. The survey results also reflected a similar picture. The overall prices of agri-inputs showed an increase in 300 sample districts (54%) while 236 districts (42%) reported no impact of COVID-19 on the price levels of agri inputs and 24 (4%) districts reported a decline in the overall price levels of Agri-inputs. ### Impact on small farmers Nearly 90% of India’s agricultural sector is made up of small and marginal farmers. These farmers are particularly vulnerable to economic shocks, include those sparked by COVID-19 lockdowns. In August 2020, IGC collaborated with the Asian Development Research Institute (ADRI) to convene a panel to discuss three key influences that COVID-19 has had on India’s agricultural markets: Differential impacts on staple versus perishable foods, Disrupting labour supply chains, Ongoing consequences of ineffective social safety nets. ## Major Problems in Agriculture Sector The non-availability of migrant labour is interrupting some harvesting activities, particularly in northwest India where wheat and pulses are being harvested. • There are disruptions in supply chains because of transportation problems and other issues. Prices have declined for wheat, vegetables, and other crops, yet consumers are often paying more. • India’s$14 billion (or Rs 1 trillion) poultry market has begun a culling exercise as consumers have started keeping off chicken products for fear of catching corona virus.

• Weak demand from the poultry sector has resulted in a sharp decline in feed prices too, with both soybean and maize prices falling by nearly 25 per cent in the past two months. The poultry market consumes around half of soybean and maize production in India. Industry estimates peg the loss to the market at Rs 1,000 crore.

• With the mango season just starting and nearly 40 per cent produce is sent to foreign countries. Due to closure of exports farmers will suffer huge losses.

## Survey on impact of COVID

A survey was conducted by NABARD to find out the impact of COVID. The results yielded-

### i. Impact on Production

At All-India level, agriculture production in almost half (47%) of sample districts was adversely affected by the impact of COVID-19. Magnitude wise, agriculture production (-2.7%) had not been adversely impacted significantly, mainly due to the fact that harvesting of rabi crops like wheat was almost complete by the end of April 2020. However, production in allied sector had declined significantly, especially in poultry sector (-19.5%), followed by fisheries sector (-13.6%) and Sheep/Goat/Pig (S/G/P) sector (-8.5%), primarily due to drastic decline in demand for these products possibly due to the widespread fear circulating in the wake of COVID 19 regarding safety of nonvegetarian food, particularly poultry 2 meat, for health related concerns. Similarly, production in dairy (-6.6%) and horticulture (-5.7%) sub-sector also reduced, owing to reduced demand for these products and disruption in their supply chain.

### ii. Impact on Farm Gate Prices

Farm gate prices have not declined significantly in crop sector (-2.2%). However, prices in allied sectors had declined in the range of 2% to 18%. This decline was highest in poultry sector (-17.8%), followed by horticulture (- 7.6%), dairy (-5.6%), fisheries (-4.8%) and S/G/P (-2.9%) sectors respectively, mainly due to supply disruption caused by restriction on movement of vehicles. On the whole, 54% of sample districts witnessed adverse impact on farm gate prices of agricultural produce.

### iii. Impact on Availability of Agri Inputs

Due to restrictions imposed on movement of men/material and closure of shops, availability of agri inputs viz. seeds (-9.2%), fertilisers (-11.2%), pesticides (-9.8%), fodder (-10.8%), etc. declined in the range of 9 to 11 per cent. At all-India level, 58% of sample districts were adversely affected in terms of
availability of inputs.

### iv.Impact on Prices of Agri Inputs

Due to disruption in supply chain owing to restrictions on movement of vehicles and closure of shops and markets, prices of agri inputs viz. seeds (8.8%), fertilisers (10.0%), pesticides (9.0%), fodder (11.6%), increased in the range of 9 to 12 per cent. At all-India level, 54% of sample districts witnessed an increase in prices of agri inputs, possibly due to its non-availability.

### v. Impact on Agriculture Marketing

Even though local procurement centres were opened by various State Governments under their jurisdiction, yet restrictions on movement of vehicles had adversely impacted about 74 per cent of sample districts in smooth operation of agriculture marketing though mandis. The impact on operation of rural haats was more severe, with 87 per cent of sample districts being adversely affected. This was mainly due to a complete ban on opening of rural haats by the local authorities in majority of the districts in the country.

### vi. Impact on Banking Services

As far as banking services are concerned, access to credit through term lending and KCC was adversely impacted in about 89 per cent and 59 per cent of districts, respectively. As regards to recovery, 94 per cent of sample districts were reported to have been adversely affected by the pandemic and consequent lockdown. However, a positive feature that emerged was that 63 per cent of sample districts reported an increase in digital transactions by the customers during the lockdown period.

### vii. Impact on Microfinance Activities and FPO/FC

At an all-India level, microfinance activities were adversely impacted in 95 per cent of the sample districts and the business activities of NBFC-MFIs was adversely affected in 88 per cent of the 3 sample districts. Similarly, adverse impact was reported in activities of FPOs and Farmers Clubs promoted by NABARD. However, many SHGs and FPOs seized upon the opportunity of making face mask and sanitizers as also direct selling of vegetables/fruits to the customers, thereby helping the local community and administration as also increasing their business.

### viii. Impact on MSME Sector

MSME sector was the worst hit sector by the COVID pandemic in terms of impact on price level of raw materials, employment, production level, consumer demand and disruptions in supply chains. Decline in production level and employment was reported in 97 per cent and 96 per cent of the sample districts, respectively. Similarly, adverse impact was reported on consumer demand (85% districts) and cash flow (80% districts) of MSME sector thereby increasing hardship of the people at large.

## Advantages of Agriculture after lock down

The News 2020-21 saw the Indian economy register its worst-ever contraction since Independence and also the first since 1979-80. The National Statistical Office has, in its Provisional Estimates released on May 31, pegged the growth in real gross value added at basic prices (previously known as GDP at factor cost) for 2020-21 at minus 6.2%. ! Although the GDP growth has been pegged at -6% but the  farm sector (agriculture, forestry & fishing) has grown by 3.6%.Agriculture being exempted from the nationwide lockdown in 2020 · The GoI largely spared PDS ration shops and other stores selling food, groceries, fruits & vegetables, milk, meat and fish, animal fodder, seeds and pesticides from strict lockdown. The Gof parly address the demand-side problem through Enhanced state crop procurement, Rise in minimum support price (MSP), PM KISAN.

## Things that should be done to reduce the impact

There should be an immediate expansion (Tenant farmers should be included) of the Pradhan Mantri Fasal Bima Yojana (PMFBY) to ensure compensation payments to farmers affected by the Covid-19 pandemic.

• MSPs for farmers in the 2020-21 seasons should be substantially raised to 1.5 times the cost of production. Procurement should also be significantly expanded.

• Encourage better functioning food markets through improved regional political and economic integration and better functioning for trade in food.

• Temporarily reduce VAT and other taxes.

• Reduce post harvest crop losses and improve food stocks along the value chain

• Remove artificial constraints to domestic trades throughout the food supply chain in order to link
smallholders farmers to markets

• Ensure that local purchases of food and food components for humanitarian purposes are exempt from restrictions

• Hold down core inflation and inflation expectations

• Assess and comprehensively cost all fiscal measures taken in response to the rise in food prices

• Protect basic consumption needs of vulnerable populations

• Scale up nutritional support and support management and prevention of under nutrition.

## Conclusion

The COVID-19 pandemic has evolved into a global challenge. As a result of the lockdown,  tens of thousands of people left the major cities because of unemployment and returned to their rural villages to avoid the pressures of maintaining a family in cities with high living costs. They have returned to their village unemployed, in some places to compete for local jobs with other would be migrant workers who have been unable to travel to seek employment in other communities that are now suffering from a shortage of labourers. Rural markets have been wholly or partially closed due to the lockdown, preventing farmers and harvesters earning an income. As a result, farmers urgently required money to sustain farming systems, particularly in April, since it is the season of the Rabi (spring) harvest. Immediately after the outbreak of COVID-19, therefore, the government launched a number of relief packages aimed in particular at helping the poor and farmers, which, however, has proved inadequate and is not fulfilling farmers’ requirements. Some experts fear that a full-blown economic collapse of the sector could be imminent, even after the return to normal conditions, and so far the government does not appear to have a plan-B to deal with such a situation. “Having life, hoping for the future” seems to be the general message being conveyed. As result, the mental health, livelihoods and well-being of farmers all over India could be jeopardized.

While farmers generally would be expected to recover even from an economic collapse, those below the poverty line in India are mostly likely to be the last to overcome the impact of the lockdown. In 2020, wages within both the agricultural and non-agricultural sectors have been declining due in no small part to the current situation, though the decline related to non-agricultural work has been the steepest. This seems to indicate that the relief packages and other initiatives launched by the government and local administrations aimed at sustaining farming systems have enjoyed some success, although the expected major impact on farmers’ wages has not yet been observed.