Prof (Dr) P. Indira Devi, Director of Research & Prof (Ag.Econ) (Rtd), Kerala Agricultural University argues that COVID-19 can be used as a non-tariff barrier by the developed world. The exporters may require additional investments to comply with standards and quality control requirements.
TPCI: The COVID-19 pandemic had a detrimental impact for farmers, especially due to supply chain disruptions? How can this be handled?
Dr P. Indira Devi (ID): India leads in the production of food grains, fruits and vegetables. The post-harvest handling infrastructure and system in the food grain sector was given emphasis through the policy interventions during the Green Revolution period, as state sponsored arrangements for procurement, storage and handling through FCI and distribution through PDS.
Over the years the role of private players also increased, to some extent for export and processing sector. However, the extent of mechanisation, scientific storage facilities and logistics still remain quite inadequate. The fruits and vegetable sector in particular did not get due attention. The efforts to increase the production were not in tandem with the post-production management. While the production surpassed the food grain production level, the post-harvest losses stood at 20-30 % with very low level of processing (less than 5%).
As per estimates of capital formation released by Central Statistics Office, Ministry of Statistics and Programme Implementation, Gross Capital Formation (GCF) in agriculture and allied sectors at current prices for the year 2016-17 (latest available) is estimated at Rs 64,410 crore and Rs 279,066 crore for public and private sector respectively. Growth in gross fixed capital formation in agriculture decreased from 17.7% of gross value added (GVA) in 2013-14 to 15.2% of GVA in 2017-18.
The increasing significance of private sector in capital investment in the sector is facilitated through modifications in laws – The Model Agriculture Produce & Livestock Marketing (Promotion & Facilitation) Act 2017; The Model Agriculture Produce & Livestock Contract Farming & Services Act (Promotion & Facilitation) Act, 2018) and exemption to Farmer Producer Companies (FPCs) under Income Tax Act; and appropriate policy interventions (100% FDI in food retail). Through R&D interventions, agritech companies can play an active role in agribusiness sector, especially in post-production sector. Food industry is projected to be one among the fastest growing sectors.
TPCI: COVID-19 has instilled a general distrust in the consumer that the agricultural products he is buying might have changed many hands and can therefore be contaminated. Fears that crop seeds might have been contaminated by the virus are already doing rounds. How can these fears be dispelled from the farm to fork value chain?
ID: The basic approach in quality management is creating consumer awareness and application of technology. One method is to effect the traceability systems in value chains and QR code system to verify the same. Testing for quality and disseminating the results, especially by the laboratories attached to Universities can help instil the trust.
Promoting local food culture by reducing the food miles can be alternate method, where the capital investments need to be micro-level and spread across the country.
Scientific information on the COVID-19 virus and its behaviour, and management protocol by the consumers need to be widely disseminated .
TPCI: COVID-19 is expected to bring in further requirements for exporters on SPS/TBT certifications, which could also take the form of non-tariff barriers. If so, how should Indian agri-exporters prepare themselves?
ID: Non-tariff barriers are always used as a strong reason for limiting trade at the interest of developed economies. There can be instances where COVID is also used as a tool. The exporters may require additional investments to comply with standards and quality control requirements.
TPCI: Will the drop in purchasing power of consumers lead to shifts in consumption patterns of people and dietary changes?
ID: The demand for quality (food and environment) is highly income elastic. So, the proportion of middle- and high-income consumers naturally decide the extent of demand shifts. The middle and high income group shall continue to opt for nutritionally balanced, safe food while the low income category, due to drop in purchasing power may shift to lower quality food. In states like Kerala where the income disparity is comparatively low and literacy and awareness high, the existing demand pull factors may continue in favour of quality foods .
TPCI: Covid-19 has highlighted the urgency for making e-NAMs a reality. But are Indian farmers ready for it? What are the likely challenges that this model could run into?
ID: The access to internet based marketing is constrained by:
– Awareness, access and technical capacity of the small and marginal farmers who form bulk of Indian farmer population
– Ensuring quality of the wide variety of produces in the absence of grading arrangements
– Inadequate logistics
– Small quantity of produce spread across many small production units
– Existing linkages with village level traders through advancing of credit, input supply and technical inputs and the informal relations
TPCI: How will the flight of labour impact sowing of kharif crops and supply of these commodities in the near future? How can this problem be fixed?
ID: There are predictions that post COVID, the food sector is going to be hit hard due to labour shortages and many other reasons. From that perspective, states like Kerala have launched a massive programme for ensuring food self-sufficiency, through active participation of people. The system tries to ensure fixing of gaps through mechanisation, pooling of existing resources and technology support.
There is every chance that the sowing and post sowing management operations are adversely affected unless the state/Central Governments launch specific programme to address the issue
Prof (Dr) P.Indira Devi, is currently serving as the Director of Research & Prof(Ag.Econ) (Rtd), Kerala Agricultural University. She has over 32 years of experiences in teaching, research and extension in KAU. She did her PhD in 1999 from Forest Research Institute Dehradun, India. Over the years, she has garnered many accolades like Letter of appreciation from Indian Council for Forestry research and Education for the project report on Economics of Teak Plantations in Kerala.
