In the last quarter of 2019 things seemed to be looking up for the Indian farmer as food prices were slowly creeping up. Dairy farmers were heaving a sign of relief hoping to recoup the losses of the last three years. After two years milk prices had risen 30% and stabilized at around Rs.35 per litre. Even prices for Maize were at all record high of Rs.2,400 per quintal in December. Much before the government swung to action, social media posts of Wuhan’s wet markets trading wild animals for domestic cooking went viral. In a nation easily swayed, people associating non vegetarian food with the virus, started shunning chicken and eggs; demand started plummeting in December.
Initially, when the lockdown was announced the ramifications did not sink in, but suddenly at most places, as supply lines chocked up, farmers were left to fend for themselves; buyers simply vanished. Eggs had to be thrown away, chicken allowed to die and be buried, feed was reduced for cattle, perishables like oranges, grapes, mangoes, tomatoes, water melons etc were left to rot in the field. Where stocks were lifted, eggs sold at a depressing Rs.1.50 down from Rs.4.50 per egg and milk is down to Rs.26 per litre. Maize prices have since fallen to Rs.1,300 and later when the lockdown eases, price will dip further as fresh harvest arrives in the largest maize markets of Purlia, Bihar.
Framers who suffered such losses are now reluctant to invest and hence will plant a reduced acreage under perishables.
Consequently, vegetable sowing is down in March and April, and expectedly will be in May too. Had it not been for drastic reduction in household consumption of fresh fruit and vegetables over last two months, higher inflation would have crept in and rendered the government powerless to respond. But there is good news of the expected good monsoon which will significantly boost agriculture production this year, which the governments tend to project as an indicator of rural prosperity, which it isn’t.
The lockdown has been eased and as public transportation resumes, migrant labour, traumatized from the lockdown will rush back to security of their villages. Its unprecedented that over 6 million have already registered. Trust has been eroded, fatigued and restive migrants will not return easily to their place of work. Much of that work may have even vanished. Each place will have its own socio-economic churning, each will be troubling. While workplaces will face shortages of workers, other places like UP, Bihar and Orrisa will face huge infusion of reverse migration from cities. This event has no precedent in our history. It is already telling; the cost of transplanting paddy in Punjab is expected to rise from Rs.3,000 to over 6,000 per acre while daily wage rates in UP are falling from Rs.250 to Rs.150. Equally disturbing is that remittances families received from migrants working in cities or in the middle east will drop significantly and millions of families across rural India which survived on these will be at a loss of options.
Evidently, a differentiated response is required and the centre must provide the states with finances and the leeway to design state specific-programs.
Additionally, if only the states followed the central government notifications in letter and in spirit, things would normalize faster. The resolution of the crisis depends almost entirely through the levers of the central government. Though the government shouldn’t be expected to identify and compensate individual farmers, nor does it have the capacity. At best the government can make interventions targeted at the poorest sections of society, which it will. But the government is dithering to infuse cash into the economy and releasing food grain for those without documents. When the stimulus infuses modest amounts of cash into hands of the people, consumption will not be broad based and the people may not react as expected. However, the demand for vegetables can recover much faster, while the supply will not be able to keep pace and the deflation in farm gate prices can turn inflationary for consumers very fast, when it happens.
In a nation recovering from the pangs of endogenous policy shocks of the past, the exogenous pandemic tipped an economy, when it was least prepared, into a freefall. An economic stimulus only provides a breather, but a longer-term recovery will depend more on the PMO pushing for meticulous reforms and tedious improvements in governance, both will be skilfully resisted by the entranced system. The urge to only announce grandstanding big-ticket reforms (agriculture is a state subject) must be supressed as these are not the final solution, as usually made out to be. In the book ‘Radical Uncertainty’ by John Kay and Mervyn King write effective leaders understand that they have “superior responsibility” rather than “superior wisdom”. To ensure positive outcomes, stakeholders for whom the reforms are intended, should be part of the process to decide strategy and design. Though it sounds simple, it’s isn’t, the ministries genuinely believe they know better and evidently over the last two decades innumerable programs have been rolled out to end the farm crisis, but history will record no metamorphic successes, but continuing farmer suicides. END