Farmers are at their wits’ end-THE HINDU-07-08-2020

Details:

On the other, farmers face a stalemate as they are unable to work on their land, earn remunerative prices and gain access to markets.

Food stocks and prices:

About 52% of the global wheat stocks is held by China, and about 20% of the global rice stocks is held by India. If the major holders of global stocks decide to turn precautionary and stop exporting, and if the lockdown is prolonged, countries dependent on rice imports will suffer. Kazakhstan, a major wheat exporter, has banned exports. Russia, the largest wheat exporter, is expected to restrict its exports.

Vietnam, the third largest rice exporter, has stopped its exports, which will reduce the global rice exports by 15%. If India and Thailand too ban exports, world supply of rice will sharply fall. In March 2020, the Philippines and the European Union, major rice importers, had inventories of rice enough to feed their populations for about three months. If the lockdown continues beyond a month, these countries will face food shortages.

India’s foodgrain output is projected to be about 292 MMT in 2019-20. On March 1, 2020, the total stock of wheat and rice with the Food Corporation of India was 77.5 MT. Prices in different markets fluctuate considerably given differences in the extent of production, stocks, arrivals and supply disruptions. According to the FAO, the world food price index fell by 4.3% and world cereal price index fell by 1.9% between February and March 2020 due to the weakening demand for food and the sharp fall in maize prices owing to poor demand for biofuels.

However, retail prices of rice and wheat have been rising in the Western economies in March 2020. The major reasons identified are panic buying by households, export restrictions by countries and continuing supply chain disruptions. If food prices rise due to the lockdown, it will be on top of an already rising price curve. However, unlike in the West, food prices in India have not risen after the lockdown.

This is because there has been a sharp fall in the consumption of foodgrains and vegetables. Similarly, the consumption of milk has fallen by 10-12%.

The crisis in farming:

Wheat prices in Madhya Pradesh fell from Rs.2200/Q to about Rs.1,600/Q. In Punjab, vegetable prices fell from Rs.15/kg to Rs.1/kg. Third, the large-scale return of migrant workers to their homes has disrupted harvest operations, and farmers are being forced to leave the crop in the fields. While mechanical harvesters can be used, there is a shortage of drivers/operators.

Most rice mills work with migrant workers, and their return home has meant that these mills are not buying paddy from farmers. Fourth, supply chains remain disrupted across India. Milk trucks are able to unload at the destination but unable to return empty, which has upset supply schedules. Trucks are in shortage as drivers have gone home.

Imports of vegetable oils are not being lifted from ports due to shortage of trucks. Food prices are not yet rising in India. What has kept Indian food prices low is the severe decline in food consumption, especially among the poor, after the lockdown. That is, hunger may keep the food inflation in March 2020 low.

Concurrently, farmers face acute labour shortages, falling farmgate prices and lack of access to input/output markets. It is unclear who is benefiting, but farmers, workers and the poor are at their wits’ end.