COVID19 has created a huge challenge to an already fragile agricultural sector in India

India is the world’s second-most populous country with a population of 1.27 billion. It is the seventh-largest country in the world with an area of 3.288 million sq. km, the land area of 2.973 million sq. km.  It is a country with the highest cultivated area in the world with an area of 1.797 million sq. km under cultivation.

Agriculture along with allied sectors is the largest source of livelihoods in India with nearly 70% of its rural households still dependent directly or indirectly on agriculture for their livelihood.  India is the world’s largest producer of milk, pulses, and jute, and ranks as the second-largest producer of rice, wheat, sugarcane, groundnut, vegetables, fruit, and cotton and is also one of the leading producers of spices, fish, poultry, livestock, and plantation crops.

Food Security and Agrarian Distress – Two Chronic ISSUES

India has done well in feeding it’s more than a billion people but the chronic issues which originated in its colonial past haunt it even today, after 70 years since becoming independent. After seven decades, food security and farmer distress remain to be two pressing challenges still unsolved.

Food Security Concerns

As defined by the Food and Agricultural Organization, ‘food security exists when all people at all times have physical and economic access to sufficient, safe and nutritious food that meets their dietary and food preferences for an active life’.

As the Indian economy has diversified and grown, agriculture’s contribution to GDP has steadily declined from 1951 to 2019. While achieving food sufficiency in production, India still accounts for nearly 25 percent of the world’s hungry people and home to over 190 million undernourished people. India ranks 114th out of 132 countries on under-5 stunting and 120th out of 130 countries on under-5 wasting and 170th out of 185 countries on the prevalence of anemia as per the Global Nutrition Report (2016).

Agrarian Distress Concerns

The employment in the agricultural sector, which was 69% in 1981 declined to 43% percent in 2016. This means agriculture is still the major source of employment; however, its contribution to GDP is declining very rapidly and was only 15% percent in 2016 from 42% percent in 1981.  This translates to low labour productivity in this sector. Further, with 82% of farmers being small and marginal the divergence in the sector is very high with a substantial number of farmers earning less than 30% of national per capita GDP, leading to severe agrarian distress.

An important reason for low income is low productivity in the agricultural sector is due to the lack of use of suitable technology, especially in poor irrigation facilities. Agriculture, to date, is largely dependent on monsoons, failure of which leads to crop failure. Only 48% of the gross cropped area is irrigated.  Another reason for low income is the exploitation of farmers, where their purchase is limited to 3-4% of total production.  There is a gap from sales of the harvest to the consumer due to unorganized marketing.  Finally, the lack of storage and logistic infrastructure leads to severe pressure on farmers who grow perishables including fruits and vegetables.

How India is Feeding a Billion

India so far achieved food price stability and an adequate supply of essential food grains through the country’s Public Distribution System (PDS). While many would see this as an out-of-date socialist system of food stockpiling and subsidized prices, India has been able to feed its billions so far thanks to PDS.

India’s PDS is the largest food distribution network in the world, which supplies basic staple food to 800 million people at subsidized prices. At the same time for farmers, it provides guaranteed minimum prices. This mammoth program, with all its shortcomings, is a legacy of the socialist-inspired economic thinking that prevailed soon after independence in 1947 when the country had fewer resources.

It relies on a federal government-regulated system of procurement, logistics, storage, and distribution of food grains. The grains are procured, stored, and transported by the Food Corporation of India (FCI) and allocated to states in bulk, based on need. The states then distribute the food to poor households through licensed ‘fair price’ shops. There are half a million fair price shops in India, one for about every 40 beneficiary households.

COVID19 – Converting ISSUES to CRISIS

India is facing a dual challenge of COVID contentment and economic constraints. With a huge population spread across the country, the measures implemented by the government have been able to limit the outbreak but have not in any way been able to control it. With close to 80,000 people infected, 2200 already dead, and daily new cases of approximately 3500 infections and around 100 deaths (as of mid-May 2020), India seems a distance from beating the curve.

Economics of COVID19 and Containment Measures

On the economic side of the things, India has been in one of the stringiest lockdowns for more than 50 days now.  As per most predictions, India is staring at a recession with the contraction of its GDP in 2020 and little growth expected in 2021. With close to 120 million people losing livelihood and nearly 100 million pushed to poverty, the next couple of years will be very challenging.

COVID19 and contentment measures have led to many direct problems, including but not limited to, the lack of farm labor and seasonal farm equipment.  As the harvest season began for rabi crop (one of the two major crop seasons in India), there is already a lack of transportation of harvest, especially in perishables (fruits and vegetables).  At the same time, there is a lack of demand as the market intermediaries and market places (called mandis) are shut down or are working with huge limitations due to the lack of manpower and concerns of the spread of infection.  Indirect issues which

Indirect issues, which derive from the outcome of COVID and the necessary measures to contain it, include migration of labour from one state to another (from urban areas to rural areas), the slowdown of economic activities (which has led to a reduction in demand of non-staple food commodities), and last but not the least, the lack of logistics has led to demand and supply mismatch, or in other words the break down of supply chains.

COVID19 Impact on Food Security and Agrarian Distress

As the farmers sell their harvests for rabi season at hugely distressed prices due to minimum demand, the masses suffer the problem of inflated prices since there is a fall in supply at the point of sales. This is a perfect recipe of dual food security and agrarian crisis. A rise in food prices is bound to have consequences, not just restricted to hunger and malnutrition, but it will also result in increased health care expenditure and a greater economic burden on the citizens leading to people falling off the poverty line. Along with the losses for the rabi season affecting nearly 20-30% of farmers (without external help from the government), many would not be able to farm in the next “kharif season,” which will lead to a cyclic reduction in demand for labour, inputs, and logistics, further leading to distress in the rural economy along with fringe challenges of reduction in economic activities.

What Can India Do

India needs to see COVID19 as an opportunity to solve the chronic issues faced by its agriculture. India needs to reset. We are already at the lowest point, if we continue to do business as usual we will not only miss the opportunity but will also end up hurting ourselves for the long term.

India needs to improve its management of agricultural practices on multiple fronts. Improvements in agriculture performance can be achieved in multiple ways:

• increasing incomes of farming households by reducing the cost of cultivation,
• diversifying production of crops, empowering low landholding farmers by consolidating landholding,
• strengthening agricultural diversity and productivity,
• designing careful price and subsidy policies that should encourage the production of profitable crops,
• diversification of agricultural livelihoods through allied sectors such as animal husbandry, forestry, and fisheries
• investment in supply chain infrastructure, including but not limited to, connectivity, storage, and distribution,
• opening up food processing to make it viable for micro-small enterprises to take food processing units closer to farm gate hence creating opportunities for farm labour to be diverted,
• shortening of agriculture commodity value chains to ensure the reduction of opaqueness and ensuring fair trade,
• streamlining irrigation infrastructure and ensure water use policy to cultivate crops which do not put stress on water resources,
• introduction of climate-resilient agriculture practices to make farmers immune to seasonal climatic vulnerabilities,
• and most important digitization of complete upstream and downstream value chains in agriculture.

The AgTech Ecosystem in India – Sunshine During and Post COVID19

AgTech start-ups, 500 of them in the post-revenue stage whose number is growing at a 20-30% year-on-year basis, can offer solutions to help the Indian agriculture sector keep its food and farm supply chain rolling.  These solutions can help in making agriculture climate-resilient, can reduce losses pre and post-harvest, can make agriculture marketplaces transparent and efficient, and can help increase productivity and profitability of farmers during and post COVID19.

The vibrant and dynamic AgTech start-up ecosystem has received venture capital funding of $545 million since 2014, a large part of it $330 million came in 2019. Indian AgTech start-ups are working across both upstream and downstream from factory gate to the farm gate, within farms, and from farm gate to the fork.

Start-ups including Ninjacart, Bigbasket, Frux, ShopKirana, MeraKisan, CroFarm, and Agrowave are trying to connect farmers with buyers, including retailers, e-commerce, processors, and direct to consumers.

Start-ups including AgroStar, Dehaat, Gramophone, and FreshoKartz are trying to connect farmers with quality agri-inputs economically and efficiently.

Start-ups including CropIn, Satsure, Prakshep, Fasal, and DigiAgri are trying to digitize the agriculture ecosystem.

Other notable excellent start-ups in diversified areas are Intellolabs, Agricxlab, AgNext, Aquaconnect, Stellapps, Aarav Unmanned Systems.

Deepak Pareek, CEO & Founder – Digi Agri Technologies Pvt Ltd, a partner of the Future Agro Challenge, was a guest contributor to this article.  Deepak is a well-decorated technocrat honored as one of the Top 10 Global Finalists 2019 by Future Agro Challenge and Technology Pioneer 2018 by World Economic Forum. He is also a member of the Expert Panel of the World Economic Forum on Digital Transformation. Deepak is working on using cutting-edge technologies including Machine-Learning, Blockchain, GeoSpatial, Computer-Vision, Drones, and IoT for improving the profitability and productivity of marginal farmers on one hand and providing valuable insights to agriculture ecosystem participants on the other.