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How agriculture shows way for economic recovery post COVID-19?

Agriculture sector is the only bright spot at this moment which witnessed an impressive growth of 5.9 percent in Q4 of FY20 despite nation-wide lockdown as compared to overall 3.1 percent economic growth

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MART, New Delhi-based leading management consulting firm recently organised a webinar, "Unlocking Economic Recovery - Agriculture Shows the Way”. The webinar was attended by over 300 participants from corporates, media, farmers, academia, consulting firms, and NGOs.

Moderating the webinar, Pradeep Kashyap, Founder - MART said, “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. Additionally, India is the world’s highest producer of tractors. The agriculture sector is the only bright spot at this moment which witnessed an impressive growth of 5.9 percent in Q4 of FY20 on the back of better Rabi harvest despite nation-wide lockdown due to the COVID-19 crisis. The Indian economy grew only by 3.1 percent during the same period due to the contraction of core sectors. Also, the recent forecast by Crisil shows agriculture will still depict positive growth of 2.5 percent, when GDP may register negative growth.”

“The total foodgrain production was estimated at 298 million tonnes, in 2019-20 which is 13 million tonnes higher than last year. Over the last four years 2016 to 2019, the FCI (Food Corporation of India) stocks for foodgrains were highest in 2019. Now when the other two pillars, manufacturing and services, of the economy have been severely impacted during COVID -19 crisis, it is very crucial to understand what role agriculture, the oldest and strongest pillar, is going to play for unfolding economic recovery and shaping up the future path,” Kashyap added.

Widely recognised as father of India’s rural marketing, Kashyap, highlighted, “Now the million-dollar question is: whether agriculture will emerge as the saviour for our economy post-COVID-19 pandemic? In order to find answers to this question, MART conducted a Pan India survey with 430 farmers across the country to understand impact of COVID-19 on agriculture and future growth prospects in the wake of revolutionary agri reforms announced by the government.”

“Since Independence, the averaged out GDP of Agriculture and Industry sectors is similar, around 20 percent each. But the public investment in infrastructure for the industry over this period is 10 times higher than that in agriculture through many industrial estates, SEZs, Port among others. But, for agriculture even after 70 years, we do not have adequate storage facilities for foodgrains. Twenty five percent of our fruits and vegetables rot at the farm-gate. Why this step-motherly treatment to agriculture?” he pointed.

Farmers’ sentiments are very positive as more than 90 percent farmers are expecting the same or higher production from the next crop due to better monsoon, continued government support and sufficient fund availability.

Pankaj Mishra, Head of Research and Consumer Insights, MART, presented key findings of the survey conducted in the second week of June 2020. The study threw light on some burning questions marketers and other stakeholders are confronting nowadays to equip themselves with post-COVID-19 shock.The study, revealed the way forward and the macro-picture. He highlighted in the last 70 years, India has transformed from food-deficit traditional agriculture economy into food surplus technologically advanced agriculture economy. Today, Agriculture continues to be the largest employer with 145 million workforce. The study revealed that 70 percent of the Rabi production, has not been impacted and the majority of the farmers have sold most of their produce.

COVID 19 impact was acknowledged largely by vegetable growers as 6 out of 10 could sell their produce partially due to poor access to mandis and non-availability of transport during the lockdown period. Farmers in the labour deficit states like Maharashtra and Karnataka -- due to reverse migration of farm labourers -- reported labour shortage and higher tractor rentals that adversely impacted harvesting and other agri-operations. The major problem during COVID-19 was encountered in selling agri-produce due to the non-availability of the transport and poor price realisation. The study revealed that farmers’ sentiments are very positive as more than 90 percent farmers are expecting the same or higher production from the next crop due to better monsoon, continued government support and sufficient fund availability.

Majority of the farmers are not anticipating any problems in the next crop. PM Kisan and KCC loan has emerged as great saviour for majority of farmers during COVID-19 time. The farmers reported that there has been a negligible impact on household consumption during COVID -19 period. Mishra concluded that positive farmer sentiments on the wake of good monsoon and revolutionary government reforms will lead to higher mechanisation growth and better farm income to drive resilient farm economy.

PM Kisan and KCC loan has emerged as great saviour for majority of farmers during COVID-19 time. The farmers reported that there has been a negligible impact on household consumption during COVID -19 period.

Addressing the webinar, Sivakumar S, Group Head - Agri and IT Business, ITC started talking about four major disruptions caused due to COVID-19 pandemic namely; Demand, Supply Chain, Farming Operations, and Global Disruptions. He shared consumption trends are a concern for food safety and bio-security. Concern for immunity and demand for immunity boosting foods, packaged foods, and trusted trademarks got accentuated in the COVID-19 lockdown periods. Some of the other problems, he highlighted are climate change, depleting natural resources like water are impacting food sustainability in agriculture.

He opined that there is a need to understand crop price volatility, farm mechanisation, precision farming, farm-gate infrastructure and alignment with market needs, value chain enabled by new laws, trade and commerce facilitation act, and co-existence with APMC act. The continuing need for social distancing to prevent COVID-19 infections is another area that needs to be understood by farmers. The segregated role of regulator and mandi boards, amendment of Essential Commodities Act are also important.

Sivakumar also shared the opportunity to create electronic market places such as e-NAM in linking APMC. He emphasised that private participants can evolve these market platforms. Farmers should be knowledge sharers and the government should balance consumers and farmers interest. He emphasised the private market players' initiatives including e-Choupal enables getting platforms, demand signals, weather forecasts, soil and disease predictions.

Speaking on the occasion, PK Swain, Joint Secretary - Ministry of Agriculture & Farmers Welfare, Government of India said, “During lockdown when the entire industry got closed, his team worked 24x7 to ensure uninterrupted supplies to protect farmers interest. The opening of critical markets, FPOs, cooperatives are done on the eve of Rabi harvest. Around 2500 APMCs that were closed have been opened through government interventions with strict social distancing and sanitisation drive. The fruits and vegetable sector was opened to minimise the supply chain disruptions across India. The agriculture ministry worked closely with control centres to ensure the fruits and vegetables trucks moves through out India.”

"Around 2500 APMCs that were closed have been opened through government interventions with strict social distancing and sanitisation drive. eNAM has increased its reach from 585 markets to 1000 markets during this difficult period. Innovations had been implemented in technology and the same is highly required in the direct marketing sector."

“eNAM has increased its reach from 585 markets to 1000 markets during this difficult period. Innovations had been implemented in technology and the same is highly required in the direct marketing sector. Agriculture productivity remains unaffected due to precision farming, timely credit, technology for sowing, and mechanisation, Swain added.

Addressing the webinar, Shubhabrata Saha, CEO-Farm Division, Mahindra & Mahindra said, “Agriculture sector is merely tractorised than mechanised, so there is a huge scope as well as significant opportunity in exploring the mechanisation in lifting horticulture sector.” He presented India’s position globally in farm machinery market and deliberated on short term and long term growth drivers which will take farm mechanisation beyond land preparation into horticulture transplantation to increase farm productivity. He shared India’s horticulture produce is higher than agriculture and today manufacturers are providing more comprehensive solutions to farmers so that throughput in agriculture improves.”

As India becomes more tractorised, precision farming, weather, hyper sectoral imaging and exports are expected to increase. Since tractors are dominant over threshers and rotavators, he shared how demand needs to be created for other machines and implements. He was optimistic on agriculture growth during this period due to farmers’ positive sentiments, better price realisation, favourable monsoons, cash in hand with farmers, MNREGA, increase in MSP, better seed quality, government’s Sub Mission on Agricultural Mechanization (SMAM) scheme performance, increase in daily wages, growth in output prices, better terms of trade, and KCC support.

Bijay Sahoo, Group President, Reliance Industries shared aspects of need-based industries and also connecting farmers to consumers would be a huge opportunity for retail companies. He highlighted the role played by Reliance in helping farmers connecting with consumers being one of the India’s largest retail supplier in the COVID lockdown. He shared his views and thoughts on how to re-engage 16 crore reverse migrants in gainful employment in villages and cities considering that they lack of farming skills.

Samik Sundar Das, Sr. RD Specialist, World Bank shared views on small and marginal farmers, subsidy structures, credits, and how to bring reforms to establish sustainable agriculture in the country. He said, “This is a very optimistic scenario. The decades' fight for agri reforms, finally came up to include the essential commodity act which opens up the market. The act is going to be very beneficial to farmers in many ways. We need to know some of the elements that have very critical factors for agriculture involving land, labour, markets, credits among other interventions. He talked on the safety measures for small, marginal as well as landless farmers and the nature of existing subsidy structures.”

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