Context: The COVID-19 measures of social distancing and imposed lockdown have brought out the woes of migrant workers and the large population in rural areas dependent on agriculture.
- Given that the rural economy was already witnessing a phase of declining incomes (Real rural wages), both for casual and self-employed workers, this lockdown is going to aggravate it further.
- A respite came in the form of rising food prices which fuelled the expectations of increase in agricultural incomes.
- But recent data on prices suggest that the trend is reversing with the decline in agricultural prices in most markets.
Impact on Agricultural Income in the Short and Long Run
1. Those engaged in the production of perishable goods as horticultural production has outperformed foodgrain production in the last decade.
2. Foodgrains and other rabi crops that were ready to be harvested will also be impacted.
1. A breakdown of supply chains owing to lack of transportation facilities.
2. Although, the government has exempted operation of agricultural markets and mandis from the lockdown,absence of migrant labourers from the states of Punjab, Haryana, U.P. is a matter of concern.
3. Packing, processing, transporting and selling the produce are labour intensive sectors. Given the year is expected to register a record in the production of cereals, pulses, cotton and oilseeds,labour output becomes crucial.
1. Short-term impacts may affect price realisation by farmers but in the long run the real worry will be the decline in prices for the majority of agricultural produce owing to decline in demand.
2. The food price index of the Food and Agricultural Organization, reported a 1?cline in prices month-on-month in February 2020.
3. Also, with the sharp decline in crude oil prices, most of the commercial crops prices have gone into a downward spiral.
It comes as an opportunity for the government to help farmers through state support.
- For Migrant distress
- Owing to political expediency and fiscal concerns the government has stocked foodgrains to the tune of 77 million tonnes of cereals with the FCI as against the buffer requirement of 21 million tonnes.
- With the grappling migrant crisis round the corner, the government may consider releasing the food stocks through the PDS, even to migrants who may not be able to avail of free grain in urban areas.
- For Farmer distress
- An intervention can be made by the government to assure remunerative incomes to farmers in turn raising rural incomes and creating demand.
- It can be done through reduction of the input costs through existing schemes of subsidies such as the fertilizer subsidy, etc.
- PM-KISAN scheme too can come handy for the short-term compensation for the loss of income.
- Efforts should be made to not only enhance the coverage monetarily but also include tenant farmers and wage labourers.
FAO Food Price Index (FPI)
- It is a measure of the monthly change in international prices of a basket of food commodities.
- The Index consists of the average of five commodity group price indices weighted with the average export shares of each of the groups (for 2002-04). It is composed of 55 commodity quotations and updated monthly.
- The five commodity group price indices are:
- FAO Cereal Price Index
- FAO Vegetable Oil Price Index
- FAO Dairy Price Index
- FAO Meat Price Index
- FAO Sugar Price Index
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