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BW Businessworld

Surviving The Pandemic In The Fields

The monsoon promises to be good and sowing for the summer crop has begun, but the farmer is still at a loss for want of raw materials like seeds, fertilisers and agrochemicals. A BW Businessworld report from the ground

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Manure is the farmer’s gold’ is an old Estonian proverb that means exactly what it says – that a cultivator is disadvantaged without a nourished soil for the crop to be sown. The summer sowing season of 2020 leaves a wide swathe of the Indian farming community scouting for that gold as the summer (Kharif) sowing season begins. So far, the Rain Gods promise to be benevolent, which is more reason for a clamour for seeds, fertilisers and agro-chemicals like pesticides – supplies of all of which have been disrupted during the mayhem that broke out in the wake of the lockdown announced in March.

Farmers’ unions admit that the timely instalments of the PM-Kisan (Pradhan Mantri Kisan Samman Nidhi) equipped farmers with the much-needed funds to buy raw materials. Agrarian India was also broadly exempt from the strictures imposed during the lockdown and many impediments to marketing the Rabi (winter crop) harvest were also ironed out. Concessions and exemptions were announced for farmers in phases, amounting to a Rs 1.2 lakh crore package, supply glitches in crucial agricultural inputs like seeds, fertilisers and agrochemicals arose for varied reasons.

So the grumble in the fields, where green shoots of paddy, pulses, maize or groundnut are sprouting for the autumn harvest, is merely a murmur and not a rumble. One worry is that hurdles in transporting the harvest to the market could send prices of crops tumbling. In both the United States and the European Union, the severity of the pandemic made it difficult for farmers to get remunerative prices for farm produce. A FICCI- GT report says between mid-April and mid-May almost 90 per cent of the farmers in India were either unable to harvest their crops or were stuck with it after harvesting and unable to sell the produce at all.

Sowing Woes
Now that the summer sowing season has begun many are strapped for inputs like fertilisers and agro-chemicals because the agro-chemical industry has not been unable to source its raw material supplies. Incidentally, agro-chemical producers were not among those granted exemption during the lockdown. On the contrary, many were stymied by the ban on 27 pesticides and insecticides announced this year.

Many fertiliser and agrochemical companies source their raw materials and intermediaries from China and have been hit by the clampdown on imports from there following the 15 June clashes between Chinese and Indian soldiers at the Galwan valley in Ladakh.  

The Union government has announced a 11-point scheme to bail farmers out of the hurdles  foreseen during the spell of the pandemic, but farmers’ unions feel that the Rs 1.2 lakh crore financial package was not enough. Pushpendra Singh, President Kisan Shakti Sangh says, “I have been asking the government to increase the amount of PM-KISAN from Rs 6, 000 to Rs 24, 000 per year. Had this been accepted, farmers could have arranged for inputs like seeds and most importantly, fertilisers, pesticides and insecticides”. He acknowledges that more than Rs 1 lakh crore of government investment has been announced for agricultural infrastructure, but points out that there was no immediate relief  in it for farmers.

Seed for sowing
Seed supplies were among items exempted from movement restrictions during the lockdown, being an essential input for farming. Seeds for sowing involve a domestic trade of around Rs 28, 700 crore and the business had already suffered a loss of close to 20 per cent when the exemption for movement of agricultural inputs was announced.

Shortage of labour during the lockdown pushed down the productivity of agro-industries and the most severely impacted were those supplying hybrid seeds of cotton and maize. Moreover, constraints in logistics delayed seed supplies to small and marginal farmers and those not represented by Farmer Producer Organisations (FPOs) in remote districts of the country. Transport operators, for instance, often refuse to ply trucks across long distances. Farmer-Producer Organisations have ironed out some supply glitches for farmers during the sowing season, but farmers may still be stymied by the social distancing norms.

In choosing crops to sow, farmers largely depend on their experience and profitability of the past few sowing seasons. Choosing the right crop to sow involves enormous uncertainty, which in turn leads to lacunae in the production of seeds. The Union government’s decision to incentivise research and development, may mitigate the problem in the long run.

Shivendra Bajaj, Executive Director, Federation of Seed Industry of India (FSII), says, “The majority of labourers are stuck in cities due to the lockdown. In such a scenario, farmers will have to rely on farm machinery and equipment to offset the need of labourers. Also, good quality seeds and other agri inputs, along with government assistance, needs to be provided to farmers to deal with the negative effects arising out of the coronavirus pandemic.”

The farmer’s gold
“The fertiliser Industry falls under essential commodities and was exempted from the lockdown,” points out Satish Chander, Director General, Fertilizer Association of India (FAI), the executive body for fertiliser groups operating in India. The lockdown, which imposed a ban on movement except for essential services, posed a challenge for continued operations of fertiliser plants, though. Plants operate round the year, but consumption of fertilisers is seasonal.

“To make fertilisers available in every corner of the country, it is very important for plants to operate throughout the year,” points out Chander. Transport was another challenge for the industry, because storage capacities of most fertiliser plants are limited. These plants were also handicapped by the unavailability of labour and shortage of consumable items. Some had to opt for a shutdown or operated at reduced cost.  

The Union Ministry of Home Affairs had exempted the fertiliser industry from the lockdown and the Indian Railways had reduced freight charges for it. The industry was, however, starved of working capital. The Direct Benefit Transfer (DBT) system, which puts subsidies directly into the bank accounts of farmers instead of making them available to fertiliser companies, tantamounts to delayed returns for fertiliser plants.Instead of recovering their capital investment within a month or two, the recovery cycle of fertiliser companies now extends upto six months.

 “The Union Budget also made inadequate provisions for fertiliser subsidy, which also halted payments (to the industry),” rues  Chander. Moreover, as part of its cash management measures to tackle the Covid-19 pandemic, the Union Ministry of Finance put monthly and quarterly restrictions on disbursal of funds. The Rs 10,000 crore loan taken from banks in March 2020 had to be settled with interest in April this year, out of funds available for fertiliser subsidy, leaving no funds for payment to the industry in April. This posed a grave liquidity problem for fertiliser companies. ”The government recognised the problem and released funds of Rs 22, 018 crore for the month of April,” concedes Chander and suggests that the government should work out a financial package for the home-grown fertiliser industry to enable it to operate at full capacity.

Timely availability of agricultural inputs is also very crucial for a better Kharif harvest. It will be difficult to meet farmers’ demands for fertilisers on time, unless production at the plant is in full swing. “The government should work out a financial package for the domestic fertiliser industry which can help it to operate at full capacity,” says Chander.

Ironically, fertiliser sales hit a record high during the Covid-19 induced lockdown. Ashok M. R.  Dalwai, Chairman of the Empowered Committee for Doubling Farmers Income and CEO, National Rainfed Area Authority says, “Right from March, the government took steps to rebuild disrupted supply chains with respect to both inputs and outputs. Preparations for Kharif, including seeds, fertilisers and pesticides, were begun well in time, and they have been positioned well at delivery points ...Likewise seeds and pesticides are easily accessible.”

Problematic pesticides
Untimely rains in many regions and the high buffer stocks in government warehouses necessitated fumigation and pest management, but the agrochemicals industry had not been exempt from the lockdown. Moreover, says R.G. Agarwal, Chairman, Dhanuka Agritech, a major player in the agrochemicals market in India “The government’s decision to ban 27 insecticides and pesticides isn’t well thought-out.”

Many agrochemicals companies import inputs from China, along with technical support and finished products. Availability of proprietor molecules, which are largely imported, have been affected by the spread of coronavirus in China since January 2020. Imports from China have been limited and inventory stocks have either been depleted or are diminishing fast.

Agrochemical plants are also unable to run at full capacity because of the shortage of both raw materials and labour. Cost of production is escalating owing to the short supply of labour and transportation. Meanwhile, the  demand for agricultural inputs and farm labour is expected to be high in a year of a good monsoon.

All stakeholders in agriculture, especially farmers’ unions, concur that credit relief is required. As Agarwal explains succinctly, “With more money in farmers’ hands, they will increase investment in agriculture infrastructure as well as agri-inputs and this will lead to overall development of the economy.” Till then, farmers have the monsoon on their side.  

This article was first published in the print issue of (25 June- 09 July) BW Businessworld. Click Here to Subscribe to BW Businessworld magazine.

Tags assigned to this article:
agriculture SATISH CHANDER R. G AGARWAL dhanuka agritech