Post Date : August 13, 2020
In the wildest of dreams, no farmer would have expected an overnight change of the market situation. The nationwide lockdown started from 25th March. All most everything was shut down. Essential services although exempted, were under much of the confusion, state borders were sealed, movements restricted, labour moved out and police were on the street. While essential services, were allowed, non-essential goods and servicesclogged the roads, trucks got stranded on the highways. The migrant and daily wage labourers wanted to rush back to their villages when no transport means were available.
Lockdown effect on Agriculture markets
Agriculture markets (mandis) being part of the essential services were not under any obligation to be shut down. But many of the operating middleman (Adat), commission agents preferred to stay at home.
Some left their operations to be managed by their Accountants (Munim’s). Consequently, a completely newmarket scenario emerged.
Most mandis across the country operated at around 50% of their capacity. Some were closed too. Most cash rich Adat/Commission agents took the back seat,preferred not to operate during these hard times.
The Munims/Mashakhors/Petty-Adat whose credibility and credentials were unknown were at the helm of the operation. The worst of it was that the Munims/ Mashakhors /Petty-Adat lacked the requisite operational credential to make a legal entry in the mandis. Hence, had troubles at security-checks.
Vehicles with Fruits and Vegetables could operate after the inspection, but empty vehicles/vehicles with empty crates on return trips were held up at various check-posts.
When these vehicles carrying essential items could not get return load the freight costs shot up.
Migrant labours, even the skilled ones (required for banana/ grapes/mango) either left for home or were stranded.
Drivers refused to go to certain specific localities which were suspected of Covid. The farmer had little choice; but to operate. His crops were maturing and if it were fruits and vegetables, he could not even hold. Thus, he made an effort to send his produce to earn something, even at a very low price.
Supply chain operation during the lockdown
For a farmer, the new norms of social- distance, hand wash and sanitisation were unheard of. But the limited operational supply-chains demanded these, for without which they were not willing to pickup
the goods. Farmers had little choice but to adopt the basic hygiene quickly in order to restore his supplies. But there were many farmers who could not manage their traditional supply chain. As a result of which there were stockpiles of farm produce at many localities. Government intervened with the option of railway freight. However, these had limited reach, and the fragmented lots had few takers for consolidation. The traditional supply lines to key consumption markets broke-down as there were little demand consolidation at the mandi levels. The unorganised supply system, which is almost 97% of it, collapsed within days of the lock down declarations. Yet, no one was accountable for it.
Urban Fruits & Vegetable retail operations
Most of states decided to shut down the local mandi, weekly bazaars or the rayatubazaars in order to avoid crowding. Small traders also failed to reach to such places in want of the public transport. As a result of this the consumer dependency on organised retail and e-commerce surged up dramatically.
Many of these organised players were quick to adopt these sanitization practices and restore theiroperation quickly. Some of them marketed the hygiene features as their offerings to re-assure the customers. Many of the retailers came up with innovative ways to maintain social distance and hygiene.
The statutory compliances became too difficult to be managed of frequent notifications from multiple agencies. Government too was on learning mode as to how to manage COVID-19.
Consumers apprehensions confounded
As the smaller mandis were closed, the APMC consumption mandis became crowded. There were too many regulations like change of operation timing, alternate shop in operations, day specific mandi operations. There were mismatches of goods arriving, buyer’spresenceand commission agent availability as a result of these the prices were swinging up and down. The mandi operations became chaotic, confused and callous. These started to lose control. At the same time there were hue & cry of farmers
on distress sale and consumers too started making panic purchases with every wave of announcements.So, government in most places neither could close these operations, nor run it in a controlled way. There were many reports of surge in Covid cases, particularly in mandi operational
areas. Urban consumers became anxious whether the vegetables are safe or not. Therefore, the food safety was hitting hard on their mind. They started to look out for safe and reliable options like organised MRFs & online shopping options.
Prominence of supply chain issues
The farming supply chain issues which were there even without Covid became much prominent for the fact that, these were the only services that were operational. Issues like border restrictions, restricted
trading within mandi jurisdiction, transport availability, freight cost, distress sale and delayed payments got amplified during this crisis. While the governments were taking decisions to prevent COVID-19, they
were equally vigilant on distress the farming sector was undergoing. The economy came to stand still, with the only silver lining of Agriculture. Therefore, the governments’ stakes were high on it.
Decisions on Agriculture
Covid brought in a slew of decisions which were unheard of, in the Agriculture sector.
DBT (Direct Bank Transfer) was at its best in its effectiveness. The Government wanted to reach out to farmers during this distress, and DBT came to its rescue. Money transfer was certain and right on its target. The next best decision was to declare “One market, One India”. Remove the APMC tax completely and allow transactions from anywhere. As the e-commerce demand were growing fast, government too rapidly
added up APMC markets to e-NAM network which crossed 1000 plus. Freight and storage subsidy under the Operation Green was something unheard of. It was a decision, which was not only outof the box, but it could potentially bring in a level playing field for the farmers who donot have the access to market and want to catch up a distant market. The 6-month trial of storage and transportation subsidy could open a new set of subsidiesfor better marketing. The Prime minister’s call for ‘self sufficiency(aatmanirbhar)’ and ‘Vocal for Local’ were building up positive sentiments for farmers.
The new emerging Normal
Consumer behaviours started to shift. The buying habits started to change. They preferred to order fruits & vegetables online than to move to crowded marketplace in fear of COVID. They are no more just looking for fresh vegetables, but are also looking for safe produce. Reliability and trust of a channel is adequately being weighed while making a choice of purchase.
Food safety, traceability and low MRL’s are the consumers’ voice, which even farmers are hearing about. A small number of farmers also tried out
selling on-line. Online Start-up’ssuddenly ceased the opportunity of lockdown to become the stars. Their sales zoomed up. Sensing the potential strength of the future online markets, many large players looked
at the investment opportunities thus Reliance launched its Jio-online platform and joined hands with were Facebook & Google. Sensing the consumer’s mood, there were vegetable washing products
launched by Marico& ITC. Farmers too have become, wise as to plant only that much quantity that they are capable of selling. The unorganised supply chainof fruits and vegetables had a quick exposure of several uncommon phenomenon’s in a short period.
As per the Nielsen’s survey, the trend of staying at home and eating home-cooked meals (Ghar ka khana) will continue to be there for a long time. So also, the demand for immunity boosting fruits and vegetables will be high. The demand for products like raw turmeric, ginger, lemon, amla will be in an uptrend. Many meat substitutes or the vegan- meat will see the replacement of the non-veg component of popular burgers or even pizza. Jackfruits & Soya based products would be the front runners on the race. FSSAI (Food Safety Authority of India), has also recommended 6 foods rich in Vitamin-C to boost immunity during this pandemic.
Implementation will make the difference
Covid fast forwarded many of the legislative decisions. Much is awaited, as to how these reforms are implemented to transform our fruits and vegetables distribution system.Do we really have the blueprints as to where we want to move, on which trajectory?Are we backed up with plans to achieve ‘doubling farmer’s income’? Or are we moving the Bihar way, sitting quiet after legislation.
Legislations cannot change the situation but the implementation of it. For example, the Government of Bihar repealed its APMC Act with effect from 2006. Today the market structurethere, is almost non-existent, and the assets have deteriorated. The market per se in Bihar has been just a strip of land.
Therefore, meticulous planning, multi- stakeholder involvement and massive replication of pilots are essential to transform the existing supply chain system to a more responsive farmer centric one.
This article has been authored by Mihir Mohanta, General Manager- Supply Chain, Mother Dairy
(Disclaimer: Opinions expressed are personal views not of any associated organisation)