Impacts of CORONA VIRUS on the Agriculture Sector

Coronavirus disease (COVID-19) is a new strain that was discovered in 2019 and has not been previously identified in humans.

Agriculture is the primary source of livelihood for about 58 percent of India’s population.

Gross Value Added by agriculture, forestry, and fishing is estimated at Rs 18.55 lakh crore (US$ 265.51 billion) in FY19 (PE). The Indian food and grocery market are the world’s sixth-largest, with retail contributing 70 percent of the sales. The Indian food processing industry accounts for 32 percent of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. Overall exports of Agriculture and allied products were USD 18.7 Bn in 2018-19, as compared to USD 18.59 Bn in 2017-18.

The share of agriculture sector in the country’s total exports, during the last three years, is given below:

Year2016-172017-182018-19
Share of agriculture sector in total exports12.07 %12.66 %11.76%

Pandemic impact in export and import trade in the Agriculture sector of India :

China is India’s biggest trading partner, which is the epicenter of this pandemic outbreak. Many transportation and shipping routes have been hindered by lockdowns in cities.

Farms and logistics companies are also facing labour shortages, shipping and air transport operations to many cities remain suspended from and to India, or are operating with low frequency.

That’s delaying shipments between the countries.

Pandemic effect in supply chain:

Manufacturers are struggling to manage the pandemic’s growing impact on their supply chains because factories and plants have shut down or significantly reduced their production.

These Circumstances are creating a “bullwhip” effect where there are spikes and drops in demand. While the food and agricultural sector should in-principle be less affected than others, illness-related labour shortages, transport interruptions, quarantine measures limiting access to markets, and supply chain disruptions resulting in food loss and waste could affect supply.

Effect on Agriculture Secoter Due to CORONA VIRUS outbreak

Negative Impacts

  1. The Indian pesticide industry is heavily dependent on Chinese imports for raw materials, and could be heavily impacted by the outbreak. According to an analysis prepared by the agriculture ministry domestic inventories will be sufficient for the Kharif sowing season, but any further supply disruptions could hurt farmers.
  2. India’s poultry industry has lost 13 billion rupees ($182 million) in three weeks after speculation on social media.
  3. Broiler chicken prices have fallen to 35 rupees a kg from around 70 rupees. The poultry industry has been losing 120 million rupees per day due to lower prices.
  4. Prices of agricultural commodities such as perishable vegetables, grapes, and sugar have fallen 15-20% as bulk demand from hotels and restaurants has declined.
  5. Tea prices plunged about 40 percent in the recent auctions as Iran and China have stopped importing the commodity because of the outbreak. As a result, the price of tea has plunged to Rs 120-130 per kg from Rs 200 a year ago.
  6. India’s coffee exports are set to take a hit in the April-June quarter as orders from the largest buyer Italy, which is battling a severe outbreak of novel coronavirus, have come down considerably over the past few days. Italy accounts for over a fifth of India’s coffee shipments.
  7. Vegetable oil imports have fallen due to lower shipments of refined oil palm. Meat exports are down by 12-15%, where buffalo meat is highly imported by China.
  8. Both demand of Non-Basmati and Basmati rice has come down India being the largest exporter.
  9. The fisheries sector is passing through a severe crisis following a decline in catches and a slowdown in exports has made things more difficult. The demand is also down in the retail market because of the cancellation of major functions like hatching.
  10. The disruption in the aviation sector following the outbreak dealt a major blow to exports of perishables from India, mainly fresh fruits, vegetables and floriculture products. Shipments are down by about a fourth in volume in recent months mainly due to cancellations of flight services to various destinations.
  11. Exports of Alphonso mangoes have come to a grinding halt due to the import ban by Gulf countries.
  12. Grapes export has been stuck down because of a halt in exporting where Netherlands is a major importer followed by the UK and Germany.

Positive Impacts:

  1. Indian can push its exports in the global markets to fill up the space vacated by the neighboring countries.
  2. According to ISMA (Indian Sugar Mill Association), there is increased demand for Indian sugarcane from Indonesia due to a fall in production in Thailand which is in favor of our country.
  3. Export of Raw Turmeric sales to Europe and West Asia are rising because of its medicinal properties as it is often used with hot milk which is believed to keep the respiratory problems away.
  4. India is the world’s largest edible oil consumer. As a result, palm oil consumption fell after India imposed lockdown. On the other hand, Malaysia which is the largest palm oil-producing state is also affected by the outbreak.
  5. Indian farm commodities have become expensive for overseas buyers, which is to the advantage of exporters.

Because of the on-going epidemic in China, which is the largest exporter and trading center for most of the countries, we can see a mix of both negative and positive impacts. If we see the positive side, China’s economic shutdown opens various doors for India. As per a recent report, global buyers are seeing India as China’s replacement. With respect to agriculture, there are huge price fluctuations happening because of uncertainty in demand and supply. Except for a few commodities like vegetable oils and raw material for Agriculture inputs, remaining things are under control and the government is maintaining 40-50%
buffer stock to overcome even the worst-case scenario. In the case of export and import, we can expect a huge change in trade policies and quarantine policies between the nations. Even now China has imposed a ban on the consumption of wild animals and similar to this there may be a lot of changes that will happen in consumption patterns which will affect a few commodities. Yet we can’t come to a conclusion right away because of the magnitude of impact due to this outbreak is increasing day by day globally. And the pandemic will have a knock-down effect in the world economy and disrupt global supply chains if not contained quickly.

Source: http://www.imotforum.com/

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