Farm Arrivals Plunge Despite Efforts To Keep Agricultural Supply Chains Moving
Arrivals of agricultural commodities at key markets have fallen to a fraction of levels seen before a 21-day nationwide lockdown was imposed, data analysed by BloombergQuint showed.
The drop in arrivals of agricultural commodities signals a disrupted supply chain ahead of the crucial harvesting season. This, despite food items being classified as essential commodities. Broken supply chains are also leading to greater volatility in prices, particularly for perishable items.
Data collated by BloombergQuint from Agmarknet, a government portal on agricultural marketing, shows a 15-76 percent decline in arrivals in the week of April 1-6 compared to the week of March 1-6.
Overall, the total arrivals of major cereals, fruits and vegetables recorded across market centres fell to 3.09 lakh tonnes in the first week of April. This is 55.6 percent lower than arrivals seen a month ago. The steepest fall has been seen in the case of maize and wheat. Vegetables like tomatoes, potatoes, cabbage and cauliflower have also seen a sharp decline in arrivals.
The data is based on daily reports provided by 800 markets. About 3,200 markets didn’t provide daily updates.
Farmers live far away from mandis (markets) and even when they do get to the mandis, their commodities are often not bought or they are paid lower prices, said Abhijit Sen, a former member of the Planning Commission.
This is because the supply chain is choked at two levels, said Sen, explaining that it’s not only difficult for farmers to reach mandis but also for supplies from mandis to reach towns and cities. For instance, movements of trucks which carry agricultural commodities, is at one-fourth the normal level, he said. “This is a bigger problem.”
Hetal Gandhi, director at CRISIL Research, said that the arrival of most agriculture commodities remained lower during first week of April due to sub-optimal mandi operations, delayed harvesting as well as labour and transportation issues. As agriculture activities are exempt from the lockdown, most APMCs initially remained open, she said. However, due to overcrowding, lack of social distancing at mandis and inadequate availability of labour, many mandis were not able to operate normally, she said.
According to Gandhi, many APMCs have reduced their hours of operation and functioning well below capacity. For example, at the Vashi APMC, which typically handles about 1200-1300 trucks on a daily basis, only 200-300 trucks were allowed during the first week of April on a per day basis, Gandhi said.
Some delay in harvest of rabi crops has also been noticed, which could be impacting arrivals.
Despite the lower arrivals, price levels have remained stable, although volatility in prices has increased.
In some cases prices have dipped below the minimum support price. This is true for maize, paddy and wheat where the modal price is below the support prices. The modal prices—the price at which most transactions take place during peak marketing period—for major fruits and vegetables rose.
However, data for minimum price of trade and maximum price, indicated higher volatility, which may signal some distress selling of perishable produce.
There is also wide variation in prices across states.
In the case of cereals, too, prices of maize in Karnataka, paddy in Chhattisgarh, Tamil Nadu and Uttar Pradesh, and wheat in Chattisgarh, were below the minimum support prices. They remained above MSP in states like Odisha and Uttar Pradesh for maize and West Bengal, Karnataka and Kerala for paddy.
The broad price trend has held up, said Gandhi. Given the lower arrivals, prices have remained firm on account of steady demand for such essential commodities so far, Gandhi said.