ECONOMIC ENVIRONMENT

Challenges to Agriculture sector in the

aftermath of Covid-19
Presented By:
Bharat Maniam 11C
Chayanika Das 12C
Kritika Bhatnagar 21C
Saumya Chaturvedi 39C
Vaibhav Mehta 49C
 INTRODUCTION
Agricultural Sector GDP Growth Rate (Primary Sector)
5%
50%
16.7%
4%
Of Indian workforce Contribution to National Income

Criticality of the Sector 3%

• Ensuring food security of the nation

• Influence growth of secondary and tertiary sectors 2%
through forward and backward linkages
• Reduces poverty directly, by raising farm incomes
1%
• Generates employment and reduces food prices

0%
20Q1 20Q2 20Q3 20Q4 21Q1 21Q2
 IMPACT ON MARKETING OF AGRICULTURAL PRODUCE
The major findings with respect to different dimensions of marketing
have been summarised below: 100

• Procurement of Foodgrains by Govt. Agencies - Nearly 44% of the sample 75

districts had a negative impact on government purchase of food

grains, whereas 44% of the sample districts reported no impact. 50
Because the government took great steps to expand the purchase of
food grains, the negative impact on procurement by government 25
agencies was substantially reduced when compared to other aspects
of marketing. 0
• Farmers getting MSP - The negative impact on this element was quite

SP

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limited because the government had made great efforts to expand the

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ng
by

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tti
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en

ca
ge
procurement of food grains.

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re

er

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• Closing local markets - Nearly 87 percent of districts across India

os
o

Fa
Pr

Cl
indicated a negative impact on the organisation of local rural weekly
markets/haats. The local authorities' entire restriction on the opening
of rural haats had a negative impact on a wide number of regions.
 SUPPLY CHAIN DISRUPTION
When most sectors in the economy are in a slump, the agriculture sector has risen to become a beacon of hope
and has the promise of leading the country’s economic recovery.

Despite the nationwide lockdown, the agriculture sector had a growth of 5.9% compared to the whole Indian
economy growing only by 3.9%.

Food is a basic necessity, the level of
food demand should be affected less
by the crisis than the demand for other
goods and services. However, there
has been a major shift in the structure
of demand, with a collapse in demand
from restaurants, hotels and catering,
the closure of open markets, and a
surge in demand from supermarkets.
There are signs that businesses along the food More than simple supply-
chain are already adapting to shifts in demand, demand equilibria, the
for example by switching production lines and agricultural sector now
increasing their capacity to manage larger has many distortions and
inventories; moving to on-line platforms and dislocations, not just
direct delivery to households; and hiring middlemen, but also a
temporary staff. very poor supply-chain,
There is also a need to find alternative markets with lack of cold storage
for products affected as people change their and efficient transport.
consumption habits in response to COVID-19.
 ONLINE SURVEY SUMMARY

In an analysis done by Nabard, through

purposive sampling method from 560
districts of 33 States/UTs manned by 401
DDMs of NABARD, data were tabulated and
analysed using suitable statistical tools to
arrive at major findings of the Survey.

The online survey was conducted during 29

April 2020 to 04 May 2020, a period during
which complete lockdown was being
enforced by the Government.
 IMPACT ON BANKING SERVICE
The findings with respect to banking are as follows:
• Farmers’ Access to Credit - Nearly 59 percent of districts
across India indicated a negative impact on farmers' 100
access to loans through KCC.
• Access to Basic Banking Services - One likely cause for the
negative impact on basic financial services was the 75
necessity for social distance and the constraints placed
on people's movement, limiting their ability to access
banks. 50
• Digital Banking - Even those who normally avoid digital
financial transactions may have transacted digitally as a
result of the lockdown's constraints, potentially with the 25
help of others.
• Bank's Recovery - The price discovery mechanism for
sectors like poultry, dairy, fisheries, and horticulture in 0
particular, has been severely harmed as a result of the

5
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g
ng

in
ed

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i
imposition of lockdown and limits on vehicle movement.

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ry
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sic

ta
As a result, many households' earnings may have

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Ba

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suffered during this time period.
 IMPACT ON PRICE OF AGRI INPUTS
Decreased 15%
4%

10%
Same
42%

Increased 5%
54%

0%
District-wise change in price of Agri-inputs

de

ry

d
ed

er

ee
ne
ci
liz
Se

eF
sti

hi
• Lower availability of goods and

rti

Pe

ac

ttl
Fe

i-M

Ca
manpower due to disruption in supply

r/
gr

de
A
al

d
• Closure of markets and shops

Fo
nt
Re
• Decline in purchasing power of farmers
• Restricted / absence of mobility Increase in magnitude of prices of Agri-inputs
 IMPACT ON PRICE OF DEMAND, SUPPLY AND WAGES OF
AGRICULTURAL LABOUR
Decreased
Same Same Decreased
25%
32% 13% 13%

Increased
Same
17%
46%

Decreased Increased
Increased
70% 41%
43%

District-wise change in Demand, Supply and Wages of Agricultural Labour

• Outflux of labourers from agriculturally

advanced states
• Influx of labourers in agrically backward states
• Restricted mobility causing increased demand
 POLICY IMPLICATIONS & ACTION POINTS
A few policy suggestions for mitigating the impact of COVID-19 on rural India are as under:

• Direct income support may be provided to farmers in general, and those in the poultry and fisheries sectors
in particular, as a result of the fall in agriculture and related sector productivity. In this regard, increasing
income support through PM-KISAN may be a viable solution.
• Microfinance activities in semi-urban and rural areas need to be revitalized by injecting cash into the
NBFCMFI sector, so that small business activities on the pavement and roadside shops can be revived.
• Credit linkage and/or the next dose of credit to qualifying SHGs should be encouraged by banks.
• Mask making, sanitizers, and direct delivery of food grains, veggies, and fruits to be cashed by SHGs and
FPOs are all possibilities.
• MNREGS should be made universal in order to cover a growing number of workers, including migrant
workers who have returned from larger cities.
• MSMEs should be encouraged to create personal protective equipment (PPE) and hand sanitizers, for
example.
• The capacity of rural godowns and cold storage infrastructure in rural areas has to be increased.
• With NABARD's help, a model farm equipment bank/fodder bank with FPOs might be created.
 CONCLUSION
• COVID-19 and the ensuing lockdown had a significant impact on agricultural and allied sectors in the
majority of districts at the national level.
• Rabi crops were the least damaged across various subsectors due to harvesting. Related areas such as
poultry, fishery, and agriculture were on the cusp of completion, but due to false rumors, demand for pigs,
goats, and sheep had plummeted.
• As a result, both production and farm gate prices dropped. However, agriculture input prices rose, owing to
disruptions in the supply chain, closure of shops and markets, as well as the supply chain.
• Despite the fact that banking activities were prohibited, despite being spared from the lockdown,
fundamental banking services such as loans, deposits, and recoveries were substantially impeded in the
majority of the sample districts in the study.
• The increase in digital banking transactions in the majority of the sample districts, on the other hand, was a
silver lining. The microfinance and MSME sectors were the hardest hit, with disruptions occurring in more
than four-fifths of the sample districts, severely limiting livelihoods in the unorganized sector, which
accounts for the majority of employment in rural areas.
• The activities of FPOs and FCs were also brought to a standstill. However, rural organizations, such as
SHGs, took advantage of the crisis by stitching face masks, PPEs, and preparing sanitizers, aiding society
while also generating some revenue for their members.
 REFERENCES
• https://www.nabard.org/auth/writereaddata/tender/1211203145Impact
%20Assessment%20of%20COVID.pdf
• https://www.fao.org/2019-ncov/q-and-a/impact-on-food-and-agriculture/en/
THANK YOU