India must revamp its food grain storage techniques, modernise its mandis and expand the capacity of cold chains without any further delay
The world will never be the same again.
That said, there are a few positive signs. On April 8, the Saudi Arabia-UAE coalition announced a unilateral ceasefire in the five-year-old attack against Yemen. The Iranians were not so lucky, as US sanctions on Iran are continuing despite the death of more than 4,100 persons from COVID-19 as of April 10. COVID-19 has not been able to persuade the United States to lift the 60-years-old trade embargo on Cuba. In India, sections of the electronic and social media have been spreading communal virus, which is as deadly as coronavirus.
The Indian agriculture and food processing sector has so far ensured that staple foods such as wheat flour, rice, pulses, edible oils, and fruits and vegetables are largely available across India. In most parts of India, urban centres have also not experienced any serious shortage of food items.
However, despite abundant production and availability of fruits and vegetables, there has been a price rise due to restrictions on mandi operations and movement from villages. At several places, there are reports of distress sale of vegetables and fruits by farmers. Despite the Union government’s clear instructions, police have been restricting movement, due to which farmers are selling in distress and consumers are paying 15-20 percent higher prices.
According to the Solvent Extractors Association, India consumes about 23 million tonnes of edible oils, out of which only about 8 million tonnes is produced domestically and the remaining 15 million tonnes is imported. An efficient global supply chain has ensured that Indian consumers have so far not faced any shortage, nor any price rise.
However, exports of agricultural commodities from India have been adversely affected. About 400,000 tonnes of non-basmati rice and 100,000 tonnes of basmati rice meant for export in March and April is stuck in the supply chain. India’s non-basmati rice is exported primarily to Bangladesh, Nepal, Benin and Senegal, etc. Saudi Arabia, Iraq and Iran are major importers of more expensive basmati rice. The prices in these countries would increase if the supply chain in India remains broken due to the lockdown. There is also a risk of other countries capturing India’s export market if the lockdown continues to hamper the supply chain.
The Government of Karnataka had closed the roads connecting Kasaragod in Kerala and Mangaluru in Karnataka. There were media reports that movement of vegetables from Tamil Nadu and Karnataka to Kerala was also affected. There is a growing realisation that Kerala should make efforts to become self-sufficient for its food requirement.
Whenever the threat of large scale deaths due to COVID-19 subsides, governments across the world may decide to build sufficient domestic capacity to grow (if possible) and store enough food to meet its requirement for at least six months. Food importing countries may realise that they need to invest large sums of money in creating modern infrastructure at ports.
In India also, there is likely to be a greater realisation to modernise supply chains of agriculture and food.
For holding government stocks of food grain, India has a silo capacity of just 6.6 lakh tonnes. The storage and movement of food grains, whether by railway rakes or by trucks, is in gunny bags which results in losses. As of January 31, about 13.2 million tonnes of wheat was stored in covered and plinth storage (CAP) in open fields, mostly in Punjab. By the time Rabi procurement ends in June, there could be much more wheat in CAP storage, some on totally unscientific and ‘kutcha’ plinths. India must quickly invest in modern steel silo storage capacity in major procuring states so that wheat procured by the government is not required to be stored in CAP.
Most of the mandis in India do not have facilities for assaying and grading. The commission agents decide the price on the basis of smell and physical examination of produce. Mandis can easily be equipped with modern equipment for testing.
India also needs to invest in setting up modern abattoirs so that people can get hygienically slaughtered poultry and meat. Similarly, cold chain capacity (including reefer trucks), for perishable food, medicines and vaccines etc. needs to be expanded.
Delhi needs to act decisively and fast as once the world puts the pandemic behind it, the government must not only ensure that there is self-sufficiency back home, but also be prepared to expand its agriculture exports to meet demands in foreign markets.
Finally, a question can be asked: how to raise money for this much-needed investment in agriculture, food and health infrastructure? The government can begin by abandoning the central vista redevelopment project in New Delhi. This can provide Rs 20,000 crore.
Siraj Hussain retired as Union Agriculture Secretary, and is currently Visiting Senior Fellow, ICRIER. Views are personal.
This is the third article in a multi-part series, World After COVID-19, which looks at the probable developments in various sectors: macro economy, trade, healthcare, agriculture, judiciary, international politics and sports.