View: Ensuring food security during the pandemic

By CSC Sekhar
The Covid-19 pandemic has resulted in a looming crisis for the global and Indian economies. As per the IMF projections, India’s GDP is projected to grow at 1.9%, which has since been downgraded to 0.2-0.5 per cent by several rating agencies. One of the most serious impacts is expected to be on food security. It is feared that the continuing lockdowns across the country, affecting labour and input availability for agricultural operations, coupled with the stoppage of transport networks, will seriously disrupt food supplies. The consequent fall in rural incomes is expected to impact food demand and also the overall economic growth adversely.

As per UN FAO, the four pillars of food security are availability, access, stability and utilization. These indicate the physical availability of food; economic access to food; stability of the availability & access; and absorptive capacity (health status). Availability and access become extremely important in the present context.

As for the availability of staple food grains, the second advance estimates of crop production (SAE) estimated the wheat output as 106.21 million tons and 15.53 million tons of rabi rice. The current projections by the states indicate even higher levels of production than the SAE. More than 80 per cent of the wheat output has already been harvested and procurement has been brisk with nearly one-third of the targeted procurement being completed by 30 April. The crop outlook for the upcoming kharif season is also positive based on a predicted normal monsoon; brisk sowing in all the states; good uptake of fertilizers and seeds. The grain stocks are also adequate with FCI carrying 56.9 million tons on 1 April — nearly two and a half times the buffer stock norms. The expected procurement in the current season is about 52 million tons while the outgo on all the programs, including the recently announced free grains under PMGKY, is 27 million tons in the next three months. Hence, by the beginning of July, the stocks could reach a level of 82 million tons. FCI has dispatched nearly 60 lakh tons of foodgrains to the states in April — which is more than double the normal monthly dispatch. Also, almost all the states have completed their offtake of foodgrains for April. Hence states are also showing the necessary urgency in dealing with the situation. The global inventories are also adequate, with the global stock-to-use ratios being close to their median level of the last two decades. Harvests in major producing countries in the next season are also expected to be satisfactory as per USDA’s projections. Thus the physical availability (production plus stocks) of staple cereals and the distribution of the same to the states appears satisfactory.

However, the same cannot be said about other commodities such as fruits & vegetables; eggs, meat and fish (EMF); milk and sugar. Disruptions of the supply chain during the lockdown period have affected this sector very adversely. Marketing of watermelons, muskmelons, mangoes and marigold flowers suffered due to stoppage of transport networks and closure of cold storages and mandis. Sugar and milk consumption declined due to the closure of hotels and restaurants and demand from bulk consumers. Poultry prices have plummeted due to Covid-19 fears. Urgent action is needed to smoothen the supply chains and help these farmers. The prices of most commodities remained sluggish in March. The Y-o-Y inflation for almost all the important food commodities has declined at wholesale and retail level due to distress sales by the farmers and decline in demand from bulk consumers.

Turning to demand side, incomes of farmers of perishable crops and poultry products are going to be much lower due to crop losses, storage problems and halt of transportation networks. The fall in prices due to lack of demand will further aggravate these problems. The farm labourers will have much lower earnings, if any at all, due to the movement restrictions and lowered agricultural activity. Also, the complete halt in construction sector, which absorbs majority of agricultural labour, will further aggravate the crisis. This huge negative impact on rural incomes is likely to hit the economy hard, which was already reeling with demand contraction even before this crisis.

Therefore, a judicious mix of policies, combining direct payments with free food provision, in addition to providing employment under MGNREGA, is urgently needed to ensure economic and physical access to food for these vulnerable sections. Although the government has already announced some of these measures in the first stimulus package, the quantum of assistance and the coverage of beneficiaries need to be expanded. First, the payment for farmers under PM-KISAN needs to be increased to Rs 6,000/- to meet the expenses for the next season. Secondly, the agricultural labour, who have been left out so far, need to be supported. There are nearly 7.6 crores of active MGNREGA job card holders. A payment of Rs 2,000 may be made immediately to these card holders. This is equivalent of wages for just 10 days to each worker.

The third vulnerable section is the seasonal migrants. As per the available estimates, there are about 1.36 crores of temporary or seasonal migrants. A payment of Rs 2,000/-, similar to agricultural labour, may be made to this segment. All these payments – to farmers, rural labour and migrant workers – will involve a total expenditure of Rs 70,060 crores. This constitutes 2.2 per cent of current Agricultural GDP and a mere 0.4 per cent of the current GDP of the country.

These payments are extremely important because these segments of the population are severely hit by this crisis. Also, these sections have a higher marginal propensity to consume (MPC), which is very crucial to kick start the economy. In addition to direct cash payments, the current provision of free foodgrains of 5 kg per person per month under the Pradhan Mantri Garib Kalyan Ann Yojana (PMGKY) needs to be continued for at least six months, if not more.

Thus, the food supply scenario is largely satisfactory but a challenge to India’s food security can emanate from the demand side. A judicious policy of direct payments and food distribution is urgently called for.



— The author is Professor of Economics, Institute of Economic Growth, University of Delhi. This article is part of a series written by economists and sectoral experts on the path India must take to survive the Covid crisis.