Review of Early Impact of COVID-19 on Indian Agricultural Economy and Disturbances in Food Supply Chains

Abstract

Many economists believe that COVID-19 poses a serious existential crisis for Indian rural communities. Analysis of the performance of the agriculture sector in the last few months reveals that agriculture and allied sectors can give new momentum to the Indian economy. A food crisis is not possible in India. We produce 70 million tonnes of food grain, more than the total national requirement. In the coming Kharif season, the input costs are expected to be higher than usual, but the government of India’s response to mitigate high input costs is encouraging. The major problem is in the food supply chain, which needed serious intervention from stakeholders and state and central government support. Disturbances and disruption in food supply chains have created high transaction costs. The spread of COVID-19 may create irregularity in food supply throughout India as 92% of produce is purchased and consumed. Using trade statistics and survey data gathered through online questionnaires and phone interviews with small-holder farmers, agro-industrial companies, agricultural workers, traders, importers, and consumers. Our findings show significant differences in how COVID-19 and containment measures disrupt supply chains between the modern export-oriented supply chain, which is centered on a few large vertically integrated agro-industrial companies, and the more traditional domestic-oriented supply chain, which includes a large number of small-holder farmers and informal traders — with the former being more resilient to the COVID-19.