Covid-19 is a multi-faceted global crisis. From the food industry perspective, we need to examine its implications along two dimensions: demand and supply. While rebuilding consumer confidence and shaping demand is a long-term ask, we need to ensure a robust supply response is in place. In a country where agriculture supports majority of our population, we need to pull the right levers to reduce possible impact on the economy. What we definitely don’t want to have is a food crisis on top of a health crisis and an economic crisis.
We must cooperate globally to ensure food moves from where it is grown to where it is needed. It is important to ensure open borders as it relates to food and agricultural products. This means refraining from export: import restrictions, and where possible, reducing tariffs to control cost escalation of essential products that can inhibit trade and negatively affect both the farmer and the consumer. Trade restrictions can disrupt global food supply chains. Countries promoting self-sufficiency to ensure food security for their citizens, may result in some disruption if we restrict free flow of trade for a sustained period. Edible oil which is a major import item for India has not been interrupted so far, but within the country, we have witnessed stark contrasts in food demand and supply. Images of farmers overloaded with stock, leading to food waste due to their inability to get the produce to the agri-markets (mandis) or get the right price and on the other hand customers lining up at supermarkets to stock food items being met with empty shelves have been observed.
With these new ways of operating coming into play, it is the right time for agri reforms. The government has recently announced reforms in the agriculture sector including the amendment of Essential Commodities Act (1955) – no stock limit shall apply for storage unless under exigencies; formulation of central law to provide farmers choice to sell at attractive prices beyond “mandis”; barrier-free interstate trade; Agriculture produce price and quantity assurance; legal framework will be created to enable farmers for engaging with processors, aggregators, large retailers and exporters in a fair and transparent manner. Risk mitigation for farmers, assured returns and quality standardisation shall form an integral part of this framework. These measures will surely help improve agriculture competitiveness and result in better remuneration to farmers in India.
With the Rs 10,000 crore scheme for the formalization of Micro Food Enterprises (MFE) under ‘Vocal for Local with Global outreach’ vision, 2 lakh MFEs, Farmer Producer Organisations, Self Help Groups and Cooperatives would be supported in technical upgradation to attain food standards, build brands and marketing.
The agri-infra fund is also a good development considering the huge amount of post-harvest losses that occur. The success, however, depends on good execution of the intent. This will assure regular and quality supply of the raw materials to the agro-processing industry, resulting in better realization for the farmers as well as offering wide-ranging food products to the consumers
With Covid related restrictions, export documentation has recently moved to the digital platform from hard copy. To ease flow of commodities across borders of import-export destinations, digital documentation including – Preferential Certificates should be widely accepted. All major export destinations including ASEAN countries should be intimated by Indian government that they are only issuing digital certificates and importing countries should not stop consignments for lack of hard copy certificates.
Another key aspect is to recognize and issue common Sanitary/Phytosanitary (SPS) standards and certificates in order to facilitate smooth export of food and feed products. Consistency in ‘critical and essential’ definition across district, state and country borders is key to avoid different interpretations. This will ensure that all critical points of the supply chain are functioning in conjunction, to continue feeding the world.
Indian government has been aware and quite receptive to understanding on-ground challenges and making necessary amendments in rules to support the production and distribution of essential food items. However, labour shortage continues to be a major concern with massive reverse migration of workers from cities to villages. Industry is providing safe accommodation to workers at plant sites where possible, but this has been tough due to the sheer lack of availability as well as the associated stigma. This has had an impact on the marketing of Rabi (winter) crop and may even spill over to the planting season of the Kharif (summer) crop. Farmers will face challenges due to this, throwing them out of gear. There will be increased labour demand from manufacturing locations across the country with increasing production requirements. This needs urgent attention and the government needs to build confidence and allay any fears with the labour, for them to return to their place of work.
This pandemic has put global food supply chains under an endurance test, and it is far from over. As we move into restart mode with the reopening of the economy, we need to prepare ahead. Prepare to bring our people back to work safely, stabilize the food supply chain, meet business demands, build new operating models, grow consumer confidence and create new distribution methodologies. If we can drive such an integrated response, we will eventually emerge stronger from this.
The writer is President, Cargill India
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