New study fills critical gap in understanding pandemic impact on food value chains and offers solutions

By Ravi Nandi and S Nedumaran

In a new paper in the journal Sustainability, ICRISAT researchers analyzed the double burden of the COVID-19 pandemic on farmers in a leading groundnut producing state in South India. Results showed that farm production and marketing disruptions led to an average 50% drop in household incomes, an added average 23% rise in farm input costs and increased food prices drove farmers into debt and contributed to poor nutrition. Farmer losses snowballed to processors, input dealers and marketers in the value chain with varying impact. The losses could have lessened with better storage facilities, market information, public distribution system policies and farmer collectives, said the study.

Significance of the study

Most assessments on the impact of COVID-19 on food systems in India have been generic and have focused at the level of macroeconomic impact. There is an urgent need to gather evidence of impact on specific commodities to enable researchers to make accurate assessments on food value chains and livelihoods of various actors involved.

The study had a total of 264 respondents (133 women; 131 men) comprising of different actors along the groundnut value chain in Ananthapuramu district of Andhra Pradesh State. The State is one of the leading producers of groundnut in the country. Groundnut is also a major crop grown in the region where ICRISAT’s Agribusiness and Innovation Platform and the Accion Fraterna Ecology Centre are working together to improve livelihoods of 6000 farmers as part of the project “Accelerating value chain benefits for improved income for farmers and nutrition for consumers”.

Methodology

The researchers employed a case study approach to assess COVID-19 impact on –

• Smallholders’ livelihood
• Crop production
• Agri-input dealers
• Processors
• Marketing
• Food environment

In the paper, the researchers report that COVID-19 pandemic has exacerbated the strain that rural communities in this drought-prone region experience. The COVID-19 impact pathways are many, and it varies for different actors in the groundnut value chain. The most affected actors in the chain are farmers, village-level aggregators and primary processors.

Key results

• COVID-19 created a “double burden” on farmers. Their household incomes declined up to 50% due to disruptions in farm operations and marketing of their farm produce. This was coupled with a steep rise in farm input costs (average 23%) and food prices resulting in increased household expenditure and decreased dietary diversity.
• Farmers’ stored produce and the public distribution system that supplied staples like rice, wheat, sugar and pulses to some extent ensured their food supply. However, this also compromised their nutritional security during the pandemic.
• The farmers reported significant uncertainty about the future. The majority (54%) of the households borrowed money by paying an average 22% interest per annum. Besides, they mortgaged their assets such as home, jewellery, livestock, machinery and land.
• Disruptions in post-production supply chain were due to lack of transport, storage infrastructure, market intelligence, and poor market linkages. With reduced business, there was a reduction in the income of all the actors in the supply chain (input dealers, brokers and processors). For farmers, an increase in the input price, reduction in the commodity prices, and post-harvest losses were major concerns.
• Restrictions on interstate transport, labor shortage, input price volatility, pressure from input supplying companies to pay previous outstanding bills and demand for inputs on a credit basis from farmers placed input dealers under immense pressure. They lost their income from business by up to 75% during the pandemic. Overhead costs of input shops such as rent, electricity charges and higher wages for the labor added to their expenditure.
• Village-level brokers and primary processors were also affected by the pandemic. About 75% of the brokers reported that the pandemic affected their economic activities, leading to losses and 88% of the primary processors were unable to buy materials from farmers or village-level brokers which affected supply to their buyers further down the value chain.

Recommendations

Currently, Indian agriculture is witnessing many marketing related reforms. These reforms aim to enhance the efficiency of agricultural value chains, ensure increased farmer participation and help them gain control over their income and livelihood. Thus, based on the evidence gathered by this study, the researchers recommend the following interventions:

• Encourage farmers’ collectives that have the potential to reduce transaction costs (logistics, inputs, extension, etc.) for small and marginal farmers.
• Strong policies to develop infrastructure in strategic places such as storage, cold chains and pack houses.
• Develop digital platforms and its efficient use in making value chains more competitive, inclusive, sustainable and scalable.

ICRISAT and AFEC are well-placed to develop evidence-based, crop-specific inclusive value chain models through farmer collectives. Through this work, the researchers hope to contribute specific evidence from a critical food crop for a better understanding of COVID-19 impact on Indian food systems and to contribute to India’s policy-making to mitigate the impact of pandemics and other such disasters.

Read more about groundnut on EXPLOREit