A CRISIS THAT CUTS TO THE BONE
Atif Parvez, 28, a poultry farmer in Uttar Pradesh’s Saharanpur district, is a worried man. Prices of broiler chicken have nearly halved in the state, from Rs 90-110 a kg in December to Rs 50 in early April, first on rumours that chicken meat and eggs caused COVID-19 and later from the lockdown. His costs are around Rs 65 a chicken, including chicken feed and staff wages. “If costs can’t be recovered, what’s the point of running a business?” he asks.
India’s poultry sector is valued at about Rs 80,000 crore (2015-16), according to the Department of Animal Husbandry, and broadly divided into two areas—the organised commercial sector, with about 80 per cent of the market, and the unorganised or ‘backyard poultry’ sector. According to the Livestock Census 2019, India had a poultry population of 851.8 million, of which 534.7 million were commercial poultry and 317.1 million, the backyard variety. Some of the largest poultry-producing states are: Tamil Nadu (120.8 million), Andhra Pradesh (107.9 million) and Telangana (80 million). There are around 30 million farmers engaged in backyard poultry and, overall, the sector employs about 60 million.
The All India Poultry Breeders Association (AIPBA) has estimated that the sector incurred Rs 22,500 crore in losses from February to mid-April. Sanjeev Gupta, vice-president of the Poultry Federation of India, claims that farmers are left with just 15 per cent of their original livestock, having been forced to cull the rest with demand dropping to almost nothing. The only businesses that will survive, he says, will be the larger ones in the organised sector. Aside from the curtailed business as a result of the lockdown, rumours on social media that drew a link between the coronavirus and chicken meat and eggs have also hit this sector badly. In an attempt to rein in such misleading information, the Ministry of Fisheries, Animal Husbandry & Dairying and the FSSAI (Food Safety and Standards Authority of India) issued separate statements to clarify the matter. The Maharashtra government also reportedly announced that FIRs would be
filed against rumour-mongers.
On April 15, the Centre allowed the resumption of all fishing-related operations, including harvesting, processing, cold chain, transport, sales and marketing. Shops are allowed to sell poultry, meat and fish, as long as they ensure strict social distancing. But the pain remains. The AIPBA has reportedly sought urgent help from the Centre, including a restructuring of loans for poultry farmers, compensation based on the size of the affected farms, and subsidised poultry feed. Gupta says that the government must also issue clear guidelines to local authorities for poultry shops to be opened. If problems continue and farmers stay away from raising chicks, prices will shoot up when the market returns to normal.
On a related note, prices of mutton are already soaring. Rezaur Rahman, a farmer from Chandanbara in East Champaran, Bihar, says the price of mutton rises every year around Holi, but drops soon after. This time, prices have remained high, at Rs 550 per kg. Rates in Delhi have risen to Rs 700 per kg, with supply faltering in some areas.
As per reports, India’s exports of buffalo meat, the country’s second largest farm export, have fallen 50 per cent, to 50,000 tonnes, in the first week of March. The industry had lost Rs 1,500 crore by then, as exports to Vietnam—which caters to the Chinese market—were stalled. Fauzan
Alavi, vice president, All
India Meat and Livestock Exporters Association, said export units are facing a shortage of shipping containers, but with the Chinese market improving, enquiries have begun. India exported 1.2 million tonnes of buffalo meat, worth Rs 25,168 crore, in 2018-19.
“The situation will not change much (after the new guidelines) because there is lack of coordination between states,” says Payal Kaur, international sales head of Al Hasan Group in Delhi, a top exporter of meat to Hong Kong, Iraq and African countries. The firm says it faces restrictions at the local level, leading to a 50 per cent drop in business.
The lockdown has badly hit the fish industry as well. Babu Raja Bhai, a fisherman from Gujarat’s Amreli district, says that apart from his own catch, he used to buy 300-400 pendis (3,000-4,000 kg) of fish daily from other small fishermen to supply to the market. “Everything has halted,” he says. “Neither are fish being caught nor is business being done.” India’s fisheries sector, employing 14 million, produced 12.6 million tonnes of fish in 2017-18, says the National Fisheries Development Board. Over 50 different types of fish and shellfish are exported to 75 countries around the world. But today, countries in West Asia and Europe have completely stopped imports. Mohammad Afzal, 40, promoter of export firm Al Tayyaba Dry Fish in Mumbai, points out that there can be no business when even fish farming is in limbo. “Only those with leftover stock might be selling,” he says. The ban on catching fish during the lockdown impacted not only fishermen and fish farmers, but also the hundreds of thousands employed in sorting and drying of stock.
Kerala, the second largest seafood-exporting state by value in India after Andhra Pradesh, exported about Rs 5,919 crore worth of marine products in 2017-18. This year, since January 15, no consignment has shipped out of Kochi port. And all export units in the state have remained closed since March 23, when Kerala imposed its lockdown (a day prior to the Centre’s announcement). “Normally, we get a lot of orders in January. After the virus outbreak, we lost all orders from China,” says Vishakan V., 57, who owns a seafood processing unit in Alappuzha district. Europe and the US also started cancelling orders from February. He says the situation may normalise in another three months, but by then, the ban on trawling will be in force. “We have lost a year due to the pandemic.” Although restrictions have now been eased, without export orders and blocked payments, marine processing units can’t operate, he adds. Local fishermen are not going to sea as auction centres remain closed.
Each additional day of the lockdown brings more pain to sectors like these. And with no end in sight, millions of livelihoods are in peril.
THE POULTRY FEDERATION OF INDIA SAYS SOME FARMERS HAVE BEEN FORCED TO CULL 85 % OF THEIR FLOCK
—with Jeemon Jacob
Arvind Panagariya is a prolific writer. He has written 20 books, 170 academic papers and twice as many press articles in a career of 47 years and lists being the prime minister’s Sherpa in three G20 meetings among his exceptional honours. Economists learn policy-making as a part of their curriculum. Few find any use for it—except to comment on policies—but many harbour the ambition to apply it. Panagariya is keen on making policy. He spent a couple of years as the first vice-chairman of NITI Aayog immediately after it replaced Planning Commission. He said he left because he prized his Columbia professorship; but the hard work he put into making NITI Aayog a useful intermediary between the Centre and the states and between economic policy and opportunism went to waste. But he is not one to give up. He has a vaulting ambition for India, irrespective of whether he participates in achieving it. He published India: the Emerging Giant in 2008, and India’s Tryst with Destiny in 2013; now he has written India Unlimited. While the first book was more or less an economic history of independent India, the second made a case for growth. His latest is a shopping bag of reforms—it outlines what Panagariya would do if he were India’s prime minister.
He would give the poor a cash subsidy that would permit all the controls that afflict agriculture to be abolished. Rationing, or the public distribution system, can go and with it procurement at minimum support prices. Competition would come to agricultural markets; agriculture can then specialise in crops in which it is competitive and start exporting. Panagariya wants states to make leasing of agricultural land easy so that the large number of villagers who own tiny plots can lease them and go and work in cities, instead of digging pits and filling them up under MNREGA. That would remove a major obstacle to a rise in productivity.
In the past three decades, China has become highly competitive in manufacturing and dominated world trade; India lost out. Arvind believes this can be reversed for two reasons.
First, with its shrinking population, China’s labour force will also decline, and wages will rise. Second, the trade war with the US will make it less competitive. And India can expand manufacturing without giving up its specialisation in services; there is no conflict. But the Bharatiya Janata Party government has powerful supporters in industry; under their influence, it has been raising import duties on goods they produce, making the Indian industry even less competitive. Panagariya writes that he would presumably favour unilateral free trade (UFT), but sees no chance of the government listening. So he recommends a uniform 10 per cent import tariff on everything. Why not devalue by 10 per cent and have UFT? In the early 1990s, when I was briefly in government, we reduced tariffs and simultaneously devalued. It is best for the government to ignore industry’s pressure for protection; but if it is too weak or partisan to do so, it should use exchange manipulation rather than tariffs or import restrictions. Panagariya makes constructive suggestions in many other policy areas, including labour laws, land market laws, affordable housing and dormitories for migrant workers, and slums.
Finance has been one of the economy’s most closely-regulated sectors; regulators have made a perfect mess of it—especially of the banking sector. Panagariya outlines beautifully how they did it—except that he has nothing to say about the equity market, which SEBI destroyed so perfectly that nothing further could go wrong with it. He lists government research institutions, but forgets to mention that their research is practically useless, and omits private corporate research which, though tiny, is more likely to be used.
At the end, Panagariya has a chapter on governance, which reads more like a lecture to the prime minister on how to run the economy. This is perhaps the most relevant, though unlikely to find a listener. But there is no harm in being an optimist, especially if one has a pensionable job in the US. ■
A shopping bag of reforms—Arvind Panagariya’s book essentially outlines what he would do if he were India’s prime minister