HOW COVID-19 IMPACTING THE RURAL MARKET

                                            How COVID-19 is Impacting the Rural Market

A lockdown has been imposed in the entire country to prevent the outbreak of the novel Coronavirus. People have welcomed this decision as they understand that desperate times call for strict measures. The manufacturing for all product categories has been stopped, until further notice, apart from the ones listed under essential items.

COVID-19 has struck deep into the global economy and India is no exception. In the near future, there will be obstacles like weak financial quarters, job losses, salary cuts, and lower profit margins. However, this phase too shall pass.

Today, everyone is talking about the impact of COVID-19, but only from a national perspective or urban centric perspective. Unfortunately, not much has been spoken about the impact of COVID-19 on the rural sector, which constitutes a large part of the economy and overall consumption across product categories in the country.

For the record, as per a United Nations report published in 2019, 69% of India’s population resides in rural areas, which constitutes to more than 700 million people comprising farmers, housewives, SME’s, government servants and youth.

IMPACT

The first visible impact of COVID-19 in the rural sector is on the agricultural supply-chain. While the government has issued permits to trucks allowing them to carry groceries, fruits, and cereals, a large number of transporters are yet to receive their permits. This has increased the time taken for the farm produce to reach the market. On the other hand, there is a slight impact on the demand side as the restaurants have been ordered to shut down for the interim period. This is causing a sizeable revenue loss to many farmers across states. As per a published report, the railway ministry suggests that freight loading has dipped from a usual 10,000 cargo rakes per day to just about 3-4,000 now. As a result, the farmer has to sell his crop at a cheaper price, settle with a lower profit.

The second impact of COVID-19 is the delay in sowing and harvesting of crops due to the unavailability of products such as seeds, tractors, ancillary support, medicines for crop protection. Traditionally, this is the best time for brands from the above-mentioned sectors to market their products to the farmers. Even the e-commerce brands in agriculture have been impacted as the transportation of these products have stopped and there is no inventory.

The third impact of COVID-19 is the expected job cuts in the agricultural sector. As per the government, there are nearly nine crore farmers along with a similar number (if not more) landless agricultural labour. While the farmer will be receiving relief from the government directly, the latter is placed in a difficult position at this time.

The fourth big impact is the complete shutdown of exports. India has been a major exporter of crops and as per APEDA, India’s overall agri-exports in 2018-19 were to the tune of Rs 685 billion. Currently, all the ports have been locked and huge inventory has piled up with the traders and farmers.

The fifth impact is on the MSME & SME’s. These include small industry units, businesses/traders, and shops that manage a decent size inventory and employ numerous direct and indirect employees. Post lockdown, their businesses are shut down and facing a revenue hit. They may have to let go of their employees for a variety of reasons including financial viability, migration, health and other. People stand to lose jobs without a clear idea of when the situation is going to stabilize.