Crop prices, farm incomes, and food security during the COVID‐19 pandemic in India: Phone‐based producer survey evidence from Haryana State

Abstract

In March 2020, India declared a nationwide lockdown in response to the COVID‐19 pandemic. Such restrictions on mobility interrupted the normal functioning of agricultural value chains. For a sample of 1767 tomato and wheat producers in the state of Haryana, we study to what extent the lockdown limited access to inputs, labor, machinery, and markets to produce, harvest, and sell their crops. We quantify crop income reductions during the first months of the lockdown and analyze to what extent these are associated with borrowing and food insecurity. We find that wheat producers, for whom state‐led procurement guaranteed market access at fixed prices, suffered minimal declines in income. For tomato producers—an already more vulnerable population—income fell by 50% relative to their expected income in a normal year, largely due to a steep fall of tomato prices as they shifted from wholesale markets to local retail markets, resulting in a sharp increase in local supply. Relative to wheat producers affected by the lockdown, reduced income for tomato producers was associated with an increase in borrowing and reduced food security. We conclude that targeting producers of crops that face substantial price risk and introducing policies that stabilize market prices are important in efforts to aid recovery and build resilience of smallholder farmers.

Impacts of the COVID-19 pandemic on food prices: Evidence from storable and perishable commodities in India

“…Similarly, Imai, Kaicker, and Gaiha [ 9 ] found that rice, onion, potato, and tomato prices in three states of India (Maharashtra, Jharkhand, and Meghalaya) increased during the lockdown period. On the contrary, Ceballos, Kannan, Kramer [ 14 ] noted the price of tomatoes decreased significantly after the lockdown policy in Haryana. Prices of fruits and vegetables were also falling during the lockdown period compared to the pre-lockdown period in various states of India (Jharkhand, Assam, Andra Pradesh, Karnataka, Jammu, and Kashmir, [ 15 , 16 ]).…”

“…Prices of fruits and vegetables were also falling during the lockdown period compared to the pre-lockdown period in various states of India (Jharkhand, Assam, Andra Pradesh, Karnataka, Jammu, and Kashmir, [ 15 , 16 ]). In the case of wheat producer price in Haryana, the effects of COVID-19 was negligible [ 14 ]. In response to the resurgence of COVID-19, no significant changes in the wholesale prices of storable staple foods (rice and wheat flour) [ 17 ] were found in China.…”

“…On the supply side factors, the disruptions in transportation sectors due to the COVID-19 lockdowns and movement restrictions severely affected food markets, creating supply shortages and increasing transaction costs [ 37 ]. For example, Ceballos, Kannan, and Kramer [ 14 ] observed that although production, harvest, and transportation costs increased for tomato farmers in the Haryana state of India, they received significantly lower prices than a typical year. Similarly, Bangladeshi vegetable farmers received less than 50% of the price compared to a typical year.…”

“…In sum, COVID-19 affected both supply and demand of food markets, resulting in higher food prices, leading to food insecurity and poverty in many developing and emerging countries. As mentioned above, various studies have investigated economy-wide impacts of COVID-19 induced turmoil [ 45 , 46 ], effects on labor markets [ 23 , 33 , 47 , 48 ], household income and food security [ 14 , 26 , 28 , 36 , 38 , 49 – 52 ], and trade flows [ 41 , 53 ]. However, the literature on price effects of the COVID-19 pandemic is minimal.…”

“…Several existing government procurement policies were also enacted to prevent a decline in wheat prices during the pandemic, ensuring stable income for wheat farmers. Additionally, Ceballos et al [ 14 ] report that government procurement policies (such as minimum support price [MSP]) to secure more food for Indians resulted in less wheat export. In other words, the negative spillover effect of government policies in the international market.…”