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Coronavirus affected rural value chain deserves attention -The Asian Age



The majority of the rural population is engaged in some form of agricultural activity, although the contribution of the agricultural sector to the GDP is only 14.10%. The livelihood of almost 40.6% of the population depends on agriculture. More than half of the households, 54.72%, don't have any cash savings. Households in vegetable and fish farming have reported highest proportions of no cash savings. 21.8% cannot survive with their current savings and among them, daily agricultural workers can rely on their savings the least. They are worse suffered of coronavirus.

Currently the farmers and traders involved in staple food value chain are experiencing a fall in prices for major products such as Vegetables, Poultry meat, Eggs, Fish and Milk due to breakdown of supply chain and interruption of transportation. Some of the non-perishable items such as rice, lentils, potato are possible to keep in stock for some days. These producers are also facing the shortage of raw materials due to lack of transportation.

Most importantly, lack of consumer demand was inevitably the biggest challenge faced by the food producers.Furthermore, owing to drop in demand, shortage of supply of raw materials and not having proper transportation facilities the price shock is expected to go hither in the near future. Additionally, with shortage of supply to the market, the industry is looking at a huge demand-supply gap for a considerable period of time, even if the lockdown is withdrawn.

Red Castle Partner, a research organization had a recent study on 'Impact of Coronavirus on livelihoods: Rural and low income population of Bangladesh'. It covers most of the essential commodities produced and delivered to cities, the customer centers. The study observed that immediately before the lockdown due to coronavirusbreakout, the dairy industry faced increased demand as the consumers turned to panic-buying.

However, immediately after lockdown, the demand has decreased in all levels, local mills, direct consumers and sweetmeat producers causing huge losses in the industry. Around 12-15 million litres of milk are left unsold everyday which add up to BDT 570 million in daily losses due to the perishable nature of milk and lack of proper storing facilities of the dairy farmers. The study find that in Satkhira alone, the dairy farmers are forced to dump over 50,000 litres of milk every day.Liquid raw milk prices dropped from BDT36-52 per litre to BDT 2 0-28 a litre.

The prices of broiler chicken, one-day-old chicken and eggs going down, sale in the poultry industry has fallen due to interruption of transportation. The price of one-day-old chicken has reportedly dropped significantly to BDT 1.The raw materials needed for the industry are stuck at port.

As a result, production has also decreased by 70 to 75%. Processed poultry products sales have dipped by 95%.Prices of broiler chicken dropped from BDT 115/kg to BDT 50-54/ kg while that farm eggs dropped to BDT 4.5-5 to BDT 7.5-8 in three weeks at the farm level even though they were still being sold to the consumers at BDT 8 to 9. There is every possibility that market will face a shortage of poultry in future.

The general secretary of the Bangladesh Poultry Farm Protection National Council told to at daily newspaper that the country's poultry farms produce 4.25 crore eggs daily.

But in the absence of preservation facilities, one-third of the eggs are being sold at a price that is 45 percent lower than normal. If the situation does not become normal in the next few days, their stored eggs will decay, he added.

More than 3,500 tonnes of broiler chickens are produced a day in the country. Now, poultry farmers are reluctant to sell mature broiler chickens because both demand and prices are falling drastically. As a result, they are beginning to dump a big portion of the 1.65 crore new broiler chicks produced every week.

The meat and eggs producers are facing similar situation. With the striking slump in demand for meat and eggs, hatcheries are being forced to either sell hatched eggs at throwaway prices or dumps chicks. Subsequently, reduced farming of poultry has created a shortage of broiler meats and eggs increasing the price of broiler chicken meat by 14% to BDT 120-130 a kg in the last week of April.

The fisheries sector, which contributes 23 percent of agricultural production, is also facing uncertainty under the adverse impact of the coronavirus outbreak.As a result, hatchery owners have to incur a loss of Tk10 crore a week. Fish cultivation will also be disrupted across the country.

The volume of sales and prices of fish have fallen significantly. For example, fish farmers, especially those in Rajshahi have been suffering huge losses due to multiple factors such as shortage of transportation vehicles, demand from consumers, etc. The average number of trucks carrying fish from Rajshahi to Dhaka has dropped from 150 to 20 per day. The fish farmers facing reduced demand from Dhaka are forced to look to sell their products at low prices.

The production of fish feeds has plunged by 75%. Raw materials such as fish feed and medicine have also become more expensive due to their scarcity in the market. Fish farmers are forced into a dilemma as they can neither sell their products nor store them for the future.

The total milk production of 9.92 million tonnes in 2018. The dairy sector of Bangladesh has been focusing on the ways to become self-sufficient. The IDRN, BAU research wing has made an in-depth analysis of the possible economic loss at the dairy sector and farm level. The analysis includes the year 2018 as the base year (normal year). The analysis shows that the year 2019 has milk quality shock and 2020 (first three months) has coronavirus shock.

Industry insiders said in an interview that, around 2.5 lakh dairy farm owners are facing problems with respect to selling milk due to a significant fall in both demand and prices. Now around 1.2 crore people involved in the dairy sector either directly or indirectly are at risk of losing their employment. As their storage capacity is exhausted, pasteurisation plants have stopped procuring milk.

Since Milk Vita and other companies in Pabna and Sirajganj have stopped buying milk during the shutdown, dairy farmers are now force to sell their produce for only Tk10-15 per litre against the regular price of Tk45, and for payments in arrears. Even then, as much as a 4 lakh litre portion of the produced milk remains unsold.These plants absorb 6-7 lakh litres of the country's daily marketable production of 1.5 crore litres of milk. More importantly, sweetmeat makers - a major buyer of dairy farms' milk - have also closed.

All farm sub-sectors including Poultry, livestock, fisheries and vegetable farming are now reeling from the coronavirus fallout, putting more than 47 lakh workers at risk of becoming jobless. Neither they nor their employers are covered by any sort of financial bailout or social safety net programmes of the government.

The study find that worse suffer of lockdown due to coronavirus are on low income people. Daily Transport workers, i.e. Rickshaw pullers, Van and Truck drivers has faced the sharpest 84.78% drop in income in April. Households involved in daily rickshaw, van & vehicle driving, vegetable farming, and daily agricultural labor was the hardest hit and experience at least 65% reduction in income for the same time period.

Daily wage earners by definition operate on a short run rate of savings and as the coronavirus has spread through the country, 54.72% of farmers and rural workers are running on zero savings.Around 83,000 poultry farmers across the country with around Tk42,000 crore in investments have fallen into bad times because of the ongoing countrywide shutdown that is being enforced to stem the coronavirus outbreak.

A huge number of low-income people moved to villages from cities virtually with no money in hand. Around 2.7 crore self-employed people, officially categorised as "own account workers", are out of work. May expatriates from Middle East countries are coming back empty hands and increasing the number of un-employed in rural areas.

Experts are emphasising the need for policy attention to support the rural economy in the same way the government has responded to the export-oriented industries. Government should immediately initiate to support these poor rural people to avert a social and economic crisis. In future, many un-employed urban workers and expatriates returned from Middle East should include in the existing social safety net.

In addition to programmes like VGD, VGF, Food for Work, and selling rice at Tk10 per kg should extend and continue until the crisis is over. The may be shortage of funds for some many bailout and rescue programs. Government may request the donors and financial institution to finance the rural poor and unemployed people as seen as possible.
 

The writer is a legal economist.
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