Prices remain muted despite decline in crop arrivals across mandis: CRISIL

Report points to the possibility of grains being hoarded by farmers and traders to be sold at a later date when mandi operations and logistics normalise

Prices of agricultural crops remained subdued despite a sharp decline in arrivals of across mandis, a CRISIL study finds.

There has been a sharp decline in arrivals during the first two weeks of April across agriculture commodities. While there are four primary reasons for this -- delayed rabi harvest, labour shortage, lack of transport, and reduced mandi operations -- grains are also said to have been hoarded by farmers and traders to be sold at a later date when mandi operations and logistics normalise.

"But in the case of perishables such as fruits and vegetables, farmers are bearing the brunt of the crash in demand because of the lockdown," the study said.

Grape and mango exports have also come to a halt. A positive outcome of this is that fruits are 10 per cent cheaper in the domestic markets despite an 85 per cent fall in arrivals.

Harvesting of agricultural crops was delayed due to non-availability of labour following reverse migration of jobless workers to Bihar, Uttar Pradesh and West Bengal.

Since the Covid-19 pandemic came to light, the government of India ordered closure of factories, offices and transports. Consequently, farmers habe not been able to transport their produce to mandis. Also, the state governments across the country ordered closure of mandis which prevented farmers to sell their produce and left huge quantities of rabi crops especially horticulture rotting in the fields.

With the mandis have started opening gradually with social distancing, the situation is likely to get normal in the weeks to come after the second phase of nationwide lockdown ends on May 3 after the three weeks of first phase on April 15.

Meanwhile, farmers are selling their produces at a dirt cheap price due to unavailabilty of transport system to mandis, consumers pay higher price on supply shortage.