MUMBAI, India (Reuters) — Indian farmer Banwarilal Bhardwaj was planning to buy a car after harvesting his winter-seeded crops that were promising bumper returns, but coronavirus has shattered that dream, undermining farm commodity prices as it spreads around the world.
“I can’t buy a car. Whatever I would earn, that will now be needed to repay a loan,” said Bhardwaj, who has planted rapeseed and chickpeas on his 15 acre farm in the northwestern state of Rajasthan.
Rapeseed prices have slumped 16 percent this year, while chickpeas are down 10 percent.
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“If prices fall any further, I’ll struggle to even repay the loan,” Bhardwaj said.
With more than 263 million farmers, the health of India’s farm sector can have a significant impact on the economy.
More than half of its 1.3 billion people depend on agriculture for their livelihoods, so profitable harvests tend to boost aggregate consumption, while smaller crops or low prices can cause a slowdown.
After excessive rain damaged summer-seeded crops in 2019, India was banking heavily on winter-seeded crops to fuel a rebound in rural earnings.
However, the coronavirus outbreak sent crop prices tumbling just as Asia’s third-biggest economy was expanding at its slowest pace in more than six years.
Authorities responded to the pandemic by imposing travel restrictions and banning big gatherings, which cut food demand.
Prices for key crops like corn, soybeans, cotton and onions have plunged as much as 50 percent, just as farmers prepare for harvest, putting paid to prospects for a rural economic rebound.
“The impact of higher yields would be nullified by the lower prices,” said Harish Galipelli, head of commodities and currencies at Inditrade Derivatives & Commodities in Mumbai.
“Farmer earnings on a net-to-net basis would remain the same.”
Higher monsoon rains from June to September increased soil moisture and reservoir levels and spurred farmers to boost the winter crop planted area by 10 percent from a year ago to 163,608,473 acres.
Farmers like Ramnaryan Mandloi from Sehore in the central state of Madhya Pradesh spent more on seeds and fertilizers because market prices and the weather both looked good.
“I’ve started harvesting wheat and prices are falling. I’ve already spent on seeds and fertilizers,” said Mandloi.
Mandloi has also been hurt by a 22 percent drop in soybean prices this year as poultry farmers slash purchases of the animal feed.
Chicken sales have plunged in the last few weeks after rumours circulated on social media that chickens were spreading coronavirus, said Uddhav Ahire, chair of Anand Agro Group, a poultry company.
Falling chicken demand has forced poultry farmers to cut corn and soymeal purchases, Ahire said.
Prices of summer-seeded crops usually start improving after supplies dwindle after February, but this year they have sunk as export demand plunged, said a Mumbai-based dealer of a global trading firm.
“After the recent sell-off in global prices, Indian farm commodities have become expensive for overseas buyers,” he said.
