Food processing companies are reverting to yesteryear’s practice of selling grains and pulses in gunny bags as opposed to the current practice of retailing them in neat packages of half kilogram and one kilogram units.
They are forced to resort to “innovative methods” as labourers and workers are in short supply in factories and small and micro packaging units across India.
On march 24, two days after the lockdown was announced, labourers, mostly migrants from Uttar Pradesh, Bihar, Rajasthan, and Madhya Pradesh, working in atta mills, pulses milling units, and other factories supplying essentials had begun to move as they were suddenly thrown out of work.
Hungry and with no money left for daily expenses, the migrants started trudging through unimaginable distances to reach their native places. Some of them remained confined inside crudely-built shelter homes by respective state governments.
Entrepreneurs who are planning to reopen their factories anticipating partial reopening of the lockdown feel that the labourers may not immediately return to work.
A large pulses trader told The Federal that migrant labour is largely used for milling pulses and with this workforce now unavailable, milling activity around the country has come to a standstill. “Only about 65-70% of pulses’ supply is reaching the retail outlets and that too is happening after millers are trying to somehow get wholesalers to make the necessary transport arrangements.
“I doubt if migrant labour would be back anytime soon. Returning to work involves a long and expensive journey for most. Besides, these people typically go back to their homes anyway to finish sowing before the rains come,” he said.
The case of atta or wheat flour is different. Adi Narayan Gupta of Bhawani Roller Flour Mills in Ghaziabad said his mills making maida have been shut since the lockdown began, since restaurants are closed and there is no demand for maida. But since atta is a prime essential, respective state governments have been ensuring supplies do not suffer.
Gupta said now that wheat harvesting season has commenced, shortage of labour — migrants mostly from Bihar were working for his mills — has meant that operations are impacted. Besides, some miscommunication with the police was holding up deliveries earlier but these glitches have been sorted out.
He said despite labour shortage, supplies to retail stores have improved, demand for wheat flour remains robust. During the lockdown period, while the economic activity has nearly remained suspended, the government has made some provisions for essentials to continue being sold through retail outlets.
Besides, wheat prices are expected to come down a notch shortly as fresh supply hits the market so Gupta is confident that atta supplies in the country are unlikely to be affected in the near term, whether lockdown continues or is lifted partially.
Sanjay Puri, President of the Roller Flour Mills Federation said labour shortage is being tackled by numerous small mills by providing housing etc to migrants. He said there is some shortage of packaging material for atta bags as the fabric needed to make them is in short supply. “We have petitioned the government to dismantle APMC for the next 4-6 months and to allow free movement of wheat. We also think the invoking of the Essential Commodities Act 1955 at this time would be counter-productive to the interests of the flour milling industry”.
Analysts have already surmised that while makers of essential items are largely managing to get their goods to the retail shops and instances of a shortage of these items are few, the real impact of the lockdown has been on retailers. So not just small time wheat flour suppliers, biscuit makers, and pulses millers, ever large organized players such as Hindustan Unilever, Britannia, and Parle would not have major negative impact on their business, given the dominance of the traditional distribution channels.
Items of daily consumption like milk, pulses, vegetables, atta, noodles, and biscuits have been kept out of the lockdown by the government and each state has been trying to ensure that supplies of these items remain unhindered.
Since the government has hinted at the possibility of partially lifting the ongoing nationwide lockdown this week there is widespread belief that this could bring to life moribund economic activity across the length and breadth of the country.
Meanwhile, prices have risen as traders have resorted to hoarding essential items. This coupled with a supply shortage, retailers have begun some profit booking. Across large kirana stores, the prices of daal etc. are already up about 15%. A trader said a further price increase could not be ruled out.
Meanwhile, brokerage Emkay Global said in a report that the COVID-19 disruption would be “wide and deep”, and unlike the demonetization, impact on consumer incomes appears significant with the hit on daily wagers and paycuts across companies.
“Consumer demand, which was already slowing down before this disruption, is likely to weaken further, thereby reducing our growth forecas… Channel checks indicate severe disruption for consumer companies too with a sharp 50%+ drop in sales during the ongoing lockdown. While staples are relatively less affected and should recover, paints and retailers may see the impact continuing beyond the lockdown,” the report noted.