ICOA – COVID-19 UPDATE BULLETIN – Dated May 11, 2020

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ICOA – COVID-19 UPDATE BULLETIN – Dated May 11, 2020

(by, Kandarp Padh, Gokul Agro Resources LTD )

NEWS FROM INDIA

On April 5, 2020 India entered Lockdown 3.0.  The entire nation was divided into three (3) zones and numerous containment areas within and outside the cities and towns.  These three (3) zones are the Green Zones, Orange Zones and Red Zones.  Only specific business activities can be performed within each of these zones and no business activities permitted in containment areas.  A curfew was also imposed, prohibiting outdoor activity from 7 am to 7 pm in these areas.

Restaurants, malls, theaters, gym, clubs, religious places, and any venues where large gatherings would occur are still not operating.  However, on April 20, 2020 the government began to ease some of the lockdown restrictions, permitting agriculture produce markets to begin auctioning commodities.  Strict health measures are in place including maintaining social distancing.  The market yards in Gujarat auction various farm products on selected days of the week. Not all market yards auction castor seed daily, but rather on certain fixed days of the week.   The farmers are now aware of the fixed days market yards are allowing castor seed auction and bring their produce accordingly.  Nonetheless, this has resulted in reduced available seeds for auction on certain days and thereby restricting the flow of seeds for crushing at the millers.

On April 29, 2020, government asked all states to plan repatriation of all skilled and non-skilled migrant workers and had thousands register with authorities before they travel.  This may impact businesses and pose challenges among all industries, including castor oil & derivative manufacturing.  These workers came out from wherever they were sheltering to go home after 40 days of lockdown in state facilities.  While we must monitor its impact on the long term, for now industries are running at 30% to 50% capacity and have been since April 21, 2020.

The castor oil manufacturing plants that had just restarted production will now have to ensure that they have adequate workers.  According to some data, 30% to 60% of the workforce in the industries consist of migrant workers from rural India particularly from the following states: Uttar Pradesh, Madhya Pradesh , Bihar, Rajasthan, Odisha, Andhra and Chattisgadh.  Currently, workers in castor industries are well taken care of by their employers / factory owners, but if some wish to return to their native state they can do so, at the states expense.

Castor seed arrivals in the market yards have been between 75K to 120K bags, depending on how many yards are open on given day.  Market yards face similar labor issues.  This can be seen when arrivals increase on any given day, and yards must carry forward or suspend auction of castor seeds due to labor shortages.  Recently, some yards were forced to shut down in the Red Zone due to a rise in COVID positive cases.

The challenges faced in shipping movements are two-sided.  One is to get the big lots of empty containers for flexitank loading, and another is slot arrangements of the lines, which have become unpredictable since February of this year.  We are also witnessing many blank calls of vessels, this is creating an inventory shortage, shut-out possibilities and less than required available slots. There was a vast pileup of import containers during lockdowns one and two through April 20, 2020.  Now that there has been some loosening of business activity restrictions, we are noticing a reduction in stockpiles and an increased availability of empty containers for other export cargos.

In conclusion, while lockdown 3.0 continues, we are likely to continue to face many challenges including: worker shortage, a spike in positive case numbers in areas where market yards were opened and then closed, the health of individuals in the factories, etc. Lastly, not to mention the cost of all these challenges and the effort to keep castor oil moving flawlessly into the world.

 

 

 

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