Agriculture Policy

Will Guaranteed Procurement of Alternatives at Enhanced MSP Wean Punjab Farmers from Rice?

The governemnt procures wheat and rice, currently, at minimum support prices MSP). For the purpose of calculation, cash expenses and the notional value of family labour are considered. Even if the government were to procure other crops at MSP that includes, apart from family labour wages and paid out expenses, the rental value of land used for cultivation, the depreciation of implements and buldings, and interest on fixed capital, rice will continue to be more profitable, deterring farmers from diversifying to other crops, argues Vivian Fernandes.  This article was first published on NDTV Profit

Protesting Punjab farmers want assured procurement of all crops at enhanced minimum support prices (MSP) but it’s doubtful that a significant number of them will shift from rice even if the demand was met.

Rice is a crop with stable yield and high profitability. According to CACP, the official agency that recommends MSP for various crops, the average cost of cultivation of paddy in Punjab for the three-year period ending in 2021-22 was Rs 54,599 per hectare (ha)  and the value of output, Rs 136,636 per ha, the highest for the crop in the country. The profit was 150 percent over costs that include cash expenses and an assigned value to family labour.

But rice cultivation is getting costlier. Though electricity is free, receding water levels require farmers to bore deeper tube wells or deepen existing ones and install more powerful pumps. This cannot go on indefinitely. Punjab’s finances are stretched taut by electricity subsidy. With climate change a concern, the irrigated water intensity of rice cultivation will have to be factored. There is also no guarantee that the government will keep on buying whatever quantity of rice Punjab farmers offer for sale.  But are there equally profitable alternatives?

Maize requires less than half the quantity of rainfall that rice needs if grown in the rainy season. (Maize is also grown in spring). It is more a feed, than food, crop whose demand tends to increase with prosperity owing to the propensity of those with higher incomes to consume less of cereals and more of proteins in the forms of eggs, milk, meat and fish. In 2013, the state government wanted about 5.5 lakh ha of area under paddy diverted to maize. But kharif maize area has remained between 1.05 lakh ha and 1.27 lakh ha since. The cost of cultivation is higher than that of rice, and the income lower. There is no assured procurement, unlike rice, which the government procured at an average of 99 percent of Punjab’s production – almost all of it – between 2019 and 2022.  Domestic prices of maize were below MSP in 14 of 20 quarters since October 2018. At one time maize was a major crop in Punjab. Paddy farmers are reportedly keen to shift to maize, but not at the cost of their earnings.

Can cotton be a replacement? Possibly. At one time 9.6 percent of Punjab’s cropped area was under it. Now it covers just 3.2 percent of the area. Cotton can be grown only in areas adjoining Rajasthan that receive low rainfall. The profitability is almost comparable to that of rice at 134.5 percent of cost.

Are pulses a substitute? The share of pulses in Punjab’s total crop area (both kharif and rabi) has shrunk from 19.1 percent in 1960-61 to 0.89 percent. Moong is a profitable pulse crop, more profitable than rice (248 percent above cost, as per CACP). But moong in Punjab is grown in summer, after potato or wheat. It’s a short-duration crop of about two months’ duration and the yield per hectare is 17 quintals owing to less incidence of pests. The productivity of rainy season moong is lower and very little of it is grown.

A shift from rice to pulses can happen if there is guaranteed government procurement at MSP plus compensation for their ecological services.  Pigeonpea, for instance, needs 15 kg of nitrogen per hectare, compared to 105 kg for rice. The nitrogenous fertiliser urea is highly subsidised. It sells for a fifth of the imported price. Pulses add 40 kg to 60 kg of nitrogen per hectare, which they absorb from the atmosphere. Even after using a part of it, some is left behind. Pulses-growing farmers should be compensated for this as also for electricity and water saved. Shorter duration pigeonpea varieties that mature in about 140 days – before the sowing of wheat – have been developed. A former pulses breeder at Punjab Agricultural University says the state’s pigeonpea yield is about 15 quintals per ha and the cost of cultivation about Rs 33,000. At the MSP of Rs 7,000 per quintal, earnings will be less than that of rice and need to be made up with payments for eco-services. In the absence of assured procurement, farmers were selling at prices that were lower than MSP over a five-year period.

 

Even if the government were to procure the alternatives to rice at MSP, there is unlikely to be a significant shift away from rice if electricity continues to be given free, even though it depletes groundwater, releases earth-warming methane and is misaligned with the country’s consumption trend.  According to the latest national sample survey, monthly per capita expenditure on cereals in rural India has declined to 4.91 percent and in urban India to 3.64 percent from 10.69 percent and 6.61 percent respectively in 2011-12.

Since farmers will not easily diversify from rice, it has been suggested that they adopt cultivation practices that use less water. Transplanted rice needs about 20-22 irrigations. If it is replaced with rice that is directly sown and not raised in nurseries and transplanted in flooded fields, about 10-20 percent of the water can be saved. But farmers will have to be skilled in the management of weeds, which is an issue with direct seeded rice. DSR also releases less earth-warming methane and it helps aquifer recharge, as there is no hard pan formed below the field surface to block seepage as happens in puddled fields.

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