In a UP village, after the loan-waiver, preparing for the next loan | india-news | Hindustan Times
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In a UP village, after the loan-waiver, preparing for the next loan

Loan waivers can just be a temporary relief and not a solution for low-income farmers who scramble for funds to invest every season.

india Updated: Jun 21, 2017 07:20 IST
Prashant Jha
For farmers such as Hori Lal, from the Bandi ka Purva village in Barabanki, farming has become a lose-lose venture.
For farmers such as Hori Lal, from the Bandi ka Purva village in Barabanki, farming has become a lose-lose venture. (Deepak Gupta/HT Photo)

Hori Lal is worried. At 70, he is old and frail. He speaks, but is not easy to always comprehend. He walks slowly. But it is not just about himself that he is anxious. He is more concerned about the well-being of his family comprising three sons, their wives and 10 grand children.

“If one person falls sick, we are in trouble. There is no money,” says Lal, a farmer in Barabanki’s Tindwani village. Though just 20 kilometres from Lucknow, if you go by the lack of infrastructure and housing, the state of roads and power, the village could be anywhere in the remote interiors of UP.

Lal has a loan of Rs 70,000, taken in 2015, and displays his Kisan Credit Card. He is also a potential beneficiary of the UP government’s loan waiver. Even as he waits to see whether his loan will indeed get written off as assured by Yogi Adityanath, the state’s new chief minister, he is already thinking of the next loan that he will likely be forced to take.

The fact that he may have to take another loan underlines the limitations of a loan waiver: it at best can be a temporary relief and is not a solution to the problem of low income farmers plagued by recurrent losses.

The economics of investment

Lal, for example, has 6 bighas, an acre and a half, of land. The single-most important challenge for him, every season, is finding the resources to invest.

Take the economics of potato farming.

For an acre of land, Lal - like other potato farmers in Tindwani and elsewhere - has to first buy 20 sacks of seeds, with each sack containing 50 kg. Each kg costs around Rs 24. And so the total cost for seeds is Rs 24,000.

He then has to buy fertilisers of different kinds - a 5 kilo pack of zinc sulphate for Rs 300, two packs of urea for Rs 330 each, and five sacks of DAP (Diammonium Phosphate) for Rs 1150 each. The total cost of fertilisers comes to Rs 6710.

Lal then has to till and level the land, for which he hires a tractor for Rs 500 per hour. Ten times, for two hours each, the tractor works on preparing the soil and land. Lal shells out another Rs 10,000 for it.

He then sows the seeds, for which he has to hire the tractor again, which costs him Rs 2000.

The farmers of Tindwani depend on pumps, run on diesel, for irrigation. Engines (which includes diesel rates) can be rented at ₹ 150 per hour; every acre requires at least four hours of irrigation; and it has to be irrigated seven times. The total cost for Lal on this head works out to Rs 4200.

The next step is the use of pesticides. Along with labour, which can be hired at Rs 250 per day, the costs of this would come to Rs 1500.

Watch | Why are India’s farmers seething with anger?

The final step in the cycle is harvesting. A tractor is hired, at Rs 2000 per acre. Ten labourers are hired for the day, which costs Rs 2500. And 250 sacks have to be bought, at Rs 20 each. Together, the entire harvesting exercise costs about Rs 9500.

But the cycle is not yet complete, for the farmers have to now transport and store their produce. Each sack is now packed in with 50 kgs of potato. The total produce from an acre, if all goes well, for Lal is about 125 quintals. The total cost of transporting and storing is close to Rs 30,000.

And so what constitutes for Lal his basic investment, in one crop cycle, for an acre of land, from the stage of seeds to storing the produce, is approximately Rs 87,910. With miscellaneous costs, this would go up to around Rs 90,000.

Potato farmer Kishan at his field in Bandi ka Purva village in Barabanki. (Deepak Gupta/HT Photo)

The lose-lose venture

And then how much does Lal - or any other farmer of his kind - earn?

Till Yogi government came to power in March in UP, there was no Minimum Support Price for potato. In the last season, prices had fluctuated. Local Tindwani farmers told HT that it varied between Rs 120 per sack of 50 kgs to Rs 750 per sack. On an average, this would mean about Rs 4.85 per kg of potato. At 125 quintals, this would mean a return of Rs 60, 625 for an acre of potato produce.

“But it was erratic. Sometimes, we just left our produce at the storage because it cost more to pay them storage fees than what we would have recovered. So we got no money,” says Lal.

To offset this problem of wild fluctuation in prices, the Yogi government has introduced an MSP of Rs 487 per quintal. But even if all his produce was acquired at this rate, it would give a farmer like Lal for an acre of his produce Rs 60,875.

But remember his investment. It is close to Rs 90,000. And so every acre of potato he cultivates, Lal is actually losing Rs 30,000.

The vicious cycle

It is because of this gross mismatch between investment and income that farmers such as Lal end up taking loans. They do not have money for the seeds, the fertilisers, the irrigation, the pesticides, the sowing, the harvesting, the transport and storage because they have actually lost money.

Weddings in the family and emergencies like illnesses force them to sell part of their land holdings. November’s demonetisation did not help. It left even lesser money for investment and so the crop produce for some of the potato farmers of Tindwani went down.

The Yogi government’s decision to waive off loans up to Rs 1 lakh, for small and marginal farmers with less than a hectare of land, may benefit Lal. But it won’t solve his problem.

Where would he get the money to make a fresh investment? “I will take a loan again. What else can I do?”

Why did he then cultivate potatoes in the first place?

Lal says he has no other option. “What else can we do? This is what my family has always done. This is all we know. At least, it gets us some vegetables for the home.” Lal says sending his sons out to work is not a solution: they were unskilled and would get Rs 250 as labour charges for a day, which they could get in the village too. “At least we are together.”

It is this underlying driver of despair - limited cash reservoir to make investments, losses on produce because of low price, and thus a further push into deprivation - which is causing despair. The UP government’s decision to waive off loans has triggered a nation-wide demand for the same, but Lal knows it is only a matter of time before he is back, standing in the queue for another loan.

This is Part 3 of our series, #BeingAFarmerNow. Part 1 focused on the new age farmers of Madhya Pradesh while Part 2 examined how big-ticket projects cheat farmers out of their land.