Farmers’ woes on the rise in the region

The situation arising due to wheat crop damage in March/April added fuel to the already burning fire from the revised land acquisition Bill and a recommendation of a high-level committee (HLC, 2015) for restricting purchases by the FCI at the minimum support price.
By Sher Singh Sangwan
UPDATED ON MAY 25, 2015 09:34 AM IST

The situation arising due to wheat crop damage in March/April added fuel to the already burning fire from the revised land acquisition Bill and a recommendation of a high-level committee (HLC, 2015) for restricting purchases by the FCI at the minimum support price.

Farmers’ despair, in general, is attributed to higher input cost, stagnating yield, loans from moneylenders and frequent crop losses. These reasons have been cited since 1995 when National Crime Record Bureau (NCRB) started reporting farmers’ suicides.

As per NCRB’s Annual Report 2012, 76% farmers’ suicides were from the five states of Maharashtra, Andhra Pradesh, Karnataka, Madhya Pradesh and Kerala. Now in 2015, the issue of suicides has been raised in an unprecedented manner in irrigated areas of Punjab and Haryana too. It is to be noted that the MSP is fully implemented in these states and partly in Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Odisha.


Now the question arises: in spite of MSP for wheat and paddy in Punjab and Haryana, what are the emerging stress factors which are creating suicidal situation? First, the stagnating yield is an issue since mid-nineties, hence this factor cannot be accepted as a recent phenomenon. Second, loans from commission agents/arhtiyas is an age-old tradition and recent studies point out decrease in amount of loan from arhtiyas after the introduction of low-interest Kisan Credit Cards since 1999. Hence, usual loans by the farmers cannot be accepted as a suicidal factor. However, the decreasing size of holding over the years is a threat to the viability of small farmers who are leaving farming and leasing out their land.

The high lease rent in Punjab and Haryana has its genesis in the reverse tenancy and the changing cropping pattern in recent years. In reverse tenancy, ownership of machinery by middle-size farmers enables them to utilise the same for leased-in land by spending on additional diesel only. The reverse tenancy started in mid-eighties but competition for leasing in land has increased due to acute unemployment among small farmers who feel shy to work under MNREGA or as labourers elsewhere.


As regards cropping pattern, normally academicians do not visualise any change and just mention that 85% cropped area is under wheat and paddy in Punjab and Haryana. But, a further peep in cropping pattern shows that over the last decade, ordinary paddy has been replaced by basmati paddy in a big way. This change has been induced due to introduction of the Pusa1121 basmati variety which can be grown in all areas. This variety was released by Indian Agricultural Research Institute for cultivation in 2003. The variety has become popular with farmers because it is photo-insensitive, requires less water, matures early and yields 19-20 quintals of paddy per acre as compared to 9-10 quintals for traditional tall basmati. As on 2013, Pusa basmati-1121 had spread in all states of north India.

Basmati paddy is not purchased at the MSP and is export-oriented, therefore, its price is directly linked with the quantity exported and the price negotiated by exporters. The quantity exported has increased continuously from 10,46,000 MT in 2006-07 to 35,00,000 MT in 2012-13 but there were high fluctuations in the value of its export. Accordingly, price of basmati paddy has fluctuated between Rs 1,000 to Rs 4,500 per quintal since 2006 with yearto-year variation.


The peak price of basmati paddy up to Rs 4,500 per quintal in 2013-14 pushed up the lease rent up to Rs 60,000 per acre in some areas of Punjab and Haryana. But in 2014-15, the price of basmati paddy crashed to Rs 2,000 per quintal, though the higher lease rent continued. Taking average yield of basmati paddy at 20 quintals per acre the gross income at Rs 4,500 per quintal would be Rs 90,000. With this income, tenant farmers will repay the lease rent and after meeting cost of cultivation of about Rs 20,000, will save Rs 10,000 for his family labour. Besides, the rabi crop of wheat will give additional net income of Rs 15,000. With crash in prices, all his calculation had gone astray and he ended up with unpaid rent of Rs 25,000 and no return for family expenses. A farmer who has leased in 10 acres will incur a net debt of Rs 3 lakh at the end of the year. Even this amount may be bearing higher rate of interest from private lenders as the bank loan is not given lease rent. Such farmers are likely to be pushed to a hopeless situation, resulting in suicides by a few of them.

Therefore, the exorbitant rent on lease land is more calamitous than the weather god. With a view to regulating lease rent, Andhra the Pradesh (Andhra area) Tenancy Act, prescribes the maximum rents payable by cultivating tenant as 30% on a crop grown on irrigable land and 25% on other land, of gross produce. Will other states also legislate and implement accordingly to reduce some woes of small farmers?

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