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To make agriculture profitable remove land-ceiling limits

Travels through the Punjab hinterland is always a learning experience for me. Recently, on a hot May afternoon, I had a long and detailed conversation with a group of farmers on the rustic realities of farming today.

ht view Updated: May 11, 2015 23:45 IST
agriculture,minimum support price,Manish Tewari

Travels through the Punjab hinterland is always a learning experience for me. Recently, on a hot May afternoon, I had a long and detailed conversation with a group of farmers on the rustic realities of farming today.

To understand the essence of the conversation, we need to look a some data first. The average size of a land holding in India is 1.16 hectares. This is roughly 2.8 acres. Conventional wisdom holds that 84% of the farmers in Punjab have a landholding of less than five acres. Though official data puts the average size of a landholding at 3.77 hectares in the state, this is more a statistical sophistry than an accurate analysis of the situation. Most farmers grow only two crops: Wheat that is sown in November and harvested in April and rice that is planted in June and reaped in early October.

The farmers I spoke to described the agrarian crisis using a rough-and-ready tutorial on the economics of farming in layman terms. One acre of land in a good year yields about 20 quintals of wheat. A quintal is equal to 100 kilogrammes. In a bad year, like the current one, the yield can go down by half or three-fourths i.e. 7-10 quintals. At a minimum support price (MSP) of Rs 1,450 per quintal a farmer can get about Rs 29,000 per acre.

But we need to take into account the cost of inputs. Each acre requires about one quintal of fertiliser that costs about Rs 2,000, it requires about one-and-a-half quintal of urea (Rs 1,000). It requires a dose of zinc (Rs 200), three sprays of pesticide (Rs 1,500), seed (Rs 800), four rounds of watering (Rs 800), manual harvesting (Rs 3,000) and there are sundry expenses like tractor and diesel of around Rs 2,000.

So a farmer spends about Rs 11,300 per acre considering that electricity is free. He thus earns about Rs 17,700 per acre for six months of hard work that translates into Rs 2,950 per month and if he has a plot of three acres, it comes up to Rs 8,850 per month. This does not take into account the wages of an entire family of four or five persons who would be toiling ceaselessly to make these numbers a reality.

Then the agriculturists explained the economics of the second crop. The yield of rice per acre is about 25 quintals in a good year. At an MSP of Rs 1,400 per quintal it translates into a figure of Rs 35,000 per acre. With an input cost of Rs 13,800, which is slightly higher than wheat, the farmer earns about Rs 21,200 per acre for six months of hard work that translates into Rs 3,500 a month. Now if he has a three-acre plot, it means Rs 10,500 per a month for the whole family.

Thus in a good year, a family can earn about Rs 19,350 a month but if there is any unnatural occurrence it can all go down the drain. However, if you are a contract farmer, who has taken the land on lease and are paying to the owner Rs 40,000 per acre annually, then your monthly income is down to Rs 9,500 per month for a three-acre agricultural holding. These figures do not take into account the all-pervasive spectre of rural indebtedness where a farmer is on an average paying an 18% annual rate of interest to the moneylender from cradle to cremation.

How does a farmer then sustain himself? He grows his own vegetables, has an odd buffalo for milk, and leads a very rudimentary existence. If there is an illness in the family or when a marriage is supposed to take place, the farmer is caught between a rock and a hard place. Children’s education on such meagre earnings is a non-priority.

What then keeps the farmer going? “Two things,” explained one of the older men. The “notional satisfaction” that the value of land is multiplying — if you are near a city, it could be Rs 2-3 crore an acre and if you are in the hinterland it could be Rs 25-30 lakh an acre. The value is the only social security net. Coupled with that is the insecurity over what to do if they sell the land.

But the younger generation is not prepared to wait. They want to monetise the land not because they want to buy flashy cars or pay for their drug habits. The sensible ones see that as the only head start that can give them a better quality of life than what their parents have had.

With immigration barriers at their zenith, recruitment in the armed forces dwindling and even terrorism having been experimented with, alienating land holdings is no longer about choice but a compulsion. If the price is right acquisition is not a taboo.

What is the solution? Surprisingly, the old gentleman gave an answer that one would have expected from a kulak. Address the structural issues beginning with relaxing or removing land-ceiling limits altogether so that agriculture becomes remunerative and collectivise, or corporatise farm inputs so that input costs can come down. Some farmers would lose out in this shake-out but farming would survive.

This is a dormant volcano in the crucible of the green revolution with fertile soil, means of irrigation and an open-ended MSP supported public procurement programme to boot. The situation is fast evolving from the death of farmers to the death of farming.

The dialogue left me wondering whether the concerns of India for the vast unknown called Bharat were still as far removed as the physical miles between Delhi and a smouldering settlement called Dedka, tucked away in the what was a ‘no go’ area during the height of militancy in Punjab..

Manish Tewari is a lawyer and a former Union minister

The views expressed by the author are personal

First Published: May 11, 2015 22:23 IST