An unviable minimum support price (MSP) for rice has forced farmers in Andhra Pradesh to leave their lands fallow. The movement is spreading to other states.
“Farming never pays” is a familiar slogan among agriculturists across the world, and especially so in India. Nevertheless, many continue to cultivate their fields year after year, barely eking out an existence, toiling in the hope that the tide may turn in their favour one of these days.
However, in the richly fertile regions of East Godavari, things have come to a head. Konaseema, comprising sixteen fertile mandals is often called the rice bowl of Andhra Pradesh—but it may have to change that sobriquet soon since 40,000 farmers in thirteen out of the sixteen mandals have not cultivated their land this year. This means that 85,050 acres of paddy producing fields are lying fallow, ensuring that the 500,000 tonnes of rice produced last year is not going to be repeated. Following Konaseema farmers, over 3,000 paddy growers of Karamchedu mandal in Prakasam district, also known for rice production, have declared a crop holiday. Many of these are marginal farmers with landholdings of less than 5 acres.
According to Secretary General of Consortium of Indian Farmers Association (CIFA) P Chengal Reddy, this is only the beginning. The movement is going to spread across the country if the Union government does not announce remunerative prices for farmers. “It has already spread to other districts like Nellore, Kadapa and Warangal in the state,” he says.
This apart, Reddy said, farmers associations affiliated to the consortium in AP, Tamil Nadu, Karnataka and Maharashtra have passed resolutions to observe ‘crop holiday’ on a massive scale in the next season if the Centre declines to accept the minimum support price (MSP) calculated by them (they call it ‘farmers price’). There are 350 farmer’s organisations under the consortium's fold across the country and similar resolutions are planned to be adopted in other states.
Why are these farmers resorting to such an extraordinary and extreme decision?
There are nearly a dozen reasons for this situation, according to a report by the Mohan Kanda committee that was constituted by the AP government to identify the circumstances that led to the declaration of crop holiday by farmers and to propose remedial measures.
More than any other reason, the MSP declared by the government seems to be the one thing that has enraged farmers the most. Even if you consider the estimates of the AP agricultural department, the cost of production of a quintal of paddy in Konaseema works out to Rs 1,583. Now, the MSP for paddy announced by the government for 2011-12 was Rs 1,110. This has meant a loss of Rs 473 a quintal and nearly Rs 10,000 per acre (the average yield per acre is estimated at 21 quintal).
| WHY ‘FARMING NEVER PAYS.’ |
| * 40,000 farmers in thirteen out of the sixteen mandals in Konaseema, East Godavari have not cultivated their land this year |
| * 85,050 acres of paddy lie fallow, not producing the 500,000 tonnes of rice that it provided the country last year |
| * Farmers’ associations in AP, Tamil Nadu, Karnataka and Maharashtra will also go on ‘crop holiday’ next season if the Centre doesn’t address pricing issues |
| * The main problem is unviable minimum support price (MSP), fixed on the advice of the Commission for Agricultural Costs and Prices (CACP) |
| * CACP computes average cost of production across states to calculate MSP which is problematic since costs vary dramatically from state to state |
| * There are also vast differences in the cost of other inputs, such as land which in Konaseema is over Rs 5 lakh an acre but Rs 1 lakh elsewhere |
| * Shortage of labour is also a major issue where schemes like NREGA compete in a fertile area where there is no problem in finding work |
| * The fifth report of the National Commission on Farmers prepared under Swaminathan says that cost of production was higher than MSP for 12 crops,, including rice and wheat |
| * The report says that MSP should be regarded as the bottom line for procurement. Purchase by government should be MSP plus cost escalation |
The MSP is fixed on the advise of the Commission for Agricultural Costs and Prices (CACP) and the commission's estimates seem to be at variance with the actual cost being incurred by the farmers in Andhra. “CACP calculations are based on three-year-old data. Besides, it takes the average cost of production in various states right from Assam to AP,” says Reddy, explaining the reasons for the variation.
This is a problematic technique. In a vast and diversified country like India, the costs of production varies in different states. For instance, according to the Ministry of Employment’s Labour Bureau, the average daily wage rate for a male agricultural labourer in AP was Rs 98.31 in December 2008, but went up to Rs 137.95 and Rs 176.29 in of 2009 and 2010 respectively. During the same period, the average wage rate was Rs 81.19, Rs 96.40 and Rs 114.10 in Assam, Rs 61.33, Rs 69.79 and Rs 84.43 in Madhya Pradesh while it was as much as Rs 220.27, Rs 250.79 and Rs 319.13 in Kerala.
Not just labour—there are also vast differences in the cost of other inputs. For example, the cost of land in Konaseema is over Rs 5 lakh an acre whereas it could be less than Rs 1 lakh in other states, or even in other regions or districts in the same state. As a result, the fixed cost of production varies from state to state, and from region to region within the same state.
Besides escalating costs, shortage of labour is also stated to be a major issue. During paddy transplantation, which usually lasts about a fortnight, large number of labourers are required. But, thanks to NREGP, it has become increasingly difficult to get the required number of labour.
To overcome labour shortage, farmers are switching to horticultural crops which are not labour intensive. However, the option is not available to wet land owners in Konaseema and Karamchedu. Their land is ideal for growing paddy but not suitable for horticultural crops.
The CIFA made several presentations to the Centre including the Prime Minister, Agriculture Minister and the Planning Commission’s Vice Chairman, asking for a remunerative MSP but to no avail. Left with no recourse, on September 5, 2011, the CIFA executive committee met in New Delhi and adopted a resolution rejecting the MSP declared by the government for the year 2011-12.
At the same meeting, it adopted another resolution urging the Centre to declare an MSP of Rs 2,400 a quintal of paddy, which it called the ‘farmers price’. CIFA’s MSP includes the estimated cost of production of Rs 1,600 plus Rs 800 as the farmer's "take home income" as per the recommendations of the National Commission on Farmers headed by noted agricultural scientist MS Swaminathan.
Besides adopting the above resolutions, CIFA also filed a petition in the Supreme Court urging the apex court to direct the Union government to implement the National Policy for Farmers-2007, framed by the Ministry of Agriculture on the basis of the recommendations of the MS Swaminathan commission.
Meanwhile, according to the fifth report of the National Commission on Farmers prepared under the chairmanship of Swaminathan, the profitability in agriculture declined by 14.2 per cent during the 1990s due to stagnancy in yield growth and rise in input prices outpacing the increase in prices of the output. The report said that the cost of production was invariably higher than the minimum support price in the case of 12 crops including rice and wheat. The other crops were jowar, maize, bajra, ragi, tur, moong, urd,gram and barley. "It would be extremely unlikely that in long run farmers would continue to cultivate those crops where the C2 costs (cultivation costs) are not recovered,” the report stated.
According to the report, MSP should be regarded as the bottom line for procurement both by government and private traders. Purchase by government should be MSP plus cost escalation since the announcement of MSP. The commission also recommended that the MSP should be at least 50 per cent more than the cost of production. It also said that CACP should be an autonomous statutory organisation and should become an important policy instrument for safeguarding the survival of farmers and farming.
Terming NREGA as a “vote catching, populist scheme”, Chengal Reddy asked, "Where is the need for introducing NREGA in delta areas like that of Krishna, Godavari, Cauvery, Tungabhadra and Punjab?" According to him, there is enough work for people in the agricultural sector in these areas and there is no need of NREGA, which is leading to shortage of agricultural labour and escalation of cost of production.
On the other hand, Union Minister for Rural Development, Jairam Ramesh, had been eloquent about the effect of NREGA in addressing unemployment in rural areas. When it was brought to his notice that the scheme had an adverse impact on agricultural operations and some farmers were observing crop holiday, the minister said he was “open to suggestions” in this regard.
ITC Agri & IT businesses group head S Sivakumar said it was time that we came out with long-term solutions. “The formula we have used for the past 30 years can’t be used in the next 10 years,” he said adding that we were currently in a situation where the food inflation was very high while there was no steep rise in the output prices for farmers.
He said that long-term solutions include raising productivity of both crops as well as labour, reducing transaction costs between farmer and the consumer and encouragement of private sector participation on a large scale for which the regulatory framework has to be changed.
Until then, one of India’s most fecund rice bowls will remain empty.
