The spiralling rise in the cost of fertiliser, seed and labour is forcing farmers to give up on agriculture. Bhavdeep Kang reports on the unfolding disaster
THE ‘CROP holiday’ by farmers of Andhra Pradesh, in protest against high agricultural input costs and low procurement prices, is entering its second season. The three lakh acres left uncultivated during the kharif or summer season will lie fallow during the upcoming rabi or winter season as well. The passive agitation has struck a chord with farmers in other states, with the Bharatiya Kisan Union threatening a copycat crop holiday in Uttar Pradesh, Haryana and Punjab.
This has raised concerns about the country’s food security in an already inflationary scenario. The agitation in Andhra Pradesh, for instance, represents a loss of over 350 lakh tonnes of paddy, the principal kharif crop. A worried Central government is considering a sharp hike in the procurement price of wheat, the main rabi crop, to encourage farmers not to quit cultivation.
The discontent among farmers, fuelled mainly by spiralling prices of fertiliser, seed and labour, may have found expression only in some pockets, but it’s a universal phenomenon based on common factors. Farmers say the costs of production have increased to the point where cultivation no longer makes sense; they prefer to find alternative sources of employment while leaving their fields fallow.
In Odisha, vast tracts of land in the coastal areas have been left uncultivated, not as part of an organised protest but because the farmers don’t find it viable to engage in agriculture. Ashish, a farmer in Puri district, owns a two-hectare plot on which he raises paddy and green gram. In the past three years, he says, “the cost of fertiliser and labour has gone up many times but procurement price of paddy has gone up only 25 percent”. Only those who cannot find employment still continue farming, he adds.
Damodar Singh of Narsimhapur in Madhya Pradesh grows wheat and soyabean on a rented plot of eight acres. He cannot understand why the cost of fertiliser has increased three times in the past three months. Never having heard of the Nutrient Based Subsidy (NBS), he is unaware of the UPA government’s efforts to trim the ballooning fertiliser subsidy by passing costs on to the farmers. Nor does he follow global trends in fertiliser pricing, to which domestic prices are now linked.
All he knows is that the cost of DAP (di-ammonium phosphate), a must-have input for most crops, has jumped from Rs 450 to Rs 950 for a 50 kg sack within three years. He actually ends up paying 1,300 per sack in the open market because there is a perennial shortage of DAP (75 percent of India’s requirement is imported) and a premium has to be paid. Likewise, the cost of urea, the most widely used chemical fertiliser, has doubled.
Labour costs have also ballooned, by as much as 300 percent in five years. “Bigger farmers get agricultural machinery like harvesters from Punjab, to reduce dependence on labour, but it is expensive — as high as Rs 1,800 per hour,” says Damodar. “I myself have worked as a labourer at Rs 50 per day not too long ago. But now, labourers demand higher wages, more than the government rate of Rs 125 per day. They also want meals. Who can blame them? The cost of everyday items has gone up.” His wife, Radha, nods vigorously, “Milk is Rs 30 per litre.”
THE PRICE of seeds, too, has doubled. Even going by official rates, certified seed outlay for wheat has gone up from Rs 1,000- Rs 2,000 per acre. Seeds bought in the open market rather than through farmers’ societies, are even more expensive. Damodar says, “The government gives me soyabean seed at Rs 4,000 per quintal, but it purchases my soyabean at Rs 2,000 per quintal.”
And that, says Dr GV Ramanjaneyulu of the Hyderabad-based Centre for Sustainable Agriculture, is the crux of the whole problem. “Agriculture is the only manufacturing process in which you buy retail and sell wholesale.”
According to official figures, the cost of cultivation per hectare of wheat in Madhya Pradesh in 2008-09 was Rs 22,618 (Punjab by comparison was Rs 35,697 per hectare). This works out to a cultivation cost of Rs 896 per quintal of wheat produced. The procurement price fixed by the government in that period was Rs 1,080 per quintal. So, the farmer should have earned Rs 80 per quintal or upwards of Rs 3,000 per hectare in the rabi season. This is not much, on a small farm of four hectares.
The figures collated by Dr Ramanjaneyulu for paddy cultivation in Andhra Pradesh show just how distorted farm economics has become. The cost of cultivation for paddy in 2011-12 is estimated at Rs 1,800 per quintal, but the minimum support price (MSP) — the rate at which the government procures paddy — is only Rs 1,080.
‘The government gives me soyabean seed at Rs 4,000 per quintal, but it buys my soyabean at Rs 2,000,’ says a farmer
The farmers’ margins are getting progressively smaller, with the easing of price controls on fertiliser. The inflationary impact of the new fertiliser policy or NBS, announced in 2009, is being sharply felt now. India is the world’s largest importer of urea and DAP and is therefore prey to volatile global markets. Unfortunately for India, DAP prices spiked this summer, affecting the kharif crop. At the same time, strong indications of urea decontrol resulted in farm gate prices increasing.
Fertiliser is invariably sold in black owing to hoarding, a fact that is not taken into account, say farmers. Also, the quantum of fertiliser used is invariably higher than the recommended dose. Dr Upendra Dixit, who has compiled data on fertiliser usage by farmers of Narsimhapur, found that they were applying more than twice the recommended dose of DAP. “If 16 kg per acre is required for soyabean, they are applying 35 kg per acre. It 15 kg of potash is required, the dosage is 25 kg,” he says.
But farmers say they have no option but to increase the dosage of fertiliser every season in order to maintain the same level of production year after year.
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has played a significant role in driving up labour costs, as it gives farm workers bargaining power. Pritam Singh, a landless labourer and village deputy sarpanch from Gadarwara in Narsimhapur, led 40 BPL cardholders to the district collector’s office to demand work under MGNREGA, as big farmers were offering low wages. “They were pressurising the administration not to implement the scheme so that they could get cheap labour. But we have the right to get minimum payment,” he says.
Labour is a major issue in Odisha as well. “The daily wage is Rs 200 per day in our area and the labourers are getting subsidised rice at Rs 2 per kg. They don’t see any need to work on the farms,” says Ashish. Mechanisation will help, he says, but no one has the capital to invest in agricultural equipment.
Two other input costs must be factored in — pesticides and land rent. Pesticides, apart from their environmental impact, are now adding significantly to farmers’ costs. For instance, a soyabean farmer will resort to at least three sprays of pesticide even in a relatively pest-free year. This works out to Rs 2,000 per acre.
“If you use chemical fertilisers, you will attract more pests. This is well established,” says Dixit.
After all of this, say the farmers, there is still no guarantee of getting the price fixed by government, as procurement by government agencies is limited. Nor can the farmer afford to wait for prices to go up before selling in the open market. As most farmers operate on credit, they need cash in hand to settle debts or make interest payments after the harvest.
The pressure on land due to industrialisation, mining and urbanisation is a double- edged sword. Some farmers welcome the prospect of selling their land for cash. But for tenant farmers, it means that land rents have gone up.
The imbalance between cost of cultivation and price of produce is addressed by the Commission of Agricultural Costs and Prices (CACP). But activists say the CACP does not have the wherewithal to determine the actual cost of production. Besides, every time the MSP is hiked, the food subsidy bill goes up, so the government will try and keep it at a minimum.
Union agriculture minister Sharad Pawar has mooted a procurement price of Rs 1,285 per quintal of wheat for the coming rabi season. This means that the food subsidy bill, already upwards of Rs 95,000 crore this year, will rise further.
It is a Catch-22 situation: if the fertiliser subsidy is trimmed by passing the cost on to the farmer, the price paid to the farmer (MSP) for his produce should be increased, which means the food subsidy would escalate.
Food policy analyst Devinder Sharma suggests a farmers’ income commission for each state. The CACP methodology, he says, has no bearing on the cultivators’ livelihood needs. After all, they are consumers as well.
Ramanjaneyulu adds: “Prices of agriculture commodities have increased by 25 percent in 1997-2007 but those of other commodities increased by over 300 percent. In the same period, salaries went up by 150 percent, without factoring in the Sixth Pay Commission and MLAs gave themselves a hike of 500 percent.” Farmers are the only group that didn’t see incomes going up.
Is there a way out? Damodar claims to have found one. “I have shifted from chemical fertilisers to vermicompost from the kharif season. I have obtained higher yields of soyabean with better grains than others, at much less cost.”