Punjab farmers want status quo on MSP, subsidies — at the root of agrarian crisis

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Farmers spray chemicals in their fields in Moga, Punjab | Photo: Urjita Bhardwaj | ThePrint
Farmers spray chemicals in their fields in Moga, Punjab | Photo: Urjita Bhardwaj | ThePrint

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Bathinda: It has been nearly a month and a half since farmers, a majority of them from Punjab, have been sitting on the outskirts of national capital New Delhi, demanding a repeal of the Narendra Modi government’s three new farm laws, and also objecting to two other pieces of legislation on electricity consumption and the practice of stubble burning.

The farmers’ demand is for a status quo. They want the government to continue paying them a minimum support price (MSP) and procuring all of their rice and wheat produce, and also demand that the facility of free electricity and subsidies on other inputs such as chemicals and fertilisers and machinery remains as it is. The farmers are concerned that if, according to one of the new farm laws, the government allows sale of their produce outside the designated Agricultural Produce Marketing Committee (APMC) areas, it will impact the assured procurement of their produce at MSP at the mandis.

However, agricultural experts say the guaranteed procurement or MSP regime, as well as the free electricity and input subsidies, are the very reasons why Punjab has been facing an agrarian distress for the last decade or so. They say the existing rules and practices have trapped farmers in a vicious circle of paddy-wheat cultivation, which has depleted the state’s groundwater resources, reduced the quality of soil and trapped the farmers in a cycle of debt.

Also read: Wedding planning, feeding buffaloes, farm work — neighbours step in as Punjab farmers protest

Punjab’s agrarian distress

Between 1972 and 1985-86, India’s agricultural growth rate was 2.3 per cent, but Punjab’s was 5.7 per cent. Punjab hit a decline over the next two decades, and while India’s growth rate climbed to 2.94 per cent between 1986-87 and 2004-05, that of Punjab declined to 3 per cent, and then went down further to 1.61 per cent between 2005-06 and 2014-15.

In 1975-76, agriculture’s share in Punjab’s GDP was 60.2 per cent. By 2015-16, the figure had fallen to 23.5 per cent. However, the workforce engaged in agriculture fell disproportionately — from 62.7 lakh in 1975-76 to 35.6 lakh in 2015-16.

These figures show disguised underemployment and lower returns from agriculture, which affects Punjab heavily because 90 per cent of the average monthly income of the state’s households comes from agriculture, as against the national average of 52 per cent, according to a 2020 report by Punjab Agricultural University (PAU), titled ‘Punjab agricultural statistics’, accessed by ThePrint.

The biggest problem, experts say, is the paddy-wheat monoculture, under which farmers are only incentivised to produce rice and wheat, which is not Punjab’s traditional crop cycle. Because of this, farmers have had to draw out more and more groundwater, use more chemicals, and take more loans. Now, as landholdings have become smaller over the generations and the cost of living has increased, the farmers are caught in a debt trap, forced to keep growing wheat and paddy, which in turn is damaging the natural resources of the state.

A senior official in Punjab’s agriculture ministry, who wished to remain anonymous, told ThePrint: “Paddy is the immediate threat to Punjab agriculture. The subsidies given for paddy make it impossible for the state government to invest in promotion of crops other than wheat and paddy.”

According to S.S. Johl, noted agronomist and former vice-chancellor of PAU, if the current system continues, the land of five rivers could face desertification within 10 years or so.

“The water table in Punjab is falling 25-30 cm per year. Drinkable water is now found at a depth of 350 feet. Punjab is heading toward desertification in one or two decades,” Johl said.

“There is severe water pollution in Punjab as it is the biggest user of chemical inputs such as pesticides, fertilisers and insecticides in the country. Water table recharge from farms further pollutes underground water, making it unfit for drinking,” he added.

Also read: Why the farmers’ protest is led by Sikhs of Punjab

The problem of groundwater and free electricity

The area under wheat and paddy in Punjab in 1960-61 was 14 lakh hectares (LHA) and 2.27 LHA, respectively, which increased to 35.08 LHA and 29.20 LHA, respectively, by 2019-20.

Paddy crop consumes 5,377 litres of water per kilogram of produce, compared to 1,500 litres for wheat. So, due to the paddy-wheat monoculture, Punjab’s farmers are over-exploiting groundwater resources through more than 14 lakh tubewells, which irrigate two-thirds of the state’s cultivated area.

According to a 2017 Central Ground Water Board report, the levels in Punjab in the pre-monsoon period of 2017 fell to 22.77 metres, compared to 20 metres in 2007, while the national average was 5-10 metres. Out of Punjab’s 137 blocks, as many as 110 come under the ‘over-exploited’ category.

The tubewell problem has been compounded because Punjab, since 1997-98, has provided free electricity to farmers. The lower the groundwater levels have fallen, the more farmers have had to install bigger, more expensive tubewells to continue to pull out water to supply the paddy and wheat crops. This is why free electricity, combined with MSP assurance, has forced the farmers’ hand towards more and more paddy cultivation.

According to an estimate, every farming household in Punjab that has a tubewell gets at least Rs 45,000 annually from the state government, on account of free power.

“Despite having the Ghaggar river near us, the water level has gone down to 350-500 feet,” said Amit Singh, sarpanch of Andana village in Sangrur. “People still cultivate paddy-wheat, as other crops give hardly any returns in comparison. If one sees their neighbour running a tubewell on free electricity 24/7, why will others invest in cotton with a new machine, labour and input costs?”

Gurmehar Singh, a farmer at Bajak village in Bathinda, also said he was forced to return to paddy and wheat, despite the declining water table and soil losing fertility.

“The water level in our village is 200-250 feet, but as crop returns and soil fertility have dropped drastically, we have to cultivate paddy-wheat though it consumes a lot of water. We have no option but to take more loans to install submersible pumps,” he said.

Graphic: Ramandeep Kaur/ThePrint
Graphic: Ramandeep Kaur/ThePrint

The larger number of tubewells, as well as their bigger size, has also resulted in increased electricity consumption, and the cost of the free electricity scheme to the state exchequer has risen from Rs 2,679 crore in 2010-11 to Rs 5,670 crore in 2018-19.

The proposed Electricity Amendment Bill 2020 seeks to move away from this practice and towards rationalisation of power consumption, by giving farmers a certain amount of money or free power allocation to use, after which they will have to pay for further usage.

According to Johl, the crisis can be averted by charging for electricity for a specific acreage. “Marginal and small landholders can be given free electricity while the medium and large landholders should be made to pay the right price for it,” he said.

“Another solution can be electricity rationing, wherein each farmer should be given a set number of units of power monthly, and excess power consumption should be charged on a per-unit basis,” the expert added.

Also read: From debt to unemployment, Punjab’s entire economy needs reform, not just agriculture

Chemicals and fertilisers harming soil quality

Other than free electricity, the subsidy on fertilisers, with high use of cheap urea and the resultant decrease in soil fertility, has aggravated the crisis and raised input costs.

Part of the reason for this is that paddy, in addition to being more water-intensive, uses more chemical input as compared to wheat. This has led to Punjab consuming more than 10 per cent of the national farm chemical input. The state has encouraged the use of chemical fertilisers through subsidies, which added up to Rs 7,022 crore in 2012-13. The total electricity and fertiliser subsidy in state stands in excess of Rs 13,275 crore.

Graphic: Ramandeep Kaur/ThePrint
Graphic: Ramandeep Kaur/ThePrint

In 2018, fertiliser consumption in Punjab stood at 232 kg per hectare, against the national average of 133 kg per hectare. In Punjab, the usage of NPK, a major farm fertiliser, stands at 1,819 thousand tonnes in 2018-19, as against 1,698 thousand tonnes in 2007-08.

This excessive use of chemicals has led to a fall in the nutrient holding capacity of the soil, which farmers then counter by pumping in more cheap subsidised chemical inputs.

Also read: How Bihar recorded growth but Punjab lagged behind and why farm reforms are important

The MSP regime

Farmers in Punjab get MSP of about Rs 60,000 crore annually, of which Rs 35,000 crore is the MSP on paddy and about Rs 25,000 crore is that on wheat.

The food procurement policy of the central government, with routine increases in MSP, has ensured good returns on paddy-wheat cultivation for farmers. As a result, Punjab shifted from its original agro-climatically suited wheat-maize cropping pattern to paddy-wheat, which is untenable both ecologically and economically.

Graphic: Ramandeep Kaur/ThePrint
Graphic: Ramandeep Kaur/ThePrint

Despite an increase in MSP, the exponentially increasing input cost for the monoculture, such as labour, diesel and other prices along with decreasing landholding, has led farmers to the debt trap, and the resultant fall in net income, as they still stick with subsidy and procurement and MSP-aided paddy-wheat monoculture, further aggravating the crisis.

According to Johl, landholdings in Punjab have decreased, so, despite increases in production and MSP, input costs can’t be covered.

Major Singh, a farmer in Upli, Sangrur, said: “I used to cultivate 100 acres on lease, but to purchase the input for cultivation, I had to take a loan of Rs 12 lakh. I had to sell two tractors to clear the loan.”

Sukhpal Singh, economist at PAU, pointed out: “Increased cost for capital intensive technology has reduced work opportunities in the farm sector, leading to a debt cycle. Farmers are in debt of Rs 1 lakh crore. Every farm household in the state is in debt of Rs 10 lakh, with income level of Rs 6 lakh per annum, leading to failure in payment. Agriculture in Punjab is a cycle of debt, de-peasantisation and death.”

The way out

Johl said the agriculture-related subsidy, which is more or less unlimited in nature in Punjab, should be converted into a Direct Benefit Transfer (DBT) scheme for farmers, based on their landholdings. Small and marginal farmers should a favourable DBT, while large farmers can pay for these facilities.

The agronomist added that economic diversification of crops is necessary for Punjab to tackle this crisis.

“An incentive of Rs 10,000 per acre can be given to farmers in Punjab for growing pulses, for example. Around 10-15 lakh hectares of paddy cultivation should be diverted immediately to other crops to avert agrarian distress in the state,” he said.

Also read: Punjab’s frustration & anger is rooted in its steep decline, now visible in farmers’ protests


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