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Inertia or economics? Why Punjab’s farmers can’t move beyond rice and wheat

Diversification is critical for Punjab and Haryana farmers who face the challenge of depleting water tables. We need another agricultural revolution.

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Every time we visit Punjab, we ask farmers why they stick with the rice-wheat cropping pattern year on year. Especially when most are witnessing receding underground water levels, forcing them to deepen their borewells each year during the paddy season. One answer from a young farmer stayed with us. He said, if you give us profitable and stable markets, we will produce whatever you want us to produce.

It is well established that Punjab’s farmers are hardworking and enterprising. Most of them today acknowledge that the underground water line is receding and their costs of cultivating, particularly paddy, are rising. Families of many in rural Punjab continue to suffer from severe illness due to high dosages of fertilisers and chemical pesticides applied to crops that are then found in the soil and even water. So, why is it that, despite the large-scale suffering and continued advisory from experts over the last two decades, Punjab’s farmers have not diversified away from water-guzzling paddy? Is it inertia or is there economics at play?

In a series of articles, we will explore the diversification plans of Punjab and Haryana farmers, both of whom face similar challenges of depleting water tables. We start with this article where we list a few plausible reasons why the Punjab farmers are reluctant to move away from rice and wheat.

Also Read: Punjab isn’t the only reason for excessive kharif procurement. Just look at Telangana numbers

Crop diversification in Punjab

Let’s start with some facts about the existing level of diversification in Punjab.

Punjab’s gross cropped area (GCA) was about 78.4 lakh hectares in 2019-20. About 93.5 per cent of this area was under 10 crops/crop categories (Figure 1), with 84 per cent under rice and wheat alone. Other major crops include cotton, maize, sugarcane, and vegetables (potatoes).

Charts by Ramandeep Kaur
Charts by Ramandeep Kaur

In the 16 years between 2003-04 and 2019-20, Punjab’s GCA decreased by about 69,000 hectares. Despite the fall, the area under rice and wheat has increased. This is at the expense of maize, gram, tur, sugarcane, mustard and cotton whose GCA have fallen. In this same period, cropped areas under vegetables (mainly potatoes) and fruits (mainly citrus) have increased marginally.

Clearly, the centrality of rice and wheat only appears to have strengthened over time. However, a micro look at recent years reveals interesting patterns. Between 2018-19 and 2020-21, the area under paddy has reduced (from 31.03 lakh hectares to 27.36 lakh ha). Within paddy, the cropped area of basmati rice (which consumes less water) has increased (from 5.11 lakh ha to 6.50 lakh ha). Even the area under cotton has started to rise (from 2.67 lakh ha to 5.01 lakh ha). As a substitute for paddy, maize has been expanding in the kharif season (from 1.09 lakh ha in 2018-19 to 2.42 lakh ha in 2020-21).

This still does not take away the fact that rice and wheat continue to dominate Punjab agriculture.

The first reason for such preference for rice and wheat is the level of profits. As per the cost of cultivation data from the Ministry of Agriculture, in 2018-19, an average Punjab farmer earned about Rs 75,887 per hectare from paddy (un-milled rice) and about Rs 64,975 per hectare from wheat (Table 1). Together from a paddy-wheat crop combination, a farmer would have earned about Rs 1.41 lakh per hectare (Table 2) (as per Agriculture Census 2015-16, Punjab’s average operational landholding size is about 3.6 hectares). Interestingly, no other crop combination comes even closer to this level of average earnings, unless one starts cultivating sugarcane. However, sugarcane being a water-guzzler crop, won’t solve the issue of the receding water table. So, for a profit-maximising farmer, no other crop combination appears more lucrative than the popular rice-wheat pattern, thus triggering the primary reluctance towards diversification.

Charts by Ramandeep Kaur
Charts by Ramandeep Kaur

The second important reason for preferring the wheat-rice combination is the stability and predictability of the incomes they offer. Unlike other states and other crops, Punjab’s rice and wheat earn stable and reasonably rising incomes each year attributable to the government’s Minimum Support Price (MSP) operations, due to which almost the entire crop brought by farmers to the APMCs (Agricultural Produce & Livestock Market Committee) is purchased at assured prices. Compared to this, other crops offer relatively unstable and volatile incomes.

Take, for example, the case of kinnow. For several decades, Punjab farmers, especially in the semi-arid zones in Fazilka, Muktsar, Bathinda and Hoshiarpur districts have been growing kinnow. The area under the citrus fruit has increased from about 19,000 hectares in 2004-05 to about 58,000 hectares in 2020-21. There are two major problems with its marketing: One, due to a low shelf-life (about 20 days) farmers often resort to distressed sales of the crop upon its harvest.

Charts by Ramandeep Kaur
Charts by Ramandeep Kaur

Usually, such sales fetch the lowest prices of the season; and second, there are huge inter-year fluctuations in prices. During the farmers’ agitation in 2020-21, the average price realised by the farmers was Rs 6-8 per kg, while in the previous year 2019-20, the farmers sold it for Rs 18-20 per kg.

Not just fruits, even in the case of basmati, there are large variations in market prices. In some years the farmers could sell it at Rs 2,500-3,000 per quintal whereas, in others, the prices fall as low as Rs 1,100-2,000 per quintal.

While the market risk of prices does emerge as one of the most important reasons for behavioural inertia, there are more.

In the case of kinnow, even though there is demand in some foreign countries, Punjab farmers are unable to tap its potential due to the distance from a seaport and the closure of land routes via Pakistan. So, while Pakistan is able to export most of its kinnow crop, Punjab misses this window of opportunity.

Farmers are also fearful of pests, diseases, untimely rains, high temperatures, hail, etc. For example, the cotton crop was damaged by mealybugs in 2007, whitefly in 2015 and pink bollworm in 2021. Unlike wheat and paddy, the input cost for cotton is also higher.

In addition to these factors, the farmers also consider the availability and wages of labour and the extent of mechanisation in a crop. It appears that labour-intensive crops are not attractive to Punjab farmers.

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

What does the government do?

For four decades, Punjab’s wheat and paddy have received almost exclusive support from successive governments, researchers, and investors. Not surprisingly, from agricultural extension systems to research, from storage to logistics to investments, almost every breakthrough is skewed towards rice and wheat. Most other crops are waiting for similar focus and successes in use of technology. But why is the Punjab government unable to identify and fill these gaps?

Punjab does not have to look outside. It has exemplary examples of diversification within its borders.  Malerkotla, dominated by small farmers, is a major centre for the cultivation of vegetables. The produce is sold in Jammu and Kashmir, other parts of Punjab, Delhi and other states of North India. Its profitability can be studied so that replicable policy interventions can be identified and implemented in other parts of Punjab.

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

Farmers’ dilemma

Picture this, if you or I have lived our lives on an assured income every year for 55 years (since 1965-67 — years of the Green Revolution) and have an ecosystem supporting it, and then if one day, someone told us that the income assurance is going and we will have to face headwinds of volatile incomes, how would we react? Especially when we are ageing and our children do not want to continue in the same business?

Punjab suffers from its past glory. The time is opportune to trigger yet another agricultural revolution in the state. One that takes Punjab higher up the ladder of value-addition and its produce to other parts of the country and global shores. We should bring back the glory of Punjab farmers who have provided food security to India for more than four decades.

Shweta Saini is an independent researcher and Siraj Hussain is a Senior Fellow at the Indian Council for International Economic Relations (ICRIER). Views are personal.

(Edited by Srinjoy Dey)

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