The Hindu Business Line : Pusa-1121 prices crash on bumper crop

Karnal (Haryana), Nov. 1 Basmati farmers are a distraught lot, with prices of the premium Pusa-1121 variety crashing by over Rs 500 a quintal in the last 15 days.

On Friday, Pusa-1121 paddy was fetching Rs 1,600-1,800 a quintal in major mandis of Haryana, after ruling at Rs 2,300-2,350 just before Diwali, when the new crop started arriving.

“I sold my crop at Rs 1,700, whereas last time I had got Rs 2,900,” said Mr Raghbir Singh from Naultha in Panipat district, who planted his entire two-acre farm under Pusa-1121. Last year, by mid-November, prices had hit Rs 3,500-3,600.

The lower prices are being attributed mainly to a bumper crop. Pusa-1121 acreage in Haryana has risen from 1.79 lakh hectares (lh) to 3.5 lh this year, with Punjab, too, registering an increase from 2.92 lh to 6.5 lh.

Moreover, yields have been higher with fewer pest and disease incidents this time. Most farmers Business Line interacted with in Panipat and Karnal reported yields of 16-18 quintals an acre, compared with 14-16 quintals last time.

“We are witnessing a huge crop this year and not even a quarter of it has come to the mandis. I won’t be surprised if prices reach Rs 1,500 levels,” said Mr Vinod Goel, President of Karnal’s new grain market.

Farmers here usually spend Rs 3,000-3,500 an acre towards irrigating their paddy crop from the time of planting nursery in mid-May to harvesting after the third week of October.

The other major costs include labour for transplantation (Rs 1,000) and harvesting-cum-threshing (Rs 2,000), besides fertilisers (Rs 1,500) and crop protection chemicals (Rs 1,000).

“This year, we spent at least an extra Rs 1,000 on irrigation because it hardly rained. Also, the frequent power cuts meant we had to use more expensive tractor-powered diesel generators,” said Mr Balbir Singh, a seven-acre farmer from Ganaur (Sonepat district).

Simply put, the farmer who, last year, netted Rs 37,000 an acre (assuming 16 quintals @ Rs 2,900), would have seen the same dip to below Rs 19,000 (@ Rs 1,800). This is still just above than the Rs 15,000-plus from growing non-basmati paddy (taking 25 quintals at the official procurement price of Rs 1,030).

For every quintal of Pusa-1121 paddy, millers get about 50 kg of head rice and 13 kg of brokens. The paddy bought at Rs 1,800 a quintal would cost Rs 2,000 at the mill, after adding transport and mandi-level expenses.

If one were to deduct Rs 156 from the sale of the 13 kg brokens (@ Rs 12), the ex-mill cost of the paddy in head rice terms would be Rs 37 a kg. To this, if one adds expenses on milling (Rs 1.20), packing material (Rs 2.50), transport to Kandla (Rs 2.25), stevedoring and freight to Dubai (Rs 1), the cost of Pusa-1121 head rice would come to under Rs 44 a kg or $ 936 a tonne.

“Our problem today is Pakistan, which is selling cheaper, courtesy its weak exchange rate (Rs 84-to-the-dollar against India Rs 47). Last year, our export realisations were in the $ 1,600 a tonne range, which is why we could pay so much to farmers,” claimed Mr Vijay Setia of Chaman Lal Setia Exports, a leading Karnal-based trading firm.

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