Agri Business

Soaring rents make lease renewal unviable for tenant farmers

K.V. Kurmanath Hyderabad | Updated on July 09, 2012 Published on July 09, 2012

Land owners cut rents by 10-15% to woo tillers

With rents touching Rs 50,000 an acre in some areas, tenant farmers in Andhra Pradesh have become reluctant to renew the lease on the land that they till on behalf of owners. Seeing this unusual trend, land owners have started reducing the rents by 10-20 per cent.

Rents on farm land range from Rs 5,000 to Rs 50,000 in Andhra Pradesh. While it is low for crops cultivated on dry land , it goes up to Rs 25,000 for chillies, Rs 50,000 for turmeric and other top commercial crops. Tenant farmers in East and West Godavari districts submit up to 25-30 bags (for two crops) of paddy to the landowners. Sugarcane farmers return 10-20 tonnes of cane in lieu of rents.

Mr Javvadi Nani, a farmer in West Godavari district with 33 acres of land, said several tenants are unwilling to renew their leases as the rents have become exorbitant.

“The owners are going back to them by offering to reduce rents by 5-10 bags (of paddy),” he said.

With drought hitting the State last year, tenant farmers made huge losses across the State.

Credit crunch

The biggest problem they are facing is the credit crunch. “Of the Rs 58,000-crore crop loans given by banks last year, tenant farmers received only Rs 390 crore. It is less than one per cent,” Mr Vangala Subba Rao, Andhra Pradesh Rythu Sangham, told Business Line.

Most of the loans are going to landowners, who have long ceased to be farmers. According to a Government estimate, there are about 26 lakh tenant farmers.

This means, 20 per cent of all the farmers in the State are tenants. Bankers are sanctioning loans to the owners who own pattas (private land deed).

With most of the land rental deals having no legal sanction, tenant farmers are dependent on private sources for loans.

The State Government had issued an Order that sought to give tenant farmers the ‘licensed cultivators’ tag and had asked banks to provide loans to farmers holding such cards. “But banks say they need cards that are valid for at least five years to meet their requirements,” Mr Subba Rao said.

Published on July 09, 2012

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