Agri Business

High fuel prices singe farmers

Rutam Vora/T V Jayan Ahmedabad/New Delhi | Updated on June 04, 2018 Published on June 04, 2018

Green Billimalai Estate near Coonoor after a spell of rains   -  PS SUNDAR

Middlemen can hike prices but producers lose margins


With the sharp increase in fuel prices punching holes in agricultural incomes, a section of farmers are reviewing the mechanisation options. Diesel prices are up one-fourth over corresponding time last year.

"The cost including transportation and pump-sets operation works out to about 25 per cent of the cost of production in various crops. Fuel costs are going up each day, while crop prices are not increasing at the same pace," said Praful Senjalia, a farmer leader in Saurashtra.

According to him many farmers are considering going back to using bullocks to till their farms to reduce fuel usage.

"There is growing interest from farmers to turn to bullocks from tractors. It works out to be economical and sustainable for them," he added.

MSP ineffective

Agri-economists believe that the pace of rise in the cost of fuel is not matching the revision in the minimum support price (MSP) for various crops. As a result, the MSP has turned out to be ineffective in providing a remunerative price.

Prof Hemant Kumar Shah, an Ahmedabad-based agri-economist says, "The pace at which diesel prices go up, the Commission for Agricultural Costs and Prices doesn't take that into consideration while calculating the farm input cost. Fuel prices fluctuate every day but the MSPs are declared only once a year."

Dr S S Kalamkar, Director, Agro-Economic Research Center at Sardar Patel University in Vallabh Vidyannagar, believes that MSP in the context of daily fluctuations of fuel prices doesn't remain relevant. "The costs of cultivation declared by the Centre has a time-lag of about 2 years. It not necessarily considers the exact situation prevailing now," says Kalamkar.

Farmers lose margins

“The margins for farmers may come down. But the margin of wholesaler, middlemen and retailer will go up as they will hike prices citing fuel price hike,” added Kalamkar.

Parbatbhai Patel a farmer in Lalpur taluka of Jamnagar says, “Fuel costs are like slow poison. We don't realise immediately but if we compare a period of five years with previous five years, there has been an increase of not less than 25-30 per cent. And our realisations from the crop have not increased in tandem.”

Agri expert Devinder Sharma said there were droughts in Punjab in the past, but its impact was seldom felt as 98 per cent of land is irrigated. “But with diesel prices going up, farmers are worried that their cost of cultivation would go up drastically,” he said.

“The cost could go up between by 20 to 30 per cent as farmers in highly mechanised States like Punjab and Haryana need diesel not just for tractors and farm equipment, but also for pumping water from tube wells as electricity is not available all the time,” Sharma added.

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Published on June 04, 2018
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