Agri Business

Kharif Outlook: Centre may find it tough to wean farmers off rice

Our Commodities Desk June 7 | Updated on June 08, 2021

Area under cereal may remain stagnant as only three States encourage growers to take up other crops

 

Despite the Centre’s efforts encouraging farmers to shift from crops such as rice to coarse cereals, pulses and oilseeds, India’s rice production has been hitting new highs over the last few years.

During the current season that ends this month, rice production, in the third advance estimates by the Ministry of Agriculture, has been estimated a record 121.46 million tonnes (mt) with 104.30 mt being produced during the Kharif season.

The area under Kharif rice has also been expanding (see Table) despite the Government’s efforts to force farmers to grow crops other than rice. Last Kharif, the area under rice topped a record 400 lakh hectares (lh).

The Centre is yet to announce the minimum support price (MSP) for Kharif crops but going by the trend over the last 4-5 years, it could continue focussing on making farmers take to coarse or nutri cereals, oilseeds or pulses.

Why Centre wants the shift?

There are a few reasons why the Centre wants farmers to shift from foodgrains such as rice and wheat. One, higher production has resulted in stocks overflowing in the warehouses. Food Corporation of India (FCI) data show that in May it carried 30.48 mt of rice and 26.22 mt of paddy (equivalent of 17.56 mt of rice) compared with 28.50 mt of rice and 23.42 mt of paddy (15.68 mt rice).

Two, rice is a water-guzzling crop and therefore, the Centre is looking at ways to reduce such water usage.

On the other hand, about ₹80,000 crore is spent on importing about 15 mt of edible oils every year, while it imports a significant quantity of pulses. The Centre wants to reduce these imports as much as possible and, therefore, is encouraging farmers to plant more oilseeds and pulses.

One of the ways has been to provide higher MSP for coarse cereals, oilseeds and pulses compared to foodgrains such as rice and wheat. Over the last five seasons, paddy MSP has gone up by an average 12 per cent, while that of pulses by 20-30 per cent and that of coarse cereals by 16-20 per cent. Oilseeds MSP have been increased by at least an average 13.5 per cent.

However, this does not seem to have paid the required results going by the rising acreage in paddy. Procurement of rice through the MSP system is seen as a factor that encourages farmers to grow more foodgrains than other crops.

The Centre’s move to pay farmers directly through online payment system or direct bank transfer (DBT) from this year is seen as a positive factor for rice acreage.

Barring Telangana, Chhattisgarh and Haryana, no other State seems to be making efforts to encourage farmers to shift from paddy.

Suresh Gahlawat, a senior Haryana Government agriculture extension official said: “This year the government has set a target of two lakh hectares for diversification from rice. Last year, we kept a similar target but we managed to get shifted only 97,000 hectares.”

Normally, rice is grown on 13.79 lakh hectares (lh) in Haryana. In neighbouring Punjab, the area under paddy, including Basmati, is likely to decrease by one lh from last year to 29 lh this year.

“Farmers in these one lakh hectares could shift to coarse cereals, pulses or cotton” said Bhagwan Das, Secretary-General, Young Farmers Association of Punjab.

 

Telangana’s regulated cropping

In Telangana, the K Chandrasekhar Rao Government is asking farmers to shift from paddy this season after having encouraged them to grow more of the fine variety last season.

The State is encouraging farmers to divert to crops such as cotton and pulses, said Nagendra, President, Telangana Rice Mills Association.

Last year, Telangana produced 12 mt of paddy during kharif, up 30 per cent from 9 mt the previous year. But the State government ran into problems in procuring paddy, while slow demand growth from neighbouring States complicated the issue.

As uncertainty looms over centralised procurement of paddy, particularly after the introduction of farm reform laws, the State Government does not want to be burdened with procurement.

“We expect a reduction of about 10-15 lakh acres in the paddy area. A good part of this could go to cotton,” said a farmers’ union leader.

Chattisgarh, Haryana shower sops

That way, Haryana seems to be trying to lure farmers to growing alternative crops through incentives.

“Farmers who grow alternative crops such as maize, cotton, pulses, oilseeds or horticulture crops will receive ₹7,000 per acre (₹17,500 per hectare) incentive. We have dropped bajra from the list of alternative crops this year,” said Gahlawat.

Haryana farmers who embraced the scheme last year will continue receiving the incentive this year too. “This, we hope, will help us increase the area under other crops this year. The only stumbling block is that the extension work is hampered by the Covid-19 pandemic,” the extension official said.

“No doubt, Haryana is offering incentives to farmers shifting from paddy but that doesn’t seem to be luring growers in a big way,” said a Delhi-based trade expert.

Reports said that in May this year, the Chhattisgarh government announced Kisan Nyay Yojana aimed at promoting crop diversification. Under this scheme, farmers who are moving away from paddy to grow millets, sugarcane, pulses or oilseeds would be given ₹ 25,000 per hectare as grant, the reports said. Similarly, farmers who replace paddy with plantation crops in their fields will receive the grant for three years, they said.

But a trade analyst pointed out that the problem with Chhattisgarh proposal is that it wants the Centre to bear the burden of the incentive.

Trade experts and analysts see little change in farmers’ attitude to plump for paddy as their favourite crop during Kharif.

“With the direct bank transfer scheme in place, farmers in Haryana and Punjab would be more independent this time (in taking decision on which crop to grow). They do not need to go by what commission agents (arhatiyas) tell them. Moreover, they would be able to use better quality inputs (such as agrochemicals) as they would be able to independently purchase them unlike in the past where these commission agents used to sell spurious ones to them,” said Vijay Setia, former chairman of All India Rice Exporters Association (AIREA) and rice exporter.

He said that the area under Basmati rice is expected to be around 13 lakh hectares and if the monsoon turns out to be good, the crop would be good.

AIREA Executive Director Vinod Kaul said that though sowing has not begun, he does not see any major shift in farmers from rice.

Exporters, who shipped out record volumes of rice last financial year, are cautiously optimistic on rice acreage.

“It is too early to say,” said BV Krishna Rao, President, Rice Exporters Association, commenting on his outlook for paddy. The increase in acreage also depends on the progress of monsoon and the announcement of the MSP for paddy, he said.

Weather aids rice

In Bengal, production of kharif paddy, the traditional crop of the State, is likely to be good backed by favourable weather conditions and adequate rains this year.

Frequent rains have helped soften the soil and prepare it for sowing. “We expect sowing to start as usual towards the end of this month and if weather conditions remain as it is then the production is expected to be good,” said Suraj Agarwal, CEO, Tirupati Agri Trade.

Pradip Kumar Mazumder, Chief Advisor (Agriculture) to the Chief Minister, said: “We are expecting a marginal increase in production this year backed by favourable weather conditions. There is still a month’s time left (for sowing to start) and we hope that with right guidance to farmers and with the kind of efforts the government has been taking things will go as per plan.”

In Karnataka, transplantation of kharif paddy has begun in the coastal areas, where excess pre-monsoon showers coupled with rains brought about by cyclone Tauktae have given a fillip to the sowing activities.

In the irrigated areas of Raichur district in Karnataka bordering Telangana, where farmers found it difficult to sell their rabi paddy after prices crashed, crops such as cotton and chilli among others may find favour with the growers.

“Small and medium farmers, who don’t have the holding capacity suffered a lot disposing of their rabi paddy since prices crashed to as low as ₹950 per quintal. It is too early to comment on whether farmers will take up paddy again in kharif and it would depend on the progress of monsoon and the availability of water in the canals,” said Chamaras Malipatil, President, Karnataka Rajya Raitha Sangha Hasiru Sene.

Experts and analysts expect the second wave of pandemic unlikely to impact Kharif rice sowing since labour availability is not a problem, particularly in Bengal and other States.

With inputs from TV Jayan, New Delhi; KV Kurmanath, Hyderabad; Vishwanath Kulkarni, Bengaluru; Shobha Roy, Kolkata; and Subramani Ra Mancombu, Chennai

(This is part of a series of Kharif Outlook reports that have been appearing in these columns since last week. The reports will continue to appear over the next few days.)

Published on June 07, 2021

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