Economy

Rising diesel price cripples farmers

TV Jayan | Rutam Vora | Vishwanath Kulkarni New Delhi/Ahmedabad/Bengaluru | Updated on June 19, 2020 Published on June 19, 2020

As mechanisation picks up in farming, the share of fuel in the input costs is also seen rising   -  PTI

‘Revise MSP or hike allocation under PM Kisan scheme’

A sharp increase in diesel price over the past fortnight is seen pushing up cultivation costs as kharif sowing picks up across several States.

Price of diesel rose for the 13th consecutive day on Friday and the total increase is over ₹8 per litre during this period. As mechanisation of farm activities picks up, driven by labour shortage and rising wages, the fuel price rise has upset the farmers’ calculations and could delay the process of doubling farm incomes.

In States such as Punjab, Haryana and Gujarat among others, where farm operations such as tilling, sowing, spraying and harvesting are highly mechanised and irrigation dependent, farmers are feeling the heat of fuel price rise more.

Key input

“Diesel is one of the key inputs for agricultural activities. Even small farmers have started using power tillers, which has multiple applications for sowing to spraying. A sharp hike in diesel prices will increase the cost of cultivation and further squeeze the margins for farmers. Such fuel price hikes will only delay the objective of doubling the farm income,” said Jayesh Patel, President, Khedut Samaj, a farmers’ body in Gujarat. Patel also said farmers are preparing to raise a protest against the hike in fuel prices for agricultural use.

Farmers also face the impact of fuel price rise in terms of increased cost of transportation for harvested agricultural produce, for sourcing of inputs such as seeds, pesticides, and fertilizers among others. This is feared to push up the overall cost of cultivation for farmers. “The frequency of hike in the input costs doesn't match the frequency of hike in the prices of farm produces. This is why farmers will continue to get squeezed due to the rising costs and stagnant income,” Patel said.

Rise in costs

As mechanisation picks up in farming, the share of fuel in the input costs is also seen rising. “The cost of cultivation would go up by ₹1,000 per acre for farmers on account of increase in diesel price alone,” said S Mallareddy, National Vice-President of All India Kisan Sabha. For example, diesel worth ₹2,500 was required earlier for preparing an acre of land and harvesting when the crop was ready. Today, this will be around ₹3,500 an acre with the latest increase in diesel prices, he said.

“Hiking taxes on diesel is an insensitive move on the part of the government. Instead of passing on the benefits of low crude prices to the people, particularly farmers, it is making farmers to cough up more,” said Vijoo Krishnan, Joint Secretary, AIKS.

Rising fuel prices will hit the agriculture sector hard, said Devinder Sharma, farm policy expert. The fuel price rise is happening at a time when farm wages have almost doubled in many places. At this critical juncture, the government should step in and handhold the farmers as agriculture is the only sector that’s keeping the economy going, Sharma said.

‘Raise MSP’

Sharma suggested that the best way for the government to help farmers is by announcing an increase in the minimum support price, factoring in the fuel price rise. Other option is to increase allocation under the PM Kisan Scheme, he said.

With the timely arrival and progress of monsoon, sowing of key kharif crops such as paddy, oilseeds and pulses has picked up across major part of the country. The fuel price rise has already hit the tractor rentals.

Rohtash Mal, CEO, EM3, which offers tractor rental services on demand, said the rentals have gone up by 15 per cent as compared to last year because of increase in diesel prices.

Ajay Vir Jakhar, Chairman, Bharat Krishak Samaj, said a farmer would be paying approximately ₹2,500 per acre as taxes on account of using diesel. A back of the envelope calculation shows that total tax collection on account of diesel consumption by farmers for agricultural would have been around ₹1 lakh crore over the last six years.

The Bhartiya Kisan Sangh (BKS) has also raised strong objection over the frequent increase in fuel prices especially diesel prices, which according to them, forms nearly 50 per cent of the overall cost of cultivation.

Plea for subsidy

“We have been representing to the government to provide subsidy on diesel for farm use. They have been doing it for marine and fishing purposes, then why can't they do it for agriculture?” asked Vitthal Dudhatra, President BKS – Gujarat.

He said the recent round of hikes in fuel prices will only burn a hole in the farmers' pockets, while there is not enough earnings as most agriculture commodities are traded below their MSP levels.

Dudhatra said that barring a few crops such as cotton, whose harvesting is done manually, other major crops such as groundnut, urad, moong, soybean etc have mechanised harvest.

“Most of the irrigation pump operations require diesel. From sowing to harvest and irrigation, at each level, our agriculture is heavily consuming diesel fuel. So, when the government aims to double the farmers' income by 2022, the fuel price burden on farmers will negate the gain on other fronts,” Dudhatra added.

Published on June 19, 2020
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