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Explained: How rising fuel prices will hit input costs of farm operations

Escalating fuel prices are set to burn a hole in the pocket of already stressed farming community. Here's how rising prices of petrol and diesel are set to increase the input cost of farming sector by 28 per cent compared to last year.

Written by Anju Agnihotri Chaba | Jalandhar |
Updated: February 24, 2021 1:02:43 pm
fuel, fuel prices, fuel prices rise, farm operations, fuel prices rise effect on agricultural sector, indian express newsFuel prices have been increasing in the past few months. (Express Photo: Nirmal Harindran, File)

Escalating fuel prices are set to burn a hole in the pocket of already stressed farming community. The Indian Express explains how rising prices of petrol and diesel are set to increase the input cost of farming sector by 28 per cent compared to last year.

How will fuel price rise enhance the input cost in the agriculture sector?

In Punjab, there are around 11 lakh farm households which own 5.20 lakh tractors, nearly 17,000 combine harvesters including nearly 6,000 with an attachment of Straw Management System (SMS), which are used for harvesting around 36-37 million tonnes wheat and paddy in the state annually.

Apart from this the state owns 75,000 stubble management machines, over one lakh other farm implements. All these machines are diesel operated and mostly tractor mounted and are used to cultivate nearly 42 lakh hectares area in Punjab. Apart from this there are 1.50 lakh diesel operated tubewells too in the state.

What is the consumption of diesel in Punjab in the agriculture sector?

“In Punjab the consumption of diesel is 2.5 times higher than the petrol approximately out of which nearly 40 per cent consumption of diesel is in the agri sector as we have nearly 20 per cent such petrol pumps out of total 3,400 in the state which are totally dependent on farming sector consumption,” said Gurmeet Monty Sehgal, the spokesperson of Petrol Pump Dealers Association, Punjab. He also mentioned that the government is looting the farmers as the price of crude oil came down to USD 20 per barrel in April-May last during the spread of pandemic and then it remained around USD 40 per barrel for around 5 months till October last but government never decreased oil prices in retail according to the rate of crude oil in international market. By this development the prices in retail should have gone down with decreasing rate of crude oil when it was cheaper and then it should have increased retail rates with increasing rate of crude oil, but that did not happen even when farming sector was running full steam even during Covid-19 lockdown.

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What is the current price of diesel and petrol in Punjab as compared to the last year?

Wednesday’s price of the petrol and diesel was Rs.90.51 per litre and Rs. 81.64 per litre, respectively. “Last year the prices of both on February 18, 2020 were Rs. 71. 83 per litre and Rs. 63.62 per litre, respectively,” said Sehgal. By this figure there is an enhancement of 28 per cent and 26 per cent in diesel and Petrol prices, respectively in the state in one year.

How the rates of diesel have gone up since 2017 when the Centre government announced to double the farming income by 2022?

Though petrol and diesel prices are decided by the Centre but state governments can always reduce the Value Added Tax (VAT) and local cess, which are different in different states, to keep the prices of these products at par with neighbouring states. In Punjab in 2017, the prices of diesel were around Rs 56 per litre including 28 per cent VAT + 10 per cent additional tax on VAT. And now it has gone up to Rs 81.64 per litre, an increase of Rs 25.64 per litre, which is an increase of 45.8 per cent in the past four years.

What would be the cost of running farm implements on one acre now?

For instance, if we take just one operation in the field — wheat harvesting from coming April, a farmer will require to spend Rs 816 per acre on diesel cost only because a harvester consumes around 10 litre diesel on one acre. Last year, the cost was Rs 636 per acre. So there is an increase of Rs 180 per acre only on diesel cost in just one year. Now a field requires around 8-10 operations of various types of tractor mounted machines between preparing the fields for sowing to harvesting and post harvesting and every operation will see an increase of 28.3 per cent in diesel consumption.

Simply put, if the total cost of field preparation for one crop, say paddy, after normal combine-harvesting would be Rs 3,000 per acre, then it will go up to Rs 3,800 to 3,900 if the higher diesel costs are factored in.

Farmer Jagdeep Singh of Kanoi Village in Sangrur, an owner of combine harvester, said that earlier he used to charge Rs 1,800 per acre for harvesting but now he will have to increase it to Rs 2,200 to 2,300 per acre to meet the cost.

“Government is all out to kill the farmers from every side as one can imagine that how much extra burden will be there when there is around 41 lakh hectares (1.01 crore acres) area is under cultivation of various crops in Punjab,” said BKU (Dakaunda) General Secretary Jagmohan Singh.

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