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Diesel pain erodes MSP gains for farmers

It is not only diesel but also fertilisers and pesticides that have become almost 25 per cent costlier for farmers in the last one year.

Written by Harish Damodaran | New Delhi |
Updated: September 6, 2018 8:28:51 am
Rising cost of fuel has become a major challenge for growers. (Archive)

Diesel is now retailing at Rs 71.34 per litre in Delhi, compared to Rs 57.46 a year ago. That is a whopping Rs 13.88 per litre or 24.2 per cent jump, which — along with similar increases for fertilisers and crop protection chemicals during this period — threatens to undo all the gains to farmers from higher minimum support prices (MSP) of crops declared by the Narendra Modi government.

Diesel is used in agriculture as fuel for tractors, combine harvesters and irrigation pumps. According to the Punjab Agricultural University at Ludhiana, which estimates the “enterprise budgets” of kharif and rabi crops every year, the total running time of a tractor in various field operations (excluding harvesting and threshing, done by combines) averages seven hours per acre of paddy or wheat.

“A 50-horsepower tractor with four cylinders consumes 6 litres of diesel per hour if it draws a rotavator, cultivator/tiller, disc harrow or MB (mouldboard) plough. Even if runs without load, the consumption will be 2-3 litres,” says Jitender Singh Hooda, an eight-acre farmer from Kheri Bairagi village in Shamli district of Uttar Pradesh.

Assuming seven hours of use in cultivation and another two hours in off-field operations (hauling produce to the market, bringing fertiliser and other inputs to the farm, etc.), with corresponding consumption of 6 litres and 3 litres per hour, the total diesel burnt in a cropping season works out to roughly 48 litres per acre. Add to this 8-9 litres/acre consumption by the combine harvester — which covers 1-1.2 acres in an hour – the figure rises to 56-57 litres.

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But that’s not all.

A 2016 study by Thiagu Ranganathan, N. Chandrasekhara Rao and Ghanshyam Pandey from the Institute of Economic Growth, New Delhi (https://bit.ly/2NnLzGY) has found 30 per cent of the country’s gross cropped area that is irrigated to be watered by diesel pumps. The ratio was low in Maharashtra (1.8 per cent), Haryana (3.6 per cent), Andhra Pradesh (4 per cent), Punjab (7.8 per cent) and Gujarat (20 per cent) — states with relatively good rural electricity infrastructure — but high for Madhya Pradesh (50.4 per cent), UP (55.6 per cent), West Bengal (71.4 per cent) and Bihar (88.7 per cent).

Further, the average quantity of diesel used for irrigation, as per this study sponsored by the Union Agriculture Ministry, was 117.5 litres per hectare (47.5 litres/acre) in paddy and 68.1 litres (27.5 litres) in wheat. That would take the overall diesel consumption per acre to over 100 litres for paddy and 83-84 litres for wheat.

A Rs 14/litre price increase will, then, push up costs by Rs 1,200-1,400 per acre, which, on an average per-acre paddy yield of 30 quintals and 20 quintals for wheat in Punjab, translates into Rs 50-60/quintal. That is a fourth of the MSP hike of Rs 200 per quintal for common paddy (from Rs 1,550 to Rs 1,750) announced in this kharif season and more than half of the Rs 110 increase (from Rs 1,625 to Rs 1,735) for the 2017-18 wheat crop.

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Moreover, it isn’t diesel alone that has become costlier. In the last one year, the maximum retail price of di-ammonium phosphate has gone up from Rs 21,520 to Rs 26,800 per tonne, while similarly climbing up by 21-25 per cent for complex fertilisers with different nitrogen, phosphorus, potash and sulphur proportions: 10:26:26 (from Rs 21,100 to Rs 25,600 per tonne), 12:32:16 (from Rs 20,700 to Rs 25,800) and 20:20:0:13 (from Rs 16,500 to Rs 20,300).

“Today, I am paying Rs 500-550 for a 10-kg bag of zinc sulphate, which cost Rs 280-290 last year. The same goes for pesticides. Prices of pretilachlor (a herbicide) are up from Rs 350 to Rs 500 per litre, while cartap hydrochloride (an insecticide) is selling at Rs 390-400 per 5 kg, as against Rs 280-290 last year,” points out Pritam Singh Hanjra, who farms 107 acres — 30 of his own and the rest leased — at Urlana Khurd village in Haryana’s Panipat district.

The reason for farmers shelling out more for fertilisers and crop protection chemicals is, as in diesel, linked to oil and the rupee’s weakening. Ammonia, a source of nitrogen, is produced from natural gas. Sulphur — a raw material for phosphoric acid, which is used to make all phosphate fertilisers — is a by-product of refineries. Their prices, hence, move in tandem with that of oil and gas.

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“Whatever be the cause, the gains for us from MSPs being fixed at 1.5 times production costs, as claimed by the government, have been eroded by diesel, fertilisers and pesticides,” notes Hooda.

Hanjra also blames the goods and services tax (GST). “GST has become a weapon for industry to indiscriminately raise prices of all farm inputs,” he alleges.

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First published on: 06-09-2018 at 01:20:12 am
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