Basmati shift with support and lure

As the first step,Punjab intends to diversify within paddy from water-guzzling parmal varieties procured for the central pool to premium basmati varieties,which are bought by traders for domestic and export markets. In the coming paddy season 2013-14,the state intends to bring an additional two lakh hectares under basmati. Last year,basmati was grown over 5.5 lakh hectares and the highest coverage so far has been 7 lakh hectares.

Holding out the promise of an assured price is being seen as the only way to wean farmers away from parmal paddy towards basmati. The MSP is yet to be announced but government officials have indicated it is likely to be in the range of Rs 2,500 a quintal this season.

Yet each comes with its own set of problems. Basmati consumes less groundwater as its sowing takes place in the first week of July,after the onset of the monsoon June 29 in the state. Parmal varieties,despite the state banning their transplantation before June 10,are seen as the main culprit behind the states fast depleting groundwater. Basmati is also cost-effective as farmers do not foot huge diesel bills for running their tubewells to irrigate paddy fields. But what tilts the scale in favour of parmal is that basmati has average yield of 16 to 20 qunitals an acre,several notches below parmals 20 to 30.

Despite the marked difference in yields,the switch to basmati should help the farmer earn Rs 5,000 an acre more,says Punjabs adviser,agriculture,B S Sidhu. Punjabs basmati fetches a higher price owing to better quality in terms of taste and aroma. To ensure that rice millers and exporters do not lift farmers produce below the minimum assured price,the government has also made the trade competitive by waiving off seven per cent taxes,including a two-per-cent Rural Development Fund fee,a three-per-cent Punjab Infrastructure Development Fund cess and a two-per-cent market fee, he says.

The exemptions come with a rider they would be given only to those transactions which take place on the assured price.

This trade-off between government and traders will also take care of year-to-year fluctuations in prices of basmati,something which left farmers at the mercy of millers and exporters. While basmati prices hovered around Rs 2,500 per quintal last year during onset of the procurement season,they shot to Rs 3,500 per quintal after farmers had off-loaded much of their produce. The basmati trade was loaded in favour of the trader. If short-duration basmati varieties are encouraged,they will not only save groundwater but also help farmers earn more. The minimum base price should help the farmer recover his costs,make good profit and also hold stocks if he expects prices to rise in the future. Otherwise there is a looming fear of prices crashing in years of basmati glut, says former president of All India Rice Exporters Association,Vijay Setia.

The committee constituted by Badal under Punjab Farmers Commission chairman G S Kalkat is working on a minimum assured price for basmati ahead of the paddy transplantation season. According to the agriculture department,on an average a farmer incurs cost of Rs 16 to Rs 18 per kilo in growing basmati. An assured price of Rs 25 a kilo Rs 2,500 a quintal this season,it says,will add up to a higher income per acre from basmati than parmal.

There is a huge difference between the two paddy varieties in terms of yield. In several areas,the average parmal yield is double of basmati. Yet we expect basmati to fetch at least 50 per cent more gross income than parmal through the minimum assured price. A decision on the minimum price will be taken next month after consultations with millers and exporters who are also a part of the price fixation committee, Kalkat said.

PUNJAB PROPOSES…

Subsidy on seeds

Subsidy on insecticides,weedicides

Subsidy on zero trill drill/seed drill machines

Village training camps for farmers

Inter-state visits

International visits