As per the latest Situation Assessment Survey (SAS) of agricultural households conducted by the National Statistical Office (NSO), an average Indian farmer earned Rs 10,218 per month in 2018-19 (July-June). Across states, the highest income was received by a farming household in Meghalaya (Rs 29,348) followed by Punjab (Rs 26,701), Haryana (Rs 22,841), Arunachal Pradesh (19,225) and Jammu and Kashmir (Rs 18,918) while the lowest income levels were in West Bengal (Rs 6,762), Odisha (Rs 5,112) and Jharkhand (Rs 4,895). But this is not a fair comparison as holding sizes vary widely across states. The moment one normalises these incomes of agri-households by their holding sizes, as in the SAS, Punjab’s ranking on per hectare income falls from 2nd to 11th and Haryana goes down from 3rd to 15th (see figure). The states that would do well on this score are Jammu and Kashmir, Kerala, Meghalaya and Arunachal Pradesh where people earn their income from cultivating fruits and vegetables, spices, and livestock. These are high value in nature, not linked to MSPs, and market and demand-driven. There is a lesson here for Punjab and Haryana farmers on augmenting their incomes on a per hectare basis, and also doing farming more sustainably.
The average landholding data is collected by both the SAS and Agriculture Census (latest 2015-16) but there is a big variation between the two data sources, especially for states like Punjab, Rajasthan, Haryana and Gujarat. This anomaly needs to be corrected. As per the SAS, the average operated area per holding for Punjab is 1.44 ha (we have used that in the figure), but the Census gives a much higher value of 3.62 ha of average operational holding. If we normalise incomes of agri-households using Census values of average holding sizes, Punjab’s rank would go further down to 21st (household monthly income Rs 7,376) out of 28 states. Even Bihar (household monthly income Rs 19,338) will do much better than Punjab on this criteria — it will rank 5th. This implies that farmers in Punjab and Haryana are earning higher incomes primarily because the size of their landholding is greater compared to their counterparts from other states.
How can farmers in Punjab and Haryana augment their incomes with more sustainable agriculture? Everyone, from the top policymaker to the farmer, in Punjab realises that rice cultivation is depleting the state’s water table, emitting methane and other greenhouse gases that damage the environment and stubble burning is choking millions. Punjab’s former Chief Minister Amarinder Singh had approached the Centre with an idea to create a fund of around Rs 25,000 crore to help farmers switch from paddy to maize. We feel that the Centre should give this idea a serious thought with the following modifications: One, the fund should be under a five-year plan to shift at least a million hectares of paddy area (out of a total of 3.1 million hectares of paddy area in Punjab) to maize. Two, the corpus should have equal contributions from the Centre and state. Three, since Punjab wants that farmers be given MSP for maize, an agency, the Maize Corporation of Punjab (MCP), should be created to buy maize from farmers at MSP. Four, this agency should enter into contracts with ethanol companies, and much of this maize can be used to produce ethanol as the poultry and starch industries will not be able to absorb this surplus in maize once a million hectares of paddy area shifts to maize. Fifth, maize productivity must be as competitive as that of paddy in Punjab and the best seeds should be used for that purpose. This is to ensure that ethanol from maize is produced in a globally competitive manner.
The GoI’s policy for 20 per cent blending of ethanol in petrol should come in handy for this purpose. In the process, Punjab will arrest its depleting water table as maize needs less than one-fifth the water that paddy does for irrigation. Also, Punjab will save much on the power subsidy to agriculture, which was budgeted at Rs 8,275 crore in the FY2020-21 budget, as paddy irrigation consumes much of the power subsidy. This saving subsidy resulting from the switch from paddy to maize can be used to fund a part of the state’s contribution to the Maize Corporation of Punjab. This could result in a win-win situation for all — farmers, the Government of Punjab and the country — as there will be lesser methane emissions and less stubble burning. Moreover, ethanol will also reduce GHG emissions in vehicular pollution.
Other parts of the diversification strategy have to be along the lines of increasing the area under fruits and vegetables, and a more focused policy to build efficient value chains in not just fruits and vegetables but also livestock and fisheries. They are more nutritious and the SAS data shows that their profitability is much higher in these enterprises than in crop cultivation, especially cereals. The sector needs to be backed by proper processing, grading and packaging infrastructure to tap its full potential. Can the Punjab government and the Centre come together on this important issue? Punjab was at the forefront of providing food security to the country in the late 1960s and early 1970s but today, the Punjabi farmer is languishing in a low-level equilibrium trap of the rice-wheat cycle with the open-ended procurement system of the government. Their income on a per hectare basis needs to increase more sustainably, protecting the state’s land, water and air from further degradation, and producing more nutritious food. Punjab can then shine again on the nutritional security front with sustainable and climate-resilient agriculture.
This column first appeared in the print edition on October 25, 2021 under the title ‘Time to seed a transition’. Gulati is Infosys Chair Professor for Agriculture and Roy is Fellow, at ICRIER