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In distress

Fall in lease rentals on farmland mirrors the plunging confidence of farmers, which inhibits crop diversification

By: Editorial |
July 2, 2016 1:42:47 am

It is no secret that India’s agriculture has been under increasing stress over the past two years, due not only to back-to-back droughts but also global factors. For the most part, agrarian distress is seen through the mirror held up by the disturbing phenomenon of rising farmer suicides. But that is an extreme outcome. More widespread changes that are unfolding in the agrarian landscape are often missed. Falling lease rentals on farmland in Punjab, for instance, show how the rural ecosystem is being more adversely affected by market forces than its urban counterpart.

Nowhere is this more evident than in Punjab, a state that has been described as India’s granary. In the Majha region, which has the largest Basmati-growing tracts, annual charges for leased land have come down by up to 40 per cent. This is true for the Doaba and Malwa regions of the state as well, albeit for differing reasons. Majha farmers have been at the receiving end of a fall in India’s agricultural exports, thanks to the crash in global commodity prices. As such, not only have the yields of the Basmati crop fallen in the last two years, the price realisation has also collapsed. Basmati varieties, which sold for Rs 5,000 per quintal till two years ago, have fetched just about Rs 1,600 to Rs 1,800 per quintal lately. In Malwa, Punjab’s main agricultural heartland, the fall in lease rates has been due to intrinsically agrarian reasons: The Bt cotton crop widely cultivated in this belt suffered heavy losses due to whitefly infestation. This resulted in shaving off price realisations by around 20 to 25 per cent.

There are at least two main implications of these falling rentals that policymakers must take note of. One, farmers are becoming risk averse. This can be seen in the fact that they are increasingly reverting to the safe choice of growing non-Basmati rice, where price realisations are assured due to the government’s minimum support price guarantee. This depression in the risk-taking spirit of the farming community cannot be good news. The collateral damage, as it were, is the certain decline in crop diversification. Farmers across the belt have dropped the risky choices, be it Bt Cotton or Basmati rice, and chosen safer but more subsidy intensive crops such as parmal paddy.

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