Wednesday, May 25, 2011

AP Rice Mill Lobby Strangulating Farmers

It is sad that neither media nor the government is concerned about the plight and suicides of paddy farmers in the state as they are about say weavers’ deaths. Not that the death of weavers should not be a matter of concern, but due attention should be paid to the paddy farmers suicides too. While clothes can be made by textile mills and weavers can choose other forms of work, it is the farmer who is stuck with his land and there is nobody on the earth to produce food grains except him. The reasons for the plight of farmers are two. One is the Central Government which fixes minimum support price arbitrarily without taking the actual input costs and refuses to increase it citing the fallacious reason that food prices will increase. It cites the same reason for refusing exports. Its arm, the Food Corporation of India ( FCI ), has grain stocks  double the capacity of its godowns. Crop after crop and year after year, the FCI cites the reason of lack of storage space to avoid buying from the farmer directly.
In AP, kharif crop ( July- Dec ) on average yields 100 – 110 lakh tons of paddy. In Rabi ( Jan – April ) the yields are 110- 120 lakh tons.  The just harvested rabi crop yielded  an estimated 120 lakh tons. Of this, the FCI bought directly from  farmers a meager  5 lakh tons and the state civil supplies  department bought 1.5 lakh tons at the minimum support price of Rs 1000 a quintal. Once the FCI stopped purchasing, the rice millers started purchasing a quintal of paddy at Rs 800- 850. And they bought 98 lakh tons. At Rs 200 lesser price per quintal, the farmers lost a whopping sum of Rs 2000 crore. And this is just for one crop not including the profits earned by millers by exporting rice to other states  and countries. The government in AP, whichever party is in power, dances to the tune of rice millers and so when almost all the farmers had made a distress sale of paddy, politicians are shedding crocodile tears now urging the central government to increase MSP and allow export of rice. And who will benefit from this. None except the rice millers. Each rice mill pays 30% of the milled paddy to FCI as levy and can sell the remaining stocks in the open market. The millers also get 12 kg of rice bran and 12 kg of broken rice for each quintal of paddy milled. The 4-5 kg of husk they get is used to generate power or used to generate steam to make paraboiled rice. The levy rice collected by the FCI is  allocated  to public distribution system for distribution to below poverty line people at a high subsidized rates. FCI has now 50 million tons in its warehouses, double the quantity required to meet the needs of subsidized rice distribution through PDS.

Paddy cultivation is  highly labour intensive. The input costs have trebled in the last 5 years but the MSP for paddy has not increased by  more than 40%.  If we take 5 acres farmer, his input costs are Rs 90,000/- which includes from raising nursery, mechanized ploughing, plantation, weed removal, fertilizer, pesticide, reaping and to harvesting. At an average  25 quintals per acre, if he gets MSP, his net earnings are a meager  Rs.35,000 for the entire crop from his 5 acres. If rabi crop is also cultivated and both the crops are not affected by any natural calamity, his earnings per year is Rs 70,000/-, which is less than Rs 6000 a month. It is  a fact that once every 3 years, one crop at least is lost to nature’s fury. having thus lost a year of earnings and with no money for the input costs for the next crop, farmers have to go for loans either from banks or private money lenders. Both these institutes show no mercy on the hapless farmer while recovering the money. This is what makes the farmer take his life. Last quarter, State Bank of India wrote off Rs 41,500 crore as bad debts and not even a single rupee of this colossal amount  would be from a farmer.

The AP government should exert pressure on the central government to allow exports of rice on a continuous basis and stop the practice of permitting millers to export after they buy at a lower price from the farmers. The FCI should be given procurement quota for each state depending on the extent of paddy cultivated. The practice of FCI procuring a lion’s share from only Northern states should stop.  

1 comment:

Vinod said...

The ban on exports was done a few years ago because of a sharp hike in local food grain prices. Things have changed much since then - prices, in relation to global ones, are relatively OK. Also, we are having bumper crops and are storing double the buffer stock required. Meanwhile, World food prices are up 36% since last year. Common sense says export. But then, since when have the powers that be have any semblence of sense (perhaps they're worried Myanmar's decision to export 500,000 tonnes of rice will drastically lower global food prices)? They are still debating on whose figures are right - the NAC's or Rangarajan Committee's - for the Food Security Bill, which could require an additional 21 million tonnes to be ploughed into food security programmes (so, perhaps, they think more stocks can enable them to do this cheaply). In the meanwhile, farmers will default on loans, many will commit suicide, the banks will be burdened further with bad debts, and the 'aam aadmi' will end up footing the bill.