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From plate to plough: Boosting farmers’ income in Punjab

Adjusted for land holding, the Punjab farmer is doing poorly, and the culprit is paddy. A five-year plan to shift one million paddy hectares in the state to maize can help

Everyone from the top policy maker to the farmer in Punjab realises rice cultivation is depleting the water table fast, emitting methane and other greenhouse gases, damaging the environment; stubble burning is choking millions. (Representative image)

By Ashok Gulati & Ranjana Roy

As per the latest Situation Assessment Survey (SAS) of Agricultural Households conducted by National Statistical Office (NSO), the average Indian farmer earned Rs 10,218 per month in 2018-19 (July-June). A farming household in Meghalaya received the highest income (Rs 29,348), followed by Punjab (Rs 26,701), Haryana (Rs 22,841), Arunachal Pradesh (Rs 19,225) and Jammu and Kashmir (Rs 18,918); West Bengal saw the lowest such income (Rs 6,762), followed by Odisha (Rs 5,112) and Jharkhand (Rs 4,895).

But this is not a fair comparison as the holding size varies widely across states. Normalising these incomes by holding size as given in SAS, Punjab’s per-hectare income rank falls from 2nd to 11th and Haryana from 3rd to 15th. The states that come up are J&K, Kerala, Meghalaya—all of which earn more from fruit and vegetables (F&V), spices, and livestock, etc., that are high-value in nature, don’t get MSP business, and are more market- and demand-driven. There is a lesson here for Punjab and Haryana farmers on augmenting incomes in a more sustainable manner.

Interestingly, average landholding data is collected by both SAS and Agriculture Census (latest 2015-16), but there is a big variation between the two sets of data, especially for states like Punjab, Rajasthan, Haryana and Gujarat. As per SAS, average operated area per holding for Punjab is 1.44 ha (used in the accompanying graphic), but Census gives a much larger 3.62 ha average operational holding. If we normalise incomes of agri-households using census value for average holding sizes, Punjab’s rank sinks further—21st (with Rs 7,376 per hectare) out of 28 states, even lower than Bihar (Rs 19,338). It implies Punjab and Haryana farmers are earning higher incomes primarily due to bigger landholding sizes compared to other states.

Everyone from the top policy maker to the farmer in Punjab realises rice cultivation is depleting the water table fast, emitting methane and other greenhouse gases, damaging the environment; stubble burning is choking millions. Recently, Capt. Amarinder Singh approached the Centre with the idea to create a fund of around Rs 25,000 crore for getting farmers to switch from paddy to maize. We feel the Centre should give it serious thought, with the following modifications: (a) it should be under a five-year plan for shifting (to maize) at least a million hectares out of the total of 3.1 million hectares of paddy in Punjab; (b) the Centre and the state should contribute equally over the five years; (c) since Punjab wants MSP for maize, a Maize Corporation of Punjab (MCP) be created to buy maize from farmers at MSP; (d) MCP must enter into contracts with ethanol companies, and most of the maize should be earmarked for ethanol as poultry and starch will not be able to absorb the maize surplus once a million hectares of paddy shifts to maize; (e) maize productivity should be competitive, like paddy, in Punjab and the best seeds should be used. This is to ensure that ethanol from maize is produced in a globally competitive manner.

The Centre’s ethanol blending policy (20% ethanol in petrol) should come in handy. In this process, Punjab will arrest water-table depletion as maize needs less than one-fifth the water that paddy needs. Also, Punjab will save on power subsidy to agriculture, budgeted at Rs 8,275 crore in FY21 budget, as paddy irrigation accounts for much of this subsidy. This saving can be used to fund a part of the state’s contribution to MCP. It can be a win–win for all—the farmers, government of Punjab, and the country—as there will be lesser methane emissions and lesser stubble burning. Moreover, ethanol will also reduce GHG emissions by vehicles.

Other parts of diversification strategy must be along the lines of increasing area under F&V, and a more focused policy to build efficient value-chains in F&V, livestock and fisheries. They are all more nutritious, and SAS data shows 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 realise its full potential. Can Punjab and the Centre come together on this? Punjab was at the forefront of food security in the late-1960s and early-1970s, but today the Punjab farmer is languishing in a low-level-equilibrium trap of rice-wheat with open-ended procurement by the government. She needs to rise to higher levels of income on a per hectare basis, that too in a sustainable manner, and produce more nutritious food. Punjab can then shine again with respect to nutritional security with sustainable and climate-resilient agriculture.

Respectively, Infosys Chair professor for agriculture and fellow, Icrier

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