Explained: Mann’s MSP promise for paddy alternatives: way forward, the economics

After announcing incentive for adopting Direct Seeding of Rice (DSR), now the Punjab government, to encourage diversification, has said that it will provide Minimum Support Price (MSP) for crops such as maize, bajra and moong if farmers cultivate them in place of paddy.

Punjab has been trying to diversify area under paddy to other alternative crops for the past over three decades but ended up only increasing area under this water guzzling crop. Anju Agnihotri Chaba explains the way forward and how the economics work out for the farmers.

What crops sown during Kharif season in Punjab and what is the area under those?

Punjab has around 41.18 lakh hectares (lh) agriculturally cultivable land, including nearly 38 lh under agricultural crops and over three lakh hectares under horticultural crops. During Kharif season, rice crops, including paddy and Basmati (aromatic fine quality rice), are grown on around 82.7 per cent (around 3.1 million hectares) of the total agricultural land. Just about 18 per cent area, or around 6.55 lh, is left for other crops including Kharif maize, cotton, and pulses (moong, arhar and black mash [Urad]oil seeds (sesamum and groundnut), and sugarcane.

How much area under paddy needs to be diversified, what is the way forward?

According to the experts, Punjab needs to curtail area under rice form 3 million hectares (30 lh) to under 2 million hectares (20 lh), which should include around 7 to 8 lh under Basmati and remaining under paddy. It means, around 11 lh area under water guzzling crop needs to be diverted for alternative crops.

Currently, Punjab grows six Kharif crops other than paddy and basmati. Last Kharif season , area under maize was 1.26 lh while cotton was sown in 3.25 lh. Around 30,000 hectares were under pulses and oil seeds and nearly 95,000 hectares under sugarcane. A miniscule area was under bajra and agro-forestry. Combined, these crops covered around 6.55 lh and experts suggest this area needs to be increased to nearly 18 lh.

Punjab’s agricultural history reveals that in past, these alternative crops were being sown in a huge areas — 5.77 lh under Maize in 1975-76; 7 lh under cotton in 1988-89; 1.73 lh under sugarcane in 1996-97; 1.40 lh under pulses in 1985-86; 2.22 lh under groundnut in 1967-68; 25,600 hectares under sesamum in 1974-75; and 2.13 lh under bajra in 1969-70. If the state follows this trend, alternative crops can be cultivated in more than 19 lh.

The different policies on diversification by the successive governments over past two decades also suggested to bring around 5 lh under maize, 7 lh under cotton, 2 lh under sugarcane and around 2 lh under pulses and oil seeds during Kharif season.

Barring cotton, which is sown between mid-April and early May in Punjab — its three pickings lasts till November when the wheat sowing starts — the duration of these Kharif crops is almost the same as paddy. Pulses take 80 to 135 days to maize, the cycle for maize is four months and these crops require very less water and fertilisers as compared to paddy.

What is the MSP of paddy and alternative crops?

Though government is yet to announce MSP for Kharif season crops for this year. Last year, however, it was Rs 1960 per quintal for paddy; Rs 1870 for maize, Rs 7275 for moong, Rs 6300 for urad and arhar, Rs 5,550 for groundnut, Rs 7307 for sesamum; Rs 2250 for bajra and Rs 5850 for cotton. Basmati was sold between Rs 1800 to Rs 4,000 per quintal.

What is the yield of paddy and its alternative crops?

Paddy’s average yield is 28-30 quintals per acre while that of Basmati is 18-20 quintals. On the other hand, average yield of pulses is 5-6 quintals per acre, groundnut is 8 quintals, sesamum is 1.5 quintals; bajra is 6 quintals, and cotton is 8-10 quintals per acre. Sugarcane yield comes around 340 to 350 quintals per acre. The state assured price (SAP) for sugarcane is Rs 345 to 360 per quintal depending upon early, mid and later varieties.

How do the economics work out for these alternative crops for farmers?

If this season, the MSP for paddy is hiked to Rs 2000 per quintal, then Farmers will be able to ear Rs 41,000-Rs 45,000 per acre (Selling the crop at MSP for Rs 56,000 to Rs 60,000 per acre and deducting the input costs of Rs 14,000 to 15,000 per acre from it). Paddy has an assured market as government procures it.

For sugarcane, with an average yield of 340 to 350 quintals per acre, a farmer make Rs 90,000 to Rs 95,000) per acre (after deducting Rs 30,000 to Rs 31,000 input cots from SAP of Rs 1.20 lakh to Rs 1.25 lakh per acre). Several farmers go for intercropping in sugarcane fields till the time crop gains height, thereby enhancing their income.

Cotton can yield farmers an average of Rs 28,000 to Rs 38,000 per acre (after deducting input cost of Rs 18,000 to 20,000 from Rs 46,000 to Rs 58,000 per acre secured at MSP). Last Kharif season, farmers sold cotton at double the MSP owing to high demand in international market and earned Rs. 60,000 to Rs 80,000 per acre after meeting costs.

From pulses and groundnut, the return is around Rs 25,000 to 38,000 per acre after meeting the expenses, said experts. Returns from Kharif maize are around Rs 20,000 to 22,000 per acre, but if green corn is sold, then earnings increase to Rs 25,000 to 30,000 per acre, say farmers.

Experts say that the consumption of water and fertilisers is very low in alternative crops as against water guzzling paddy. Also, pulses improve soil fertility by fixing air nitrogen in the soil. Also, repeatedly opting for paddy makes it vulnerable to diseases and pest attacks.

In Punjab, cropping patterns can be set both region and soil wise, say experts, adding that farmers, opting for alternative crops, can be given additional incentives on seeds and fertilisers among others so that their income should be at par with or more than that from paddy.

Where is the market for alternate crops, and can government afford to procure alternative crops for the MSP?

Sesame and groundnut has a great demand in Europe and East Asian countries. Last year, India exported sesamum oil worth Rs 3500 crore and groundnut oil worth Rs 4000 crore. Also India is meeting 60 to 65% of its demand for edible oils from outside country. Oilseeds grown in Punjab make for only 4 per cent of the total edible oil consumed in the state. As far as pulses are concerned, Punjab meet 85
per cent of its demand from other states.

There is big market and existing industry for processing maize. Basmati has a huge market offshore. In sugarcane mills, power and ethane plants can be set up.

For cotton, the Cotton Corporation of India ensures that when the rates go down in the market, it picks up the produce at the MSP rate.

Also, this year, the rates of moong and oilseeds are high and farmers mostly sold it in the open market. Basmati is also being sold at much higher price in the international market

“The government is required to intervene only if the prices go below the MSP. Government can then pay the difference between MSP and the prevailing market rate, the way several state governments such as Haryana and Madhya Pradesh have been doing for several crops. Also, government can easily find markets both in the country and abroad for the crops so that farmers can get remunerative price for their produce,” said an agricultural expert.

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