Industry
A crisis is brewing in Punjab and farmers know it
Summary
- Farming in today’s Punjab, despite the stellar productivity in cereal crops, is staring at an impending tragedy. A groundwater crisis is likely to make growing paddy almost impossible, a decade from now. Farmers know this. Is there an alternative?
New Delhi: “I would like to pay particular tribute to the Punjab farmers," wrote C. Subramaniam in The Hand of Destiny, his memoir published in 1995. As India’s agriculture minister when it embarked on the ambitious Green Revolution project, which made the country self-sufficient in food grains within a short time, Subramaniam wrote that Punjab farmers “were pioneers…but for them I am convinced we would not have made a success of it."
Subramaniam also observed that states like Uttar Pradesh and Bihar had the same benefits of suitable climate and soil but could not match the performance of the Punjabis. It was the enterprise of the Punjabi farmer which stood out. A large chunk of them, mostly Sikhs, had moved over to east Punjab when India was partitioned during Independence. They had left behind everything, arriving with almost nothing to call their own.
But, wrote Subramaniam, this was not the first time they faced adversity. They inhabited the border area for centuries and fought a steady stream of foreign invaders. Due to the sheer need to survive, they developed into a ‘hardy lot of enterprising people.’
“When this new (green revolution) technology was offered to them, they took to it like fish to water. Everyone vied with one another to demonstrate that he was the best able…Many farmer organizations came into existence." One such organization was the prestigious Tonnage Club, where one could get entry only if they produced at least a ton of rice or wheat per acre of land. The green revolution strategy, due to involvement of farmers from Punjab, was nothing short of a “farmers’ movement".
Six decades later, Punjab is the epicenter of another farmers’ movement.
In 2020, farmers from the state led year-long protests which forced the union government to repeal a clutch of farm laws. These laws were enacted with the aim to liberalize internal trade in agriculture and provide farmers more avenues to sell their produce, especially to private buyers.
Earlier this February, farmers from Punjab again took to the street. They are now camping 200km away from Delhi at the state’s border with Haryana. The ask is to make minimum support prices (MSP) a legal right. MSP is announced by the union government on 23 non-perishable crops, but purchase is mostly limited to rice, wheat and cotton.
Prosperity to crisis
While support prices did benefit the Punjab farmer, the responsibility to supply to public food stocks for decades also ruined its soils, depleted water tables and increased disease incidence (due to overuse of chemical inputs), says Amandeep Sandhu, author of the book Panjab: Journeys Through Fault Lines.
“Paddy is a remunerative addiction, but not enough to get farmers out of debt. If a farmer wants to move to other crops who is going to pay for the losses and costs of transition. Where is the plan?" asks Sandhu. He adds that lack of jobs elsewhere means farmers are tied to their land. Now, they are like parwanas (flying insects), ready to crash and burn. That explains the doggedness with which they often pursue their demands.
Data from the National Statistical Office’s Situation Assessment Survey shows that an average farm family in Punjab earned ₹26,701 per month—more than double the national average of ₹10,218 per month (during the 2018-19 crop year).
But this evidence of relative prosperity is at odds with another tragic data point. Close to 9,300 farmers committed suicide between 2000 and 2018 in just six districts of the state which were surveyed, a study the Punjab Agricultural University, published in 2022, revealed. About 90% of the suicides were driven by debt, and most were small and marginal farmers. Crop failure in cotton, a financial squeeze due to rising living costs, and indebtedness following purchase of farm machines like tractors pushed farmers into a debt trap.
Interestingly, in Punjab, income from crop production accounted for 47% of the farm household income. This dependence on cultivation is lower, at 37%, at the national level, the Situation Assessment Survey stated.
The higher dependence on rice and wheat at assured prices is also what makes the Punjab farmers edgy. “People tend to agitate when they have something to lose. Punjab farmers have the most to lose if the policy of open-ended procurement (of government agencies buying all grains that are produced at MSP) ends. This fear is what is driving the protests," says Ajay Vir Jakhar, chairman, Bharat Krishak Samaj, and former head of the state farmers’ commission.
A draft policy submitted by the farmers’ commission to the state government in 2019 laid bare the fragile state of agriculture in Punjab. With 10 million acres of cultivated area, the requirement of short-term crop loan is ₹24,000 crore per season, but aggregate outstanding bank loans is much higher, at ₹60,000 crore. This implies farmers may be using crop loans to pay for consumption expenses. Aggregate ownership of tractors is also higher than required—average use is just 40% of the 1,000 hours per year required for a tractor to be economically viable. The report also said that the state policy of free power for agriculture together with the central policy favouring paddy cultivation paved the way for indiscriminate use of groundwater. The result? 110 out of 148 blocks reported groundwater ‘overexploitation.’
Diversification dilemma
No one is more aware than farmers of Punjab on the need to move away from paddy, says Ramandeep Singh Mann, a farmer leader and activist who is part of the ongoing protests.
During talks with farm unions on 18 February, the Centre offered a diversification package. It said, the government will purchase five crops—three varieties of pulses, maize, and cotton—for five years, at announced support prices.
This out-of-the-box, innovative contract farming solution will help restore soil fertility while ensuring guaranteed returns to farmers, union food minister Piyush Goyal said after the meeting. A day later farmers rejected the proposal.
The reason? Union leaders said the new package is only for farmers moving away from paddy and not for those already growing these alternative crops. “That diluted our primary demand of ensuring support prices for crops other than rice and wheat. Besides, it will take a few years to implement the policy. The five-year limit means farmers will have no price protection after switching," Mann adds.
Another reason why the package failed to impress farmers is that returns from growing rice are way higher when compared to the proposed alternatives. A paddy grower from Punjab earns a gross return of ₹88,000 per hectare (without accounting for unpaid family labour and land rents), shows latest available data from the Commission for Agricultural Costs and Prices (Cacp). This is largely due to superior yields of over six tonnes per hectare. In comparison, yield of pulses and oilseeds are far lower, hovering between one-two tonnes per hectare. These low yielding crops are also more prone to damage due to uneven rains and pest attacks. The Cacp data shows that the best returns on pulses is for tur dal, at ₹58,000 per hectare. Similarly, in maize the best any Indian farmer could achieve was ₹61,000 per hectare.
High land rents in Punjab—between ₹50,000 to ₹60,000 per year, on which two crops can be planted—also means replacing paddy with alternative crops will impose a considerable burden on tenant farmers.
So, farmers will need additional incentives beyond just an MSP guarantee to induce them to move to other crops. However, that may not mean prohibitive costs for the government. Switching to other crops also means subsidy savings on chemical fertilizers (since pulses and oilseeds require fewer inputs), water and free electricity, plus the money spent on reducing the incidence of burning paddy stubble—which chokes north India every winter.
Someone must sit down, do the math, and propose a plan which makes economic sense for the Punjab farmer, says Avinash Kishore, senior research fellow at the Delhi office of the International Food Policy Research Institute. “At times, I am doubtful if policymakers honestly want farmers to switch. Are they worried that procurement for public stocks may be at risk if Punjab stops supplying rice?" Kishore asks.
In fact, the much-abused Punjab farmer continues to be the top rice supplier to central food grain stocks, which are used under the national food security programme. In 2022-23, Punjab supplied 12.2 million tonnes (mt) of rice, about 22% of the total public purchase of 57 mt. Interestingly, an estimated production shortfall of less than 10 mt prompted India, the world’s largest rice shipper, to impose export curbs to increase domestic availability and cool retail prices. So, before the Punjab farmer moves away from rice, India will also have to ensure that other states cover the supply gap.
Uneasy solutions
The way out is to use a carrot and stick strategy, says Ajay Vir Jakhar, the former head of the state farmers’ commission, quoted earlier. This involves restricting supply of free electricity to farmers—which is used to draw groundwater for growing paddy—and costs the state government over ₹9,000 crore per year; limiting paddy procurement at MSP to five acres per family; creating market infrastructure for perishable produce and cash incentives for farmers who switch from paddy to other crops.
The Punjab farmer must realize that the money is not in the field but in the possibilities offered by the market, says Sukhpal Singh, professor at the Indian Institute of Management, Ahmedabad.
“It is a mindset problem perpetuated by years of selling to the government. High value horticulture and spices crops can provide them returns higher than rice and wheat. But for it to work, farmers need to understand that the market rewards quality. Currently, they do not even dry the harvested crop properly before taking it to the market, because the government is the sole buyer," adds Singh, who is also a member of the government committee set up in 2022, to make the MSP regime more ‘effective and transparent.’ The committee is yet to submit its report.
But these solutions are not easy to implement. When a fear of dilution of MSP protection brings farmers to the street, to persuade them to agree to a plan proposing to limit public purchase of rice, the most remunerative crop, will require more than just a dialogue. It would require a process that can earn their trust—not brute force to drown the protestor’s voice.
