Easing debt burden the key to farmers’ welfare

Raj Kumar

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PUNJAB, with only 1.53% of the total geographical area of the country, produced 16% of the country’s wheat, 11% rice, 3.4% cotton and 7% milk in 2019-20. During the past decade, the state has contributed 35-40% wheat and 25-30% rice to the Central pool. Over the past seven decades, Punjab’s agrarian economy has continued to thrive, signalling a reach much beyond its demographic and geographical boundaries. The state’s average monthly income for agricultural households has consistently been the highest in the country.

However, the state continues to face several issues, including depletion of underground water, mounting debts and a lack of alternative employment opportunities. The alternatives advocated by the experts, such as agricultural diversification, have proven to be non-starters. Approximately 67% of the farmers in Punjab cultivate less than 4 hectares of land, although their portion of the total cultivable land is only 34.6%. On the other hand, only 5.3% of the farmers have more than 10 hectares of operational holding with a share of 21.7% of the total cultivable land of the state. The average size of the operational holding in Punjab is 3.62 hectares.

Presently, there are 4.69 lakh tractors, 14.83 lakh tubewells, 92,000 lakh threshers and 19,000 combine harvesters in the state; these have made agricultural production capital-intensive. Heavy farm investment and low level of savings in agriculture are leading to indebtedness. It is not economically viable to acquire even the smallest 25HP tractor on 67% of the holdings with less than 4 hectares. The small farmers cannot afford farm investment on land, irrigation and farm machinery from their own savings in order to enhance productive capacity of farms and realise the benefits of precision farming. Therefore, cooperative farming needs to be promoted in order to alleviate the financial burden associated with the purchase of expensive machinery and tools. Hiring farming equipment is a significant cost-cutting measure for farmers. Such machinery can be maintained at the village-level cooperative organisation and made available to farmers on custom-hire basis. Collectively, the farmers themselves can also pool their resources and start cooperative farming. To initiate cooperative farming, well-run Primary Agricultural Cooperative Societies (PACSs) can prove to be a lifeline for small and marginal farmers. These societies should not stop at being fertiliser providers; they should also promote cooperative farming, mechanisation and marketing of agricultural produce. Such a strategy can help farmers increase their profits. Thus, small farmers must form groups and FPOs (farmer producer organisations) to strengthen their bargaining power, which will enable them to not only purchase quality inputs in bulk at relatively lower prices, but also sell their produce at higher prices. Besides, the farmers can choose crop rotations that require more labour and yield higher returns than the wheat-paddy cycle, such as horticultural crops. This will also result in increased employment hours in the fields. Contract farming, likewise, may also assist small farmers in ensuring their returns. However, it requires government intervention to establish strict rules and regulations to protect both parties, as contract farming has a chequered history.

The state’s infrastructure for produce storage must be improved. Farmers can obtain credit against their stored produce using the warehouse receipt system. Additionally, this will assist them in avoiding distress sales immediately after harvest. Around 36% of the farmers rely on non-institutional sources of funding (private dealers, corporate agents, commission agents, and money lenders) to meet their household and agricultural needs at a high rate of interest, ranging from 24% to 36% per annum. The government should keep a check on unregulated operations of non-institutional sources, and the farming community, particularly small and tenant farmers, should have increased access to institutional financing.

The reduced working hours of the agricultural labour force is another key issue in today’s agricultural scenario. The mode of production in Punjab’s agriculture has become capital-intensive over time and the demand for human labour has diminished since the late 1980s. Such idle agricultural labour is often unable to find new employment in the non-farm sector. According to the recent cost of cultivation data, a one-acre paddy-wheat crop rotation requires only 20-25 man-days of labour. Crop rotation or a supplementary occupation that generates additional work throughout the year is necessary. Farmers can visit Punjab Agricultural University (PAU) or district-level Krishi Vigyan Kendras (KVKs) to explore new supplementary occupations of their choice. With the addition of new occupations, farmers’ effective working hours can be increased, resulting in higher revenue.

Farmers must adhere to the agricultural techniques recommended by PAU in order to reduce production costs and ensure the sustainability of their profession. Additionally, it has been noticed that a majority of the farmers don’t keep a proper record of expenses and returns from farming. By keeping accurate records of returns and expenses, one can quickly detect unnecessary expenditure, which then can be reduced. Unproductive expenses on flaunting symbols of social status and expensive costs associated with marriages and other social rites should be eliminated in order to alleviate the debt burden. Individuals should live within and consume within their means.

Utilising modern agricultural techniques, efficient farm planning, diversified agriculture through demand-driven production and better farmers’ exposure to both local and distant markets can help them lower crop production costs, increase demand for their produce, explore additional work hours, and ultimately turn agriculture into a profitable occupation. Within the confines of Punjab economy’s socio-economic and political framework, these approaches can be helpful in raising farm income and reducing indebtedness.

The author is Principal Extension Scientist, PAU, Ludhiana