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WELCOME Crop Holiday-Kharif 2011 Reasons and Solutions Dr. Kota Tirupataiah,IFS DG WALAMTARI

WELCOME Crop Holiday-Kharif 2011 Reasons and Solutions Dr. Kota Tirupataiah,IFS DG WALAMTARI 10 th October 2011. Structure of the Presentation. Cropped area in Kharif 2011 Crop Holiday- story The Issues Cyclones Labour Costs Input Costs Credit Minimum Support Price

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WELCOME Crop Holiday-Kharif 2011 Reasons and Solutions Dr. Kota Tirupataiah,IFS DG WALAMTARI

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  1. WELCOME Crop Holiday-Kharif 2011 Reasons and Solutions Dr. Kota Tirupataiah,IFS DG WALAMTARI 10th October 2011

  2. Structure of the Presentation • Cropped area in Kharif 2011 • Crop Holiday- story • The Issues • Cyclones • Labour Costs • Input Costs • Credit • Minimum Support Price • Procurement Policy • The Mohan Kanda Committee • Solutions

  3. PADDY CROP – DOUBLE LOSS Fertilizers Pesticides Cyclones Labour PADDY CROP _____________________________________________________________________________________________ MSP Export Policy Procurement Policy Storage Space

  4. Crop Holiday- The Beginning • Started in Konaseema – the rice bowl of AP • 13 out of the 16 mandals took part • 40,000 farmers participated • 85,050 acres area not cropped • “Rythu Sangham “played key role under the leadership of Godavarthi Radhakrishna Chowdhary

  5. Crop Holiday- Trigger Area

  6. Konaseema- the trigger

  7. Konaseema- the trigger

  8. Cropped Area in Kharif 2011 • Crop Target area- 224 lakh acres • Crop sown area- 192 lakh acres • Shortage- 32 lakh acres • Area in konaseema- 3 lakh acres (1.5 million MTs of rice- 5 lakh MTs more than the recent export permit) • 305 excess rainfall, low prices of maize and sugarcane, 5% increase in paddy area in kharif and 10.85 in rabi • Record rabi production of 30% more than last year

  9. Crop Holiday- The Hidden Fire • The decision is not a spark out of blue • Karamchedu farmers were observing crop holiday for the last 3 years • Many lakhs of farmers have voluntarily kept their farms “fallow” • Farmers in WG,EG,GTR enrolled as labourers under MG NREGS to show their anger • Strong signal to youth to go away from agriculture and allied sectors

  10. Crop Holiday- The Effect • Achanta under Nekkanti Subba Rao, Kolli Nageswar Rao (VZA), • Rythanga Samakhya- Yerneni Nagendranath gave it mometum • Consortium of Indian Farmers’ Association (CIFA) under P.Chengal Reddy helped it spread- 350 Orgns. • In AP- Spread to Karamchedu ( S&M Farmers), Nellore, Kadapa, Warangal • Outside AP- Spread to TN, Karnataka, MaH- passed resolutions to observe crop holiday next season

  11. Crop Holiday- The Emotion • N.Subba Rao- “In these conditions we may have to observe crop holiday at least one out of the 2 seasons every year” • K.Satya Rao- “ a painful decision to all of us who are used to growing 3 crops in a year” • Kolli Nageswar Rao- “ desperate move due to raising costs and government apathy” • Y.Nagendranath- “ Fertiliser and pesticide ealers make money due to us. Shortage will lead to extending this to rabi also’

  12. Crop Holiday- The Communication Gap • Reporting by officials- “Farmers are rescheduling the crop for rabi to avoid loss due to cyclone” • Government Release- “They are planning for early rabi and expect early release of water for kharif next, most probably by May 15,2012”

  13. Crop Holiday- The Determination • We face cyclones every year in november but we never hesitated to go for kharif sowing. We want to skip this season when everything is ready- seedlings grown by June end itself- except a remunerative price • We want to tell government that we are observing cent per cent crop holiday- farmers of Uppala Guptam,EG

  14. Crop Holiday- Lack of understanding • “The government never asked us about crop holiday and we never reported about it to govt. Our job is to keep seeds and fertilisers ready for the kharif season and give suggestions to the farmers”- JDA, EG

  15. Crop Holiday- Issues- Cyclones • Every year phenomenon- last 3 years continuous • Crop holiday not due to this • M.Pavan Kumar-Peddapuram- developed long duration fine grain variety- RGL- 2537- withstands lodging moderately and less prone to pests & diseases • Though research on this subject is necessary, CH is not definitely due to this • Discolored paddy due to last cyclone is an indirect reason

  16. Crop Holiday- Issues- Labor Costs • 4 fold increase in wage rates • MG NREGS attributed as the main culprit • MG NREGS -agricultural operations- ineligible • Generally wages < 50% total costs but now > 70 % • Big picture- Ratio between agril & non-agri. Wages rose from 1:1.80 (1950s) to 1: 5.20 (2010) • GDP per agri labour between 1950 to 2010 is 75% more than what was in 1950 in real terms • Overall real per capita GDP increased by “4 times”

  17. Crop Holiday- Issues- Input costs

  18. CH- Additional cost due to Fertilizers/acre

  19. Crop Holiday- Issues- Credit • In the last 18 months fertilizer cost increased 6 times • Loan Target for 2011-12 20, 285 crore against which 15, 182 crore (75%) is actually lent • Only 50% farmers accessed credit • Lessees worst hit- of 20 lakh only 5.50 lakh got loan cards and 96, 366 got loan • Term loans 465 and allied loans 23% • Scale of finance 17,500 inadequate ( 28,000 needed)

  20. Crop Holiday- Issues- MSP • The National Commission on Farmers (NCF) in its 5th report (2007)reported that profitability of agriculture has gone down by 14.2% during 90s due to stagnant yield growth and increase in input costs outpacing the increase in price of output • Identified 12 crops whose MSP is less than COP- Rice, Wheat, Jowar, Maize, Bajra, Ragi, Tur, Moong, Urd, Gram, Barley

  21. Crop Holiday- Issues- MSP • The NCF said,” It would be extremely unlikely that in the long run farmers would continue to cultivate these crops where the cost of cultivation is not recovered • Recommendation- 50% over and above the C2 • Make Committee on Agricultural Costs and Prices autonomous

  22. Crop Holiday- Issues- CACP • Takes the costs of the last 3 years and works out averages • Gives national average- wide variations across states on costs of inputs, land and labour • Does not represent the farmers’s interests • Governed by the Ministry of Agriculture and not Autonomous

  23. Crop Holiday- MSP over the years

  24. Crop Holiday- Our MSP • On Sept. 5th, CIFA executive committee adopted a resolution rejecting the MSP of the govt. for 2011-12 • Made resolution to recommend Rs. 2400/Q as “Farmers’ Price” (1600 cost +800 take home income as per NCF) • Filed a petition in SC to direct govt. to implement the recommendations of the NCF and the National Policy for Farmers, 2007 • Recommended farmers to be on the CACP

  25. Crop Production over the years

  26. Physiognomy of Paddy Crop

  27. Procurement – Farmers’ woes • Millers paid Rs. 850-930/Q against MSP (1,030) after deducting other costs, it is a loss of Rs.100/Q • When they sold to Mandis, 7-9 days wait, no shelter, hamali, gunny bags, measures loss, market cess, payment delays • Most of them sell to miller at throw away price just for “on the spot payment” loss of Rs.5000-8000/acre

  28. Harvesting Technology– Farmers’ woes • Mechanised harvest took over the state in the last 3 years • 240 acres in a village can be harvested in one day yielding 1,08,000 bags paddy per village • A mandi can only handle 5000 q/day • @ one mandi/mandal and 60 villages, they are woefully inadquate • Delays and IKP centers could not compensate • 2/3rd harvest comes in the first 2-3 weeks • There is no space with millers Also

  29. Procurement Role of APSCSC • APSCSC Main procurement agency and prepares plans for both seasons based on advance estimates by BES • Enters market only if price falls below MSP • Procurement target traditionally low- grain deficit state for a long time- has not revised even after large scale bore well irrigation • Millers lobby strong and often agency helpless

  30. Procurement Role of APSCSC • Paddy procurement Targets not revised in spite of bumper rabi crops in successive years • Chattisgarh procured 22.07 lakh tonnes of Paddy in 2008-09, Orissa- 17.93 LT, UP- 23.97 LT, Haryana- 22.07 LT and Punjab-18.79 LT • AP- record procurement of 19.98 LT in 2010-11 – not adequate • Late decision and entry in the market-arbitrary not planned based on the yield estimates

  31. Procurement Role of FCI-AP • Paddy procurement is not the focus of FCI in AP • Major operation- procure Rice from millers • No breathing space- Kharif operation over in Feb-Mar. Rabi crop comes in May • Little time to empty godowns • Hence low rabi paddy targets- 2.00 LT (but procured 6.05 LT in 2010-11 as an exception) • Blames state on unreliable yield estimates and revision targets at the last minute

  32. Procurement Role of FCI-AP • It states that its main business is to procure levy rice from millers which is central to lop-sided procurement policy denying MSP to farmers in rabi • 2008-09, FCI and APSCSC together procured over 50% (84 LT) rice from millers and only 9 LT paddy • Captive market for millers- keeps WP/RP high • Other states- lion share of rice procurement from open market and only small share from millers- keeps market rate low and helps farmers • Millers have captured the procurement policy in AP

  33. Levy Policy • Custom milling- get running costs and as a bonus get the rice bran and husk free • Buy paddy at below MSP and make huge profit by selling to FCI • 2010-11 bought common variety paddy at 1200/q and sold to FCI at 1,730 earning a profit of 35%. For fine variety the profits are even higher • Purchase discolored paddy at even cheaper price and get un-imaginable profits • The FCI is a “market” for the millers

  34. Levy Policy • The new rice levy of 100% with 25% being parboiled, a boon to millers giving stable, captive and lucrative market • 5000 rice mills in AP are the economic power in rice business influencing policy at all levels • On top of it, 10 lakh tonnes is permitted to be exported by millers- bonanza ( JP asked for a share of profit to be given to farmers) • Policy that cannot give at least cost to farmer is minting money for millers

  35. Losses • Javvadi Nani- @ 7000 saving/acre (25,000 C2 and 18000 income) Individual level- gain of Rs.1.75 lakh on 25 acres • Dr.MV Rao- more crop- more loss, less crop- less loss, no crop- no loss plus savings • Federation of Farmers’ Associations (FFA) conducted socio-economic impact of CH- @ 21 q/acre over 1.25 lakh acres, 6.62 LT yield and @ 1080/q rate= 283 crores: 75 lakh mandays= 150 crore: fertilizers and pesticides @ 25 crore each and Seeds @ 7.50 crore, TOTAL LOSS= 530 crore

  36. Target for 2011-12 • Target 103.50 lakh tonnes 12 LTs more on 2010-11 • 70 LTs rice from millers ( 47 LTs in Kharif) • 50 LTs paddy direct from Farmers ( 33.50 LT rice) • Procurement to be continuous • Procurement based on godown space (?)

  37. Mohan Kanda Committee 1. Dr. Mohan Kanda, I.A.S., CS (Retd.) – Chairman 2. Dr. M.V.Rao, MLC - Vice Chairman 3. Dr. K.Pratap Reddy, Ex-Director, IRMA 4. Dr. R.Sudhakara Rao , DR, ANGRAU 5. Sri C.Muralidhar , E-in-C, I&CAD 6. Smt. V.Usha Rani, I.A.S., COA - Member /Secretary

  38. Mohan Kanda Committee- TOR • To identify the circumstances that led to declaration of crop holiday by the farmers. • To propose measures to prevent recurrence of such incidents. • To suggest suitable modifications to the cropping schedule in Konaseema region, so that risks of weather and market are minimized. • To suggest methods of increasing water use efficiency in Godavari Delta. This is to be achieved both Irrigation and drainage canal system. • To suggest methods of improving the profitability of Paddy crop.

  39. MKC- Recommendations • Immediate • Administrative • Financial - nil • Legal - nil • Operational • Short Term • Long Term

  40. MKC- Immediate Recommendations • Administrative • Civil Supplies Department to buy the balance of Paddy stocks available with farmers. • The Creation of an Assistant Director (HORT.) post in the Department of Horticulture. • The creation of an Assistant Director (Fisheries) post. • While works are taken up under NREGS on a demand basis • preferring the selection of de-silting of drains and forming farm link roads. • Implementation of the modified NAIS and weather based crop insurance scheme in East Godavari district.

  41. MKC- Immediate -Administrative • Supplying suitable farm machinery like coconut climbers on war footing. Necessary extra budget provisions may be made by the Government • Providing milch animals under Pasu Kranthi Scheme to eligible farmers. • Providing subsidized paddy seed by covering the district under the NFSM. • Taking up all pending link / donka roads from the Market Cess. • Encouraging coconut based village industries. • Encourage farmers to take up early Rabi Paddy. • Reducing the cost of cultivation through advocating optimum use of fertilizers, need based plant protection measures and mechanization.

  42. MKC- Recommendations- Operational • The closure of canals by 1st April & opening by 15th May. • De-silting of drains wherever there is no free flow of water. • Placement of Dhaincha and other green manure seeds on 50% subsidy to enrich soil fertility. • The arranging of at least 100 rakes per month by the Railways in the coming two months to facilitate evacuating of the godowns, so that at least Kharif and Rabi paddy in this season can be purchased properly. • Creating CAP storage facilities/silo facilities. • To remove all the encroachments in revenue drains and fishing nets across drains, ensuring free flow of water.

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