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Letter From A Reader Regarding MSP Of Crops
In Print Version: April 2005
To
Comrade Editor,
FAPP
Re: – An article on “Equitable Prices” (and MSP) of agro-produces that appeared in the Apr '04 issue of FAPP.
Dated: May 2, 2004
I refer to an article on the question of MSP or the “equitable prices” of agro-production published in the Apr. '04 issue of FAPP. It was by Com. Sukumar Roy. It was a very well written article and was backed by lots of data. It is extremely difficult to “challenge” any view or “facts” given there; but may I humbly submit my ‘doubts'. Though I regret that I am now an ‘uprooted' person, having insignificantly small rural life-connections since a decade, and hence may not be able to supply correct and exact data. These doubts are regarding the facts of ‘percentages of produce going to the market', for food grains, and a somewhat conclusion, that << up to 2 hectares owner peasants (generally) do not produce marketable surplus >>.
Sometimes we encounter ‘studies' and ‘papers' dealing with this subject only cursorily; I cannot write ‘abstractly' here as abstraction does take into account all ‘essential' features, which those studies do not, generally, reflect. Let me explain.
It will not be correct if two factors are excluded from consideration: — [one] the cropping intensity, or, in other words, the land utilisation index; and [two] what is produced, how and when.
[One] A 2Ha (yearly) twice cultivated land does not just produce twice the amount of a 2Ha single cultivated one; the former produces more than twice, say, in the case of monsoon paddy and summer paddy cultivation. Summer paddy gives at least 50% more yield, and the cost of production is higher too. In many, that is, in not a few parts of India the cropping intensity is well above 1.5; and in some parts and some states it is almost 1.75 or more. So any agro-politico-economic analyst cannot disregard this factor. Simply a ‘2Ha peasant' means nothing if not his cropping intensity is taken into account. Your comrade writer expressed justified doubts before his ‘guess-work'. But, then why ‘guess' something and write that if it can generate misunderstandings and/or oversimplified notions among those who are not well versed in rural affairs!
[Two] Thanks to the aggressive ‘green revolution', age-old traditional varieties of food grain seeds are almost extinct (or rare) in India in terms of statistical ‘weight' in the advanced agricultural zones in India . HYV cultivation is essentially ‘chemical cultivation' because it makes imperative the usage of artificial fertilisers, insecticides, pesticides, even when one can avoid, or unable to use, mechanical power. For the latter diesel is a must, excluding only the electrically operated pump-sets. Even pumps, most of them, are diesel run. For tractors, threshers, etc also you will need diesel. Irrigation is still, in the main, pump based, even in the canal areas, to force water to flow to a bit far off or a bit higher plots. But Indian agriculture is still, mainly, rain-fed, even in HYV zones. This is a silly but sturdy contradiction in Indian ‘development' one may say. And down from the peasants up to the govt all long lingeringly for a good monsoon. Our city-based newsmen see if the average rainfall figure is OK or not. But, as the renowned Prof. Swaminathan once said — one can never cultivate with ‘average' rainfalls! Agriculture needs certain ‘actual' spells of rain with certain volume in certain times; it needs a certain rhythm of rain. And a change in that rhythm, even in a ‘normal' ‘average' rainfall year, can spoil everything and bring calamities to the life of millions of peasant households. These days the rainfall pattern, rhythm have changed, it is not the same as it was, say, 20-25 years back; the pattern, rhythm became, and perhaps are becoming more uncertain and irregular. So how a peasant is getting his irrigation (if at all he gets), at what terms, cost, etc are very important now, even in the rainy-season cultivation. If one has his self-own shallow tube-well run by electricity, and another a diesel run pump things will be different for them. If one gets canal irrigation at a low cost from the govt, another getting water from govt owned deep tube-wells, and still another has to buy water at exorbitant rate form the water-lords (as seen in some parts of WB) – the cost of production in these three cases will be very different from each other. Per hectare charge for irrigation now-a-days from a govt owned or sponsored deep tube-wells is nearly Rs.750 in the rain fed season (including the ‘fees' for the ‘benevolence' of the local party and panchyat babus), the summer charge is almost 4 times higher, say, Rs. 3,000; but, the per hectare charge of buying water from a water-lord in the summer paddy can well soar up to Rs. 12,000!! How difficult it is to average them up.
Only with over-simplification, with good chances of errors and distortions, can we say that cost of production of paddy , generally HYV , in any season, and ‘minus the cost for man-days purchased' , is equivalent to almost 40% of the produce. This over-simplification is done solely for the calculations that follow; otherwise, it will be too difficult to handle so many different considerations, at least for me. That ‘average peasant' has his self-owned diesel-run shallow tube-well, or can get water at that price. He is a typical Bengal peasant having an average ‘good' plot, and we shall look only into his ‘good years'.
CASE: 1— Take the case of a 0.2Ha owner-peasant of twice cultivable and twice paddy cultivating land. He may, at maximum, produce enough paddies to cover his cost of production, and we shall assume that he and or his family members do all his agricultural works; in his case he needs 75 man-days per year only. Furthermore he has a surplus of paddy by which his family can afford rice all through the year; but mind here, for everything the family need besides ‘rice' are to be bought – so he has to ‘sell himself off', he must earn something which should be, must be higher than, or many times that of, the equivalent of his own-produced for-home-purpose paddy. He is then a poor peasant, almost down to the level of an agricultural labourer . Anyway, he produces roughly 45 packs of paddy, each pack weighing 60 Kgs. His family, say, of 5-6 members, needs almost 25 packs for annual consumption. Therefore he has to go to the market with the remaining 20 packs, he needs to change them to money to pay back or buy forward his ‘inputs' (input sellers do not barter things); and if something extra remains in his hands he feels lucky. Sorry to miss some other assumptions – we took that the input seller gives him all he need at credit with no interest charging at all. Otherwise he will have shortfall in his self-family-consumption kitty. And we also assumed that he gets a fair price for his produce, i.e., he does not have to take recourse of ‘depressed sale'. On so many ifs his fate hangs! In the next cases also we shall exclude the effects of usurer's loans and depressed selling in our primary calculations. Well, now consider the effect of a rise in MSP (minimum support price declared by the govt) of paddy on him. He will certainly be a looser; (other things remaining constant) he will have to buy all his non-rice food articles (which are obviously more than the rice that he has at home) at higher prices from the market, and everybody knows that a rise in wholesale price (say, of per quintal) makes a higher rise in retail prices. He may expect that the landlords will then give him higher wages; but seldom does that occur, as his own experience would tell him.
CASE: 2— Now let us look into the ‘business' of a 2Ha owner-peasant of a single cultivating land. He may produce in his land 180 packs (of 60 Kgs. each) of paddy in the rain-fed season. Of which 25 packs he will keep for home consumption. The rest must go to the market to be changed to money. Well, there are practices, though not much widespread to be called the ‘general practice' that the peasant pays the input seller certain quantity of paddy packs at a pre-fixed rate. But, our average peasant needs to sell off his ‘surplus' produce, in this case 180–25=155 packs. Then 40% of 180 packs, i.e., 72 packs will go to meet his expenses for inputs. There will remain 155–72=83 packs. If he is lucky enough to have the opportunity to sell each pack @ Rs. 300, he will get Rs. 24900 in total. But his luck is generally not that lucky; still we shall cling to that ‘big' sum of Rs. 24900. We assume that the peasant household perform all the agricultural work themselves, and do not have to hire labourers; because the total man-days needed is 300 or a bit more. Only in the reaping period he needs 90 or more man-days within a very short span, more is needed in the harvesting, and that too in an extremely short period. But let us hope that his family of 5-6 members can manage the work by extra-ordinary workloads, which is so ordinary a practice among toiling peasants. (There are certain caste / religious barriers even among the poor which debar women-folk of a good number of families to take part in ‘open' field work, the uppermost caste, ‘Brahmin's do not ‘till' lands, etc … but we are ignoring them in our general calculations.) So that big sum of Rs. 24900 belongs to the family: – an income equivalent to Rs. 2075 per month, to cover all the non-rice expenditure of the family. He can dodge through his thorny ‘TIME' with much exertions and efforts. A medical mishap in the family, a daughter's marriage, … will throw him to the greedy village usurers. A bad rain will ruin all his short-term future plans (if at all he has any). His feasible dreams may include a (or another) bi-cycle, a new FM radio, a tiled or tinned roof instead of a straw-made one, etc. Saving a little amount in the post office will need earning from outside. But by the blessings of the WTO and the ‘mechanics' of the ‘free market', by the blessings of the govt-party-business men nexus, he only seldom or rarely enjoys a chance to sell @300 per pack since last few years. His monthly income, now a day, hangs around approximately Rs. 1750. In case of taking usurer's loan his annual income may drop down a great deal. He is a middle peasant.
Now let us see the effect of a rise in the MSP. No: 1 – he will likely not have the chance to sell at the govt fixed price, experience tells that only richer land-owners having ‘connections' with the business men, etc, reap off that advantage. No: 2 – even if he gets the chance of the enhanced MSP (a very rare instance to happen) he will loose ultimately; because he is a net-buyer, he buys much more food article than he has at store in home (those 25 packs of paddy, equivalent to almost 1000 Kgs. of chawl , i.e., 2.7 Kgs. a day for the entire family). He will have to pay dearer for all the remaining food articles (whose prices will also subsequently rise), and all other items also (because the traders will hike prices). Experience shows that in the ultimate story he did never gain anything from rising MSP in spite of all his wishes (except for those mid-eighty to early-ninety years, when the typical south-Bengal peasant had some good years due to rise in paddy price; and the feature of soaring input prices was, to him, a never-thought-of future, etc, and the days of dipping output prices too).
CASE: 3— Here comes our twice-cultivating 2Ha owner-peasant. He is quite different a fellow than those we already met. His annual production is 450 packs. Keep aside 40%, i.e., 180 for inputs, and say, 30 for home consumption. There remains 450–(180+30)=240 packs for sale. But there, he has an extra ‘input cost', the cost for hired labour. He needs 300 man-days for the rain-fed crops and 450 for the summer season cultivation. Let us assume for the time being and for the sake of easier calculation that he purchases only 150 man-days a year; he and his family do the remaining work. In that case also he is using, purchasing hired labour equal to 20% of his total need; and thus he got himself promoted to the rank of a rich peasant , though a hard-toiling-in-the-soil one. His 240 packs will fetch him, if sold @ 300 per pack, Rs. 72,000. Take away Rs. 9,000, approximately, for the labour cost (@ Rs. 60 per man-day). Then he will have a net Rs. 63,000, which is equivalent to a monthly income of Rs. 5250. A pretty income indeed, it is, in rural-Bengal standard. He will eagerly look forward for rising prices, he can afford to hold at home at least 100 packs to sell later at dearer market, … he will support the demand of MSP rise. He will demand higher govt subsidies and grants. He will not loose much for dearer non-rice food articles, as their combined cost would be a fraction of his income, and that income will rise too. How about purchasing a hand-tractor (common name for power tillers in south Bengal ) by a bank-loan, what about having his own mini-deep-tube-well (partly by bank or coop loans) – he may, and can think. He may even dream of buying a motor-bike and driving at 80 Kmph leaving a trail of dust behind.
CASE: 4— While a twice-cultivating 2Ha owner-peasant in the potato belt of south Bengal may chew over the maruti– 2495 offer, because only his potato produce in 2Ha will be, even at a low level of yield, 48 tonnes. Depending on many market related factors, he can wrench a profit of something between Rs. 50,000 and 100,000 only from the potato crop! For only the potato cultivation he needs almost 510 man-days, and in most of the real cases of this type of ‘peasants', he or his household members rarely participate in hard labours. If he ‘organises' production, he, then, becomes a cultivating landlord , not a kulak (rich peasant) , because rich peasants are peasants , and peasant is one who toils in the land taking part in all major agricultural operations . He is an ardent supporter of higher MSP, higher govt subsidies in inputs, etc.
The academicians in general and the govt statisticians do not cognise the class nature of different peasants , they lump together all “2Ha peasants”. They even avoid the word ‘peasant', they name all having land as ‘farmers'. In reality, however, we can find rich peasants and cultivating landlords even in the government's ‘marginal' and ‘small' “farmers” categories. Prof. A.N. Basu (deputy chief of the state planning board) in his book on Bengal 's economy and politics gave us some figures well available to him. In page 138 of that book we find (his data source is the Farm Management Studies of the Govt of WB, 1996-97) some interesting facts that I cite below:
CROP % OF NEEDED MAN-DAYS THAT ARE HIRED
BY ‘FARMERS' OF CATEGORY
MARGINAL SMALL MIDDLE ALL
(Less than 1 Ha) (1-2 Ha) (2-4 Ha) COMBINED
JUTE 62.9 67.3 56.0 63.8
RAIN-FED PADDY NON-HYV 68.8 74.3 90.9 79.2
-DO- HYV 85.1 84.6 83.4 87.2
SUMMER PADDY 64.9 69.4 84.3 72.5
WHEAT 52.4 58.4 62.8 58.0
POTATO 96.7 93.9 83.9 74.1
Almost unbelievable these ‘facts' are, aren't they?
Even if we call all govt statistics unreliable, the above facts at least reveal a thing; i.e., many (that is not a rare few) of the ‘marginal' and ‘small' “farmers”, i.e., farmers having less than or equal to two Ha of land, are in reality rich peasants and/or cultivating landlords. And they sell a good part of their produce in the market. And in our previous case 1 we saw a 0.2 Ha poor peasant also selling part of his produce in the market.
Whereas, the referred article published in your journal may give rise to a misunderstanding about all ‘farmers' of 2 Ha or less do not have any marketable surplus, in general; and all of them, then, can attract the sympathy of the readers.
Again I beg pardon due to my not-so-well-informed state, my data, and the consequent analyses may be wrong. I hope readers well versed in the related field will then correct my wrong ideas and will clear up my doubts.
With revolutionary greetings
A reader of FAPP