Telangana farmers didn’t join protests because MSP is already below costs: GV Ramanjaneyulu

Courtesy GV Ramanjaneyulu
17 January, 2021

For over a month, lakhs of farmers from Punjab and Haryana have been camped on Delhi’s borders in one of the largest agrarian protests in India’s history, while talks with the government on withdrawing three farm laws that deregulate the sector persist. At the other end of the country, over the past six years, the agrarian system in Telangana has seen major systemic shifts, after the formation of the state under chief minister K Chandrashekhar Rao.

A major change KCR introduced was a direct income subsidy for farmers, called Rythu Bandhu. Alongside, his government greatly increased water availability for farming through the building of several large dams. The government also directed farmers to grow fine rice varieties and other water and fertiliser intensive crops. Contrary to KCR’s projections, this reduced the income of farmers as the new glut in fine rice varieties struggle to find a viable and remunerative market.

GV Ramanjaneyulu is an agricultural scientist who has researched and written extensively on public-policy issues impacting food systems and farmers livelihoods. Tushar Dhara, a reporting fellow with The Caravan, spoke to Ramanjaneyulu, the executive director of the Centre for Sustainable Agriculture—an independent agriculture research organisation based in Hyderabad—about the results of KCR’s agricultural policy. They discussed how the three farm laws would impact farmers in Telangana who are going through a marketing crisis, and the distinct lack of farmers’ protests in the state.

Tushar Dhara: Can you give a brief overview of how agricultural policy in Telangana has evolved over the last six years?
GV Ramanjaneyulu: The main focus since the state came into existence in 2014 was to increase the water supply to agriculture. The assumption was that if the area under irrigation can be increased then you will have better cropping patterns. The government acquired land to build dams, despite the fact that Telangana is located on the Deccan plateau, so you cannot have gravity dams. You need lift-irrigation dams, which have huge energy requirements to lift water and supply it. Lift irrigation dams also displace people. A lot of farmland was acquired for irrigation projects. Today we have the Kaleshwaram dam being built in Telangana. This was the first problem, the assumption that by increasing irrigation, all problems in agriculture can be solved. The energy cost and environmental impact of holding so much water was not calculated.

Secondly, when some water became available, the state encouraged paddy cultivation. That is the second big mistake the government made. The assumption is that paddy is an easy crop to grow and there is procurement, in terms of the central government’s minimum support price. The state also probably wanted to recreate the lush green paddy belt of coastal Andhra in Telangana. All this pushed the government to increase the area under paddy, and to a lesser extent, cotton.

TD: How did the government decide that paddy and cotton were the crops to promote?
GVR: Ideally one should look at the soil type, weather conditions and local markets. After making an assessment the government came to the conclusion—wrong, in my view—that they would go for paddy and cotton in the kharif season of 2020 [kharif refers to the cropping season between June and November]. Both crops are water and chemicals intensive, and it is a risk for farmers because crop failures are relatively high in Telangana. Within paddy, the government laid an emphasis on fine rice varieties, because there is demand in the open market, which meant that individual farmers could sell their produce, as could the government if it purchased from farmers.

With this policy shift, the area under paddy went up to 58 lakh acres from around 35 lakh acres. Under rabi [the cropping season between November and May] also there was an equal area under paddy cultivation. This gave the state nearly one crore metric tonnes of rice. Telangana’s requirement is only 25 lakh metric tonnes. The assumption was that fine rice will be sold in the open market while coarse grain will be acquired by the central government for the public-distribution system. The centre said it would take only 27 lakh metric tonnes from Telangana. Moreover, what the state government bought, it was unable to sell and the chief minister’s calculation is that the losses amount to Rs 7,500 crores in the last three years, for all crops [including paddy and maize].

The Telangana government purchased 43 lakh metric tonnes of coarse grain, of which the union government paid for 27 lakh metric tonnes, which is distributed in the PDS. The state government has to sell the rest at a cheaper price. But the open market price for coarse rice is low, it is available at Rs 22 a kilogram. So, no one will buy the grain from the Telangana government.

TD: How did the government’s agriculture policy change as a result?
GVR: KCR has announced that the state will not talk about what crops should be grown, and also that the government will not procure at the village level. It can be interpreted in different ways and there is no clarity about it. But the state said it will not do village-level procurement and crop planning. When the union government started the kharif 2020 paddy procurement, much of it was bought from Punjab. As of 30 December, the central government had bought 316 lakh metric tonnes, of which 135.86 lakh tonnes were from Punjab alone. Haryana’s share was 36 lakh tonnes. The rest came from Telangana, which sold 27 lakh tonnes, Chhattisgarh, which sold 29 lakh tonnes and Uttar Pradesh, which sold 31.83 lakh tonnes. Beyond these five states, every other state’s share is negligible.

TD: Is this related to why the centre’s farm ordinances have had almost no reaction in Telangana?

GVR: The cost of production for paddy is very high in Telangana. In fact, across the country, we have the highest cost of production. The report of the Commission for Agricultural Costs and Prices [a unit of the agriculture ministry that gives recommendations on price policy of food crops] says that the cost of producing one quintal of paddy in Telangana is Rs 2,529, while the MSP is currently Rs 1,868. The Telangana farmer’s starting price is above the MSP. By contrast, in Andhra Pradesh the cost of production is Rs 1,902 and in Punjab it is Rs 1,868. 

The cost of production is high because of intensive fertiliser use, high labour costs and land rentals. The rentals are high because of the large occurrence of tenancy farming, where tenant farmers have to pay annual rents to land owners for cultivating their land. Labour and rentals alone would form nearly 40 to 50 percent of the cost of production. Given that the production costs are high, protests to safeguard the MSP will not be a Mhigh priority.

TD: What made KCR shut down village-procurement centres?
GVR: The FCI does not directly purchase directly from farmers, it does so via intermediaries and these vary from state to state. For instance, in Punjab it is the arthies [commission agents] who procure from farmers and sell to FCI; in Bihar, it is through the Primary Agricultural Credit Societies. In Chhattisgarh, it is through agriculture cooperatives and in Andhra Pradesh, they use PACS and women’s self-help groups. In Telangana, it is currently through Markfed [state-run marketing federation which purchases coarse grain, pulses and cotton], Indira Kranti Bhavan centres [state-government run cooperative societies that are specifically mandated to procure excess paddy], self-help groups and civil supplies department.

As a policy decision the farm ordinances [farm laws] don’t talk about shutting procurement centres or the PDS. I think states like Telangana and Chhattisgarh anticipated big procurement orders from the central government, but a bulk of procurement happened in two or three states, that is where the problem lies. Telangana has different ways of procuring grain. You have the APMC [agricultural produce marketing committee] market yards, Indira Kranti Bhavan centres the civil supplies department buys directly and the Markfed buys.

The Telangana government said they will purchase grain in villages via the rythu samanvaya samithis [farmer coordination committees set up by the Telangana government for farmers’ welfare]. That was the biggest mistake because the committees are neither elected bodies, nor are they registered business entities. There is no accountability. There is no clarity on whether KCR’s announcement is about shutting the coordination committees or even some other centres. As far as my reading goes, it will affect just the committees because the other procurement channels existed before the TRS government assumed power.

TD: The new farm laws will also affect procurement. How effective were the APMC mandis in Telangana?

GVR: The crisis in agriculture in Telangana has been there for long, and it is only in the past few years that the government has been talking about building new dams and giving income support to farmers. When the farm bills were announced, there was no impact because except for paddy and cotton, farmers don’t go to APMCs much. Only 5 percent of rice is purchased in mandis, so people in any case were selling much of their produce outside.

TD: When Telangana announced the Rythu Bandhu scheme a few years ago it was hailed as a game changer for agriculture. Has it been a success?
GVR: Rythu Bandhu as a scheme is good for the simple reason that it is a direct income support to farmers. If you give input subsidies then the model of agriculture changes. If I subsidise chemical fertilisers or power then everyone starts using more of these. Direct income support is a better option. But the money needs to go to the cultivator of the land. Unfortunately, in Telangana they gave the money on the basis of land pattas [land deeds] and thus the owners of the land got the money. In Telangana, there is a lot of absentee landlordism and a high rate of tenancy, but there was no attempt to focus on cultivators. A paddy farmer getting Rs 10,000per year, or Rs 5,000 per season, amounts to reducing the cost of cultivation per quintal by Rs 200. Even in the case of price fluctuation, the farmer can bear with it. But for this to succeed, the money needed to be restricted to cultivators. In the absence of that, the entire exercise becomes simply an incentive to own land.

TD: So, who is the Rythu Bandu money going to?
GVR: Mostly to the land owner, many of whom are absentee landlords. The NITI Aayog estimation for tenancy farming in Telangana is 15 to 16 percent, but my reading is that it is about 25 percent. By tenancy, I mean farmers who don’t own land, but take it on lease from other farmers, to whom they pay rent. These are the farmers who neither get credit support nor Rythu Bandhu income support. The absentee landlords are the ones sitting in Hyderabad or the United States. The land owners are mostly Reddys, who are the landowners in Telangana. The tenancy farmers are mostly from OBC and Dalit communities.

This interview has been edited and condensed.