Problem of plenty: Centre's refusal to procure more paddy impacts Telangana farmers

While the Telangana government battles with a stubborn Centre that refuses to increase rice procurement from the State, paddy farmers saddled with high output are staring at a grim future.

A farmer displays his sprouted paddy at Gouravelli village on the outskirts of Hyderabad on November 25, 2021. The impasse over paddy procurement between the State government and the Centre is causing heavy losses to farmers in Telangana as untimely rains have soaked paddy stocks on drying platforms, rendering them useless.

An agricultural crisis brewing in Telangana has dented the veneer of invincibility of Chief Minister Kalvakuntla Chandrashekar Rao, who came to power in 2014 and won a second term in 2018 riding a wave of parochial politics. The crisis primarily revolves around the stubborn unwillingness of the Narendra Modi government at the Centre to procure the entire quantum of paddy grown and parboiled rice produced in Telangana.

The agricultural crisis also comes on the heels of a byelection loss: Chandrashekar Rao’s party, the Telangana Rashtra Samiti (TRS), lost the Huzurabad Assembly constituency to its arch-rival the Bharatiya Janata Party (BJP). The winning candidate was Chandrashekar Rao’s one-time confidante and former Health Minister, Eatala Rajender, who was unceremoniously dumped from the Cabinet after Chandrashekar Rao accused him of land-grab.

Chandrashekar Rao, whose road to power was paved with agitations and protests, was forced to go back to his roots and stage public protests, not once but twice, in Hyderabad along with ministerial colleagues.

The irony of Chandrashekar Rao publicly protesting for the first time since he came to power in 2014, and that too at Dharna Chowk, Hyderabad’s equivalent of New Delhi’s Jantar Mantar, did not go unnoticed by his political rivals. A few years ago he had shut down Dharna Chowk, a designated protest site with over a decade-long history that saw several protests during the agitation for Telangana’s Statehood.

Rice procurement

In most States, including Telangana, the Food Corporation of India (FCI) and State government agencies first procure the paddy and get it custom-milled by rice millers by paying fixed charges. The rice is then distributed. Some 66-67 kilograms of custom milled rice (CMR) are obtained from every 100 kg of paddy.

Dr G.V. Ramanjaneyulu, Executive Director at the Centre for Sustainable Agriculture, a non-governmental organisation, said that the ongoing tussle between the Telangana government and the Centre encapsulates the worst of the “political economy that underpins the minimum support price (MSP) driven cereal procurement exercise in India”.

In a letter dated November 17, to Prime Minister Narendra Modi, Chandrashekar Rao reiterated his demand that the Centre come out with a clear paddy procurement policy and set annual targets for paddy procurement.

He urged the Modi government to direct the FCI to enhance its targeted procurement from Telangana from the stated 40 lakh tonnes of rice (or 60 lakh tonnes of paddy) during the ongoing 2021-22 kharif marketing season to 90 per cent of production, and to complete the procurement of the remaining 5 lakh tonnes of rice produced during the 2020-21 rabi season. The kharif marketing season includes both the kharif and rabi crops. The Centre has refused to play ball, with the FCI citing a surfeit of supplies and limited consumption. The FCI has also stated that it would restrict its procurement of paddy from Telangana to the present kharif marketing season.

Chandrashekar Rao accused the FCI of following policies that create confusion in the minds of farmers as well as State governments. According to him, this prevents State governments from formulating appropriate cropping pattern plans and explaining the same to their farmers. Citing an example, he said that the FCI procured 32.66 lakh tonnes of rice from Telangana during the 2020-21 kharif season, which was only 59 per cent of the total 55.75 lakh tonnes produced and even less than what was procured in the previous kharif season. He said that “such wide variations in procurement levels (did) not allow the State to implement a rational cropping pattern”. Seeking “early action on these issues”, the Chief Minister said that in September he had met Union Minister for Food and Public Distribution Piyush Goyal and requested that the annual procurement target be fixed at once. However, even after 50 days, no policy decision was taken or communicated to the State, the Chief Minister noted in his letter to Modi.

Meanwhile, thousands of paddy farmers have been gathering at procurement centres with their crop, with some even resorting to distress sale of their produce. Reports indicate that even though harvesting has picked up, the government has opened only about half of the 6,500 paddy purchase centres in the State.

The impasse over paddy procurement has already resulted in the deaths of three farmers, allegedly because they were distressed over not finding takers for their produce. One farmer died after suffering a stroke when he was waiting at a procurement centre, while another allegedly killed himself when he found no takers for his produce.

Rise in acreage, output

Part of the problem is the rise in the area under paddy cultivation and a consequent jump in production. According to the Telangana government’s Agriculture Action Plan 2021-22, the area has more than quadrupled in the last five years from 25.02 lakh acres in 2015-16 to 1.06 crore acres in 2020-21. Production has gone up from 29.6 lakh tonnes in 2015-16 to 2.46 crore tonnes in 2020-21, with 1.19 crore tonnes produced in the rabi season. In 2021-22, production is expected to comfortably cross 2.5 crore tonnes. Even if the FCI eventually lifts the enhanced promised figure of 90 lakh tonnes of paddy (which translates to around 60 lakh tonnes of rice), and the State were to retain another 25 lakh tonnes for self-consumption, farmers are going to be left in the lurch with excess produce.

Several farmers, especially those living in the border areas close to Karnataka’s Raichur district, are resorting to distress sale of paddy and parboiled rice at prices below the MSP. Against an MSP of Rs.1,940 a quintal, farmers from the districts of Mahbubnagar and Narayanpet, as well as from some villages in Nalgonda district, especially those who had taken huge loans and needed money right away, have shipped their produce across the border (where the paddy crop is yet to be harvested) and are selling it at Rs.1,300 a quintal. With heaps of paddy piling up at procurement centres, farmers are also being pressured by local traders to sell their produce below MSP. In November 2020, several paddy farmers in Nizamabad, Nalgonda, Sircilla and Kamareddy districts burnt their produce in protest against the State government’s crop regulation policy and its failure to procure their produce at MSP. In 2020-21, about 95 per cent of MSP beneficiaries in Telangana were small and marginal farmers. Given the assurance of MSP for paddy and the widespread availability of irrigation facilities, more and more farmers are shifting to paddy cultivation.

So, what went wrong? Is Telangana a victim of its success? Dr G.V. Ramanjaneyulu, who has been working on public policy issues impacting on food systems and farmers’ livelihoods, accused the government of promoting paddy cultivation at the cost of other crops, pursuing strategies that lack “rationale and forethought”, and “pushing the State’s farmers into an agricultural crisis that will cost lives”.

A few years ago, Chandrashekar Rao had announced plans to transform the State into a State with 1 crore acres of fertile land. In June this year, he proudly stated that the State had procured 3 crore tonnes of paddy. But in September, at an official meeting, he said that “cultivating paddy was no better than the farmers hanging themselves”, clearly prompted by the FCI’s decision to restrict its procurement from the State.

Unconfirmed reports said that officials have directed farmers against growing paddy and even threatened seed dealers with cancellation of their licences if they sold paddy seeds to farmers. However, the State BJP leadership continues to encourage farmers to grow paddy.

History of paddy cultivation

Telangana’s obsession with paddy cultivation stems in part from the State’s leaders wanting a land that rivals the lush green paddy fields in their fellow Telugu State’s coastal districts. However, the type of soil and topography is vastly different in the Deccan plateau than in the coastal belt of Andhra Pradesh.

Dr Ramanjaneyulu said: “It was the Telugu Desam Party (TDP) which, in 1981 with the Rs.2 a kg rice scheme, tilted a traditionally non rice-eating population towards rice. If you see in most Telugu festivals, there are very few or no rice-based dishes. Introducing rice was a Sanskritisation of food as it were.”

There is little doubt that the TRS government has created massive irrigation facilities by building major dams such as Kaleswaram and Devadula, besides offering free power for agriculture and a cash incentive scheme known as Rythu Bandhu. But owing to the State’s topography, the newer dams are not gravity-based dams but lift irrigation dams. Water has to be stored and pumped upstream, as is done from Pollavaram to Devadula, for instance.. The cost of delivering water is high.

Many newly constructed dams were eventually dumped. According to statistics from the Comptroller and Auditor General of India (CAG), the cost of building infrastructure to irrigate one acre in the command area is Rs.5 lakh, with power consumption costing another Rs.50,000-80,000.

Paddy is being grown at the expense of traditional crops such as pulses, oilseeds and millets, and to a lower extent, cotton. Dr Ramanjaneyulu said: “The Centre is procuring rice at Rs.37,000 a tonne and supplying it back to the States through the public distribution system at Rs.5,000 a tonne, in line with its rice subsidy scheme. The Telangana government then makes available the subsidised rice at Re.1 a kg to families below the poverty line. But any increase in the price of the super fine variety, as per the growers’ demands, means an additional burden of Rs.6-7 per kg to the State government.”

He added: “Unfortunately, this subsidy is only for paddy. When that is the case, why will farmers switch to other crops? The Centre had been writing to States to reduce the area under paddy cultivation and to reduce procurement, but lobbies have prevented any action on the ground. And the Centre has no proactive plans to help farmers. It doesn’t say what the alternative is and most importantly, whether it will support the crop with MSP.”

According to him, there has to be a rethinking on how farmers can switch to other crops. He said: “We are trying to formulate plans for 2021 and beyond with a 1960 attitude. Much of the government’s policy is not reality based. India imports oilseeds, why can’t the government create a system to encourage farmers to grow these crops?”

Paddy farmers in Telangana were also lured by the fact that Kerala and Tamil Nadu are major consumers of parboiled rice. An agriculturist said: “While Kerala and Tamil Nadu are the major consumers of parboiled rice, the Telugu States are the main suppliers. Breakages are low, so recovery is better in parboiled rice, tempting farmers to go for it. If the recovery for normal rice is around 67 per cent, it is 72 per cent for parboiled rice, depending on how sophisticated the milling machine is. Telangana farmers saw a huge potential and during the past 4-5 years, 1,500 new parboiled rice mills were established.”

With the Telangana government withdrawing from the Pradhan Mantri Fasal Bima Yojana (PMFBY), the Centre’s crop insurance scheme that integrates multiple stakeholders on a single platform, farmers are highly vulnerable. Paddy cultivation also comes with a host of nutritional and economical issues, apart from harming the ecology. It is the leading cause of greenhouse gas emissions, such as methane because of water stagnation and nitrous oxide and urea.

But farmers cite the fact that the yield is much better in paddy—24 quintals an acre—when compared with, say, millets, where the yield is hardly 8 quintals an acre. Also, there is very little price fluctuation since paddy is procured by the Centre. An agricultural scientist said: “We need to impose restrictions and disincentives on excess paddy cultivation. Also, today the emphasis and challenge is all about income, not yield.”

According to Siraj Hussain, retired Union Agriculture Secretary and currently Visiting Senior Fellow at the Indian Council for International Economic Relations, the fact that around half (49.12 per cent) of the total rice produced in 2020-21 (1,222.7 lakh tonnes) in India was procured by government agencies was a sad reflection of the free market.

He said: “Paddy cultivation has gone up substantially all over the country. Telangana is producing much more than what the state agencies can procure. We have to think of ways of open-ended procurement. Most crucially, governments are not prepared to support any other crop. Weaning farmers from rice requires not only more money as incentive but also a coordinated policy and incentive regime in which both the Union and the state governments are on the same page. In the current political scenario, it looks like a tall order.”