Cash crunch hits wheat
sowing
By Ahmad Fraz Khan
Farmers claim that a big number
of them had to miss wheat sowing this season as they did not
have enough money. Citing statistics to substantiate their
claim, they say that wheat acreage in the country had
dropped by massive 1.4 million acres.
Punjab has fallen behind by 900,000 acres, Sindh 350,000
acres and Khyber-Pakhtoonkhawa 150,000 acres.
Their failure to invest in wheat sowing has stemmed from
price crash of two cash crops cane and cotton. These crops
ensure liquidity for cultivating food (including pulses)
crops.
The price of cotton crop in domestic market has dropped by
almost 100 per cent, despite substantial recovery in
international market. This season was exceptionally tough
due to weather vagaries. The months of March and April last
year were hotter than usual, which affected the early sown
cotton.
The farmers struggled to save their crop, and succeeded with
heavy labour – both in financial and manual terms. As if it
was not enough, heavy monsoon tested their nerves and
finances in subsequent months. To make the matter worse,
general sales tax was imposed on inputs – increasing
cumulative cost of production by a massive 30 to 40 per
cent.
Increase in fertiliser prices, especially urea, dented
farmers’ effort and the government, which had claimed a
production of 16 million bales, started trimming the yield
expectations progressively, from original target of 16
million bales to 15 million, then to 14 and finally to 13
million bales. Its initial claims of 16 million bales – one
million bale more than domestic
requirement – set the market on lower side, which never
recovered despite huge slide in ouput. Ever since, the
farmers, on an average, have sold their crop at Rs2,500 per
40kg against Rs5,000 per 40kg last year.
The loss of farmers on cotton front becomes evident if a
comparison is drawn between cost of production and the sale
pric.
Against the total input cost
of Rs2,860 per 40kg, they sold it at an average price of
Rs2,500 per 40kg – a loss of Rs360 per 40kg. These bales
have thus caused them a loss of Rs48 billion because of
under pricing. At least, that is how farmers calculate their
cotton loss and a corresponding reduction in their liquidity
position.
Similarly, the cane crop has so far caused another loss of
Rs26 billion. The farmers insist that the cost of cane
production has got close to Rs170 per maund – a price being
recommended by the Punjab government as a support price for
next year.
At present, the millers are paying an average price of Rs130
per maund. Even if this year’s support price of Rs150 per
maund is taken as a benchmark, farmers are suffering an
average loss of Rs20 per maund. Around 80 per cent of total
production goes to millers. That means that out of total 65
million tons of cane, around 52 million tons would go to
millers at a farmers’ loss of Rs20 per maund. This total
loss translates into Rs26 billion.
If the loss of these two crops is taken into consideration,
they have created a hole of Rs74 billion in farmers’ kitty
this season so far. Where could have the money come from for
wheat sowing, they wonder. The poverty cycle, created by
cane and cotton prices crash, has not stopped at these two
crops; it has already enveloped wheat – if the missed
acreage of wheat is multiplied by an average production of
30 maunds per acre, these 1.4 million acres would cause
another loss of Rs44 billion to farmers. These losses are
for those farmers who own land. The one who has to pay the
rent is simply doomed.
Since the entire crop production is an integrated cycle,
every crop performance affects every other thing. The
slapping of GST on fertiliser has already caused a drop of
urea consumption by around 20 per cent and the di-ammonium
phosphate (DAP) by 40 per cent, upsetting balanced use of
fertiliser.
All these factors are testing farmers’ nerves and financial
health, and would contribute hugely in national poverty. The
governments, especially provincial ones, need to take note.
If left alone, the situation is bound to worsen.
Of all the federating units, Punjab has especial
responsibility to save its agriculture as it is the
country’s major crops producer.
It must overhaul agriculture marketing system, which, at
present, has completely been hijacked by special interest
groups – cartelised to the core.
Gluts and shortages are essential parts of the agriculture
cycle and the world has created shock-absorbing systems by
building
storages and creating regulatory mechanisms. Why can Punjab
not take a cue from it and start creating those systems?
Instead of making some piecemeal efforts, primarily designed
at fire fighting when crises erupt, it needs to visualise
the entire agriculture spectrum and its storage requirement
that cater to each and every crop and bring efficiency in
agriculture marketing.
Courtesy: DAWN