Never mind wishful thinking by the government and RBI. Food will never be cheaper than what it is today. Not this year. Or in future. The reason is simple. Growing food in India has become extremely expensive. Crops are pricier even before they reach the market and face the pulls and tugs of rising local demand and exports.
The farmer’s single biggest cost now is labour. Farm labour wages have doubled in the last year across states and crops. The worst affected are fruits and vegetables because they need careful tending. Onion farmers in Jalgaon last year paid Rs 50 daily for a woman to plant seeds, do the weeding, and later harvest the bulbs. This year, she wants Rs 100 per day. Men demand Rs 150. Cheap labour that gave Indian horticulture its competitive edge is blunting rapidly.
Field crops are faring no better. Maharashtra sugarcane farmers have agreed with labour unions to pay 25% more for harvesting the crop. Picking cotton is India’s largest on-farm employment opportunity. This year cotton farmers are paying Rs 4.50 for picking each kilo, again double last year. Cost of ploughing, sowing, spraying and weeding each acre is extra. The total labour cost in the current season has touched Rs 10 per kilo.
In parts of Punjab and Haryana, you can’t get workers at any price, leaving this summer’s paddy standing forlorn in the fields. What has changed? The farm worker’s negotiating power. For the first time. With free monthly ration and government mazdoori available for Rs 100 a day, landless labourers needn’t beg neighbours for work. Work is chasing them. It’s a heady feeling. And disconcerting for the rest of the countryside.
While labour costs per hectare are zooming, yields per hectare are stagnant. That’s like running a factory at 30-40% capacity. Obviously, the per unit cost swells. Logically, rich farmers growing cash crops should be keenest to increase output. Not so.
UP cane farmers, Punjab grain farmers, Andhra paddy farmers haven’t used high-tech varieties in years. Only cotton farmers have shown nous in adopting BT technology to double output in six years. Without dramatically boosting volumes, farmers can’t even consider reducing product prices. No FMCG company would either.
With stagnant yields, bumper harvests only occur when more acres are diverted to a crop, and aided by good weather. Since cultivable land has maxed out, this bounty is at the cost of some other crop. Farmville is nothing to our farmland passing-the-parcel. Government’s MSP acts like the music played randomly to declare a winner. Pulses won this year. Wheat MSP is a deliberate disincentive because the 2% increase doesn’t cover costs.
As a result, inflation merely hops from pulses to cereals to sugar to oils to vegetables. It never goes away. Yield fatigue implies returns are still too volatile to incentivise technology upgradation. Food prices have to spiral and stay there if India wishes to feed itself.
The farmer’s single biggest cost now is labour. Farm labour wages have doubled in the last year across states and crops. The worst affected are fruits and vegetables because they need careful tending. Onion farmers in Jalgaon last year paid Rs 50 daily for a woman to plant seeds, do the weeding, and later harvest the bulbs. This year, she wants Rs 100 per day. Men demand Rs 150. Cheap labour that gave Indian horticulture its competitive edge is blunting rapidly.
Field crops are faring no better. Maharashtra sugarcane farmers have agreed with labour unions to pay 25% more for harvesting the crop. Picking cotton is India’s largest on-farm employment opportunity. This year cotton farmers are paying Rs 4.50 for picking each kilo, again double last year. Cost of ploughing, sowing, spraying and weeding each acre is extra. The total labour cost in the current season has touched Rs 10 per kilo.
In parts of Punjab and Haryana, you can’t get workers at any price, leaving this summer’s paddy standing forlorn in the fields. What has changed? The farm worker’s negotiating power. For the first time. With free monthly ration and government mazdoori available for Rs 100 a day, landless labourers needn’t beg neighbours for work. Work is chasing them. It’s a heady feeling. And disconcerting for the rest of the countryside.
While labour costs per hectare are zooming, yields per hectare are stagnant. That’s like running a factory at 30-40% capacity. Obviously, the per unit cost swells. Logically, rich farmers growing cash crops should be keenest to increase output. Not so.
UP cane farmers, Punjab grain farmers, Andhra paddy farmers haven’t used high-tech varieties in years. Only cotton farmers have shown nous in adopting BT technology to double output in six years. Without dramatically boosting volumes, farmers can’t even consider reducing product prices. No FMCG company would either.
With stagnant yields, bumper harvests only occur when more acres are diverted to a crop, and aided by good weather. Since cultivable land has maxed out, this bounty is at the cost of some other crop. Farmville is nothing to our farmland passing-the-parcel. Government’s MSP acts like the music played randomly to declare a winner. Pulses won this year. Wheat MSP is a deliberate disincentive because the 2% increase doesn’t cover costs.
As a result, inflation merely hops from pulses to cereals to sugar to oils to vegetables. It never goes away. Yield fatigue implies returns are still too volatile to incentivise technology upgradation. Food prices have to spiral and stay there if India wishes to feed itself.
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