Hyderabad: Fifty-six-year-old Basava Chinna Babu used to grow paddy on 15 acres of land he owns in Uppalaguptam village, located in the heart of Konaseema in East Godavari district, a region with endless expanses of lush green paddy fields.

Barren patch: A file photo of a farmer in his paddy field in Konaseema in Andhra Pradesh’s East Godavari district. Around 106,000 acres of farmland in the district is unlikely to be cultivated this kharif season

Babu, like thousands of farmers in the region, plumped for the latter option in Andhra Pradesh, the country’s biggest rice-growing state, which produced a bumper crop of 14.3 million tonnes in the 12 months ended March, one-third more than in the previous year.

Around 106,000 acres of farmland in the East Godavari district, known as the rice bowl of Andhra Pradesh, will be unsown this kharif season, according to the Andhra Pradesh state government. Farmers in the region estimate the land going uncultivated at three times as much. The East Godavari district has around 2.47 million acres under paddy cultivation.

Rising prices of farm inputs including seeds and fertilizer, a shortage of labour which, when available is becoming increasingly expensive, and lack of procurement by government agencies that have no space to store more foodgrain are responsible for the phenomenon known as “crop holiday".

“It’s not an easy decision," says Chinna Babu. “But we have no other option. Paddy cultivation is financially unviable. The input costs have shot up by 100-300% in the last two years. Forget minimum support prices, there is no one to procure the paddy."

Chinna Babu lost around 60,000 in the rabi season and has debt of 1 lakh to repay. He still has 30 quintals of rice unsold from the rabi crop.

It’s not a phenomenon restricted to East Godavari alone.

“This time, in place of rice, we have decided to cultivate grass for our cattle," says 63-year-old M. Hanumanth Reddy of Irukodu in Medak district of Telangana region.

Reddy has 23 acres of land, of which only 5-acre land is suitable for rice cultivation.

“Getting farm labour here is a major problem, and mechanization is not feasible as paddy fields are small and scattered. Even if we take a risk, we are not getting minimum support prices," Reddy says.

Anantapur district, a drought-prone district in Rayalaseema region, hasn’t been spared either.

“There is an undeclared crop holiday in Anantapur district; at least 20% lesser paddy will be cultivated in this kharif season," says 55-year-old T. Sarat Chandra, a farmer from Tarimela in Singanamala mandal. Chandra holds 40 acres. “This time we are going for cotton, as it has somewhat better margins."

It costs 780-800 to cultivate 1 quintal, or 100 kg, of sona masuri, a premium-grade medium-size rice variety. The minimum support price for paddy set by the government was 1,080 per quintal, but farmers received only around 600-700 per quintal from rice millers who procure their produce, translating into a loss of 100-180 per quintal. If the loss is calculated on a per acre basis, it ranges between 2,200 and 3,600 on an investment of 19,500-24,000.

Dire situation

The area under paddy cultivation has declined by 18% in Andhra Pradesh in the current kharif season compared with last year.

The total area under paddy cultivation in Andhra Pradesh is around 5.34 million hectares (ha), of a total area of 26.million ha where paddy will be grown across the country this kharif season.

In Andhra Pradesh, farmers are blaming the policies of the Centre as well as the state government for the predicament they are facing.

“The government has simply failed to read the situation; despite having full knowledge of a bumper harvest this year, they failed to give a nod for exports in time," says P. Chengal Reddy, president of the Federation of Farmers’ Associations. “The government even failed to provide bags on time for IKP (Indira Kranthi Padham) self-help groups to procure rice."

IKP is a poverty reduction project aimed at helping the rural poor improve their livelihood through their own organizations.

Food Corporation of India (FCI) has the capacity to store 3.6 million tonnes of rice in Andhra Pradesh, while its warehouses are brimming with stocks of over 120%.

Of 14 million tonnes (mt) of rice produced in the state in the fiscal ended March, FCI had the mandate to procure 9.1 mt, but it could only procure 7.6 mt.

Given excess supply, rice millers and commission agents have been bargaining hard, reducing the prices to as low as 500 per quintal in some paddy-growing regions.

FCI has official sanction to construct storage capacity of 556,000 tonnes in Andhra Pradesh. That compares with 5.1 mt of capacity it has been mandated to build in Punjab.

“The shortage of godown space with the FCI in the state is very severe due to full occupancy with rice. Due to this, the FCI is not able to accept levy rice from rice millers and this is having an impact on the paddy purchases by the rice millers, thereby causing hardship to the farmers, Andhra Pradesh chief minister N. Kiran Kumar Reddy wrote in a letter to Union minister for consumer affairs, food and public distribution K.V. Thomas on 18 July.

The letter, which was made public by the state administration, said the Andhra Pradesh government planned to create an additional 2.5 mt of storage capacity.

The Centre banned the export of non-basmati rice in April 2008 to check inflation. The government lifted the ban on 12 July 2011, allowing the export of 1 mt at a minimum price of $400 per tonne. This translates into 1,800 per quintal.

In separate letters to finance minister Pranab Mukherjee and Thomas on 16 August, Kiran Kumar Reddy requested them to consider allowing the export of 1.5 mt of rice so that millers could clear the stocks on hand and could purchase the paddy from farmers and farmers in turn would get the remunerative price for their produce.

“I am sure that you would agree with me that unless the millers clear the stocks on hand with them, they will not have any liquidity to plough back for purchases of paddy in the ensuing kharif season, which would result in the farmers agitating for remunerative prices and to per force dispose of at the distress rates in the market in spite of price support operations undertaken by the government agencies," he wrote.

Symptom of a larger crisis

“Over 5 mt of paddy is still lying in the hands of farmers in Andhra Pradesh with no takers," says agriculture scientist and food policy analyst Devender Sharma. “If there is normal rainfall, there will be another good crop, only to compound the crisis."

“The crop holiday problem cannot be seen in isolation, it is a symptom of a bigger crisis that’s going to unfold at a national level in near future," Sharma warns. “Unless there is an assured procurement and a guarantee minimum support price, farmers will be at a losing end."

The crop holiday in East Godavari is expected to affect the livelihood of around 80,000 farm workers. The state government has asked district officials to hire them under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which aims to provide 100 days of employment a year to at least one member of each rural household. Ironically, the MGNREGA has been blamed for causing a farm labour crunch and increasing labour costs.

On 11 August, the Congress party government of Andhra Pradesh constituted a seven-member committee of bureaucrats and academics to study ways to solve the problems facing rice growers. The committee, headed by former chief secretary Mohan Kanda, was given one month to submit its findings.

“There is not a single representative of farmers in that committee that is meant to study the problems of farmers," says Chengal Reddy, the head of the Federation of Farmers’ Association. “I don’t think there is a need for another committee. The government has first-hand information on the root causes of the problem.

“There are serious policy lapses. The state government did not focus on building more mandis (markets) and connecting them to production areas," he adds.

“But it’s not too late. If all the panchayat (village council) buildings can be converted into makeshift godowns, a large portion of the grain can be saved from rotting in the farmers’ hands."