Troubled by limited profits in farming, large-scale farmers in Punjab have tried to diversify their incomes but have found little success, says research
For farmers in Punjab, profits from agriculture have become limited and unpredictable over the years. Large-scale farmers try to resolve this by investing in other businesses. But a study shows these investments haven’t worked as they don’t generate the income farming does.
The study, by Shreya Sinha of University of Cambridge, UK, is based on a 2014-15 survey of 93 agricultural households across four villages in Ludhiana district of Punjab. Of these, 32 were large farmer households who have tried to diversify their income sources.
The easiest way to diversify is to invest in activities around agriculture itself, such as dairy farming or milk production. But respondents complained about poor returns and high costs for cattle feed and workers. Rice mills that process paddy grains into polished rice are another alternative, but these need an investment of ₹1.5-2 crore, which not many can afford. Renting out equipment such as combine harvesters is also possible. But rental rates have dropped due to an oversupply of such equipment in Punjab.
Farmers have also diversified into non-agriculture businesses. One example is transporting goods, with the farmer either owning the business or driving trucks themselves. One respondent did this for 10 years but quit as he made a much smaller profit than he had hoped for.
Two large-scale farmers in the study had tractor dealerships but said their profits had come down. They said they used to get commission on sales earlier, but now had to buy tractors from manufacturers outright and then sell them on.
Since it’s hard to invest successfully in businesses outside farming, many households focus their attention back on agriculture. All this means that large-scale farmers in Punjab find it difficult to grow either inside agriculture or outside of it.