High costs, low profit margin make paddy farming unviable in Kerala

Paddy farms are fast disappearing from Kerala. Efforts to sustain paddy cultivation are proving futile. Kerala is the only state that has witnessed area under paddy farming falling continuously. Interestingly, this is happening at a time when paddy prices in the wholesale market are increasing. The most worrying fact is that the indigenous variety of rice is disappearing and new hybrid varieties are filling in the void.

Figures provided by the economics and statistics department, government of Kerala, reveal that the area under paddy cultivation declined more than 74% in 32 years. During 1961-62, the total paddy cultivation area was 7.53 lakh ha (hectares). During 1975-76, it grew to 8.76 lakh ha. But after that, the state witnessed a steady decrease in cultivation area until it reached 2.29 lakh ha in 2007-08. During the same period, the area under paddy cultivation showed an increasing trend nationally.

A district-wise analysis revealed that Palakkad district occupied the top position with an area of 99,173 ha followed by Alappuzha district with an area of 33,335 ha. Area under paddy cultivation is the lowest in Pathanamthitta district (2,001 hectares). A variety-wise analysis shows that the total area under cultivation of high-yielding variety during the autumn season was 93.68%. Local varieties of paddy are cultivated in the rest.

Production of rice during 1975-76 was 13.31 lakh tonne. It reached a maximum of 13.39 lakh tonne in 1981-82. Thereafter, production in the state is decreasing. Output of rice was at 5.28 lakh tonne during 2007-08 as against 6.41 lakh tonne in 2006-07. Productivity in autumn, winter and summer were 2168 kg/ ha, 2370 and 2404.5, respectively.

Rice remains the staple food of Kerala and the annual consumption is estimated at 40 lakh tonne with more than 85% of the requirement coming from the neighboring states. Escalation in the cost of production is the main reason why many are giving up paddy cultivation. In Kuttanand, labour cost alone works out to 65% of the cost of production. An agriculture department estimate reveals that it needs Rs 21,000-23,000 for cultivating paddy in a hectare, while the value of output received from the land is only Rs 24,000-26,000. Hired human labour accounts for more than 45-50% of the cost while the imputed value of household labour stands at around 5%.

The low profitability in paddy cultivation appears to have contributed to the shifting of paddy land to other crops. Felds once used for paddy cultivation are now being utilized for other crops and for non-agricultural use as well. An increase in profit margin is necessary to sustain the remaining land and production. Improving productivity beyond a level will be difficult and thus cutting down on labour cost by opting for mechanisation is the only solution. With scarcity of labour becoming a big problem, trade unions are also putting less resistance to the use of harvester and other machines.

Rajesh Ravi, Financial Express, September 7, 2009