Value Chain Analysis of Paddy in Andhra Pradesh

NATIONAL ACADEMY OF AGRICULTURAL RESEARCH MANAGEMENT

RAJENDRANAGAR, HYDERABAD

Value Chain Analysis of Paddy in Andhra Pradesh

By Dewasish Ghoshal PGDM (Agriculture) NAARM, Hyderabad

Project Mentor Dr Babu Dhanapal Scientist NAARM, Hyderabad

National Academy of Agricultural Research Management, Hyderabad Page 2

ACKNOWLEDGEMENT

I would like to extend my deep sense of gratitude to Center for Sustainable Agriculture

(CSA) and Dr. G V Ramanjaneyulu who gave an opportunity to work with their organisation

for this assignment, which has been a pleasant and immensely valuable learning experience for

me.

I am happy about the way this project went on and proud that it has been completed

successfully.

Thanks also go to Dr. N.H.Rao (Director NAARM), Dr. P.K.Joshi (Ex Director, NAARM),

Dr. G.P.Reddy & Dr. K.H.Rao (Course Director PGDM), Dr. Babu Dhanapal (Project

mentor) and other PG cell officials PGDMA, NAARM for their guidance, which has always been

there with all the students of PGDMA course and thanks to all the colleagues, NAARM faculty

and staff.

My deep regards for my father, mother, my brother and sisters who are the most valuable

possessions in my life and have always been there to support me in all my ups and downs.

Dewasish Ghoshal

PGDM (Agriculture)

NAARM, Hyderabad


DECLARATION

This is to declare that, I, Dewasish Ghoshal, student of Post Graduate diploma in

Management Agriculture (2009-2011), NAARM, Hyderabad, has given original data and

information to the best of my knowledge in the project report titled, “Value chain analysis of

paddy in Andhra Pradesh “and that, no part of this information has been used for any other

assignment but for the partial fulfillment of the requirement towards the completion of the said

course.

I also agree in principle not to share the vital information with any other person outside the

organization.

Dewasish Ghoshal

PGDM (Agriculture)


CERTIFICATE

This is to certify that the project entitled “Value chain analysis of paddy in Andhra

Pradesh” submitted to the National Academy of Agricultural Research Management

(NAARM), Hyderabad in partial fulfillment of the requirements for the award of the degree of

POST GRADUATE DIPLOMA IN MANAGEMENT (AGRICULTURE) is a faithful record

of bona fide work carried out by Dewasish Ghoshal under my guidance and supervision and

that no part of the report has been submitted for any other degree or diploma.

It is further certified that the assistance and help received during the course of the

investigation has been duly acknowledged by him.

Place: Hyderabad

Date: April 24, 2011

PGDM (A) Course Director Dr. G P Reddy Principal Scientist, NAARM

Director NAARM Dr. N H Rao

Project Mentor Dr. Babu Dhanapal Scientist, NAARM


Table of contents

Abstract………………………………………………………………………………………….....6

Chapter I: Introduction…………………………………………………………………….....7

Chapter II: Review of literature…………………………………………………………...12

A. Pre production…………………………………………………………………………13

B. Production……………………………………………………………………………...14

C. Post production……………………………………………………………………….15

Chapter III: Methodology…………………………………………………………………...16

Chapter IV: Result and Discussion……………………………………………………….17

A. Factors and Relationship………………………………………………………………..18

B. Constraints and opportunities in paddy value chain…………………………..31

C. Factors that affect paddy Prices……………………………………………………….33

D. Cost of cultivation in Paddy…………………………………………………………….34

E. Marketing of Paddy………………………………………………………………………..38

F. Rice exports and levy systems………………………………………………………….45

G. Value addition to enhance profitability…………………………………………….47

Chapter V: Summary and Conclusion…………………………………………………..49

References…………………………………………………………………………………………51

Annexure


Abstract

Rice is one of the most important food crops grown in India. During last four years there has

been an abrupt increase in the price of paddy affecting the purchasing power of middle and

lower middle class consumers. Rice being the staple food of Andhra Pradesh, it is of atmost

importance to analyze the way it is produced, marketed and the role of different actors in this

chain. This study mainly focuses on the trends and issues from farmer to consumer throwing

light on the price margins of different actors involved in the total paddy value chain. Levy

systems, role of millers, government agencies, civil supplies and other alternative systems of

procurement of paddy are studied. Along with these issues, a major area of concern is the

problems and issues involved with production of paddy with respect to power supply, irrigation,

and increase in cost of cultivation, fall in net incomes, mechanization, irrigation, labour issues,

input usage, credit and marketing.


CHAPTER I Introduction

Rice remains a staple food for two-thirds of the world‟s population and has become an item of

commerce since the last two decades. Throughout history, rice has been one of man‟s most

staple foods. About four-fifths of the world‟s rice are produced by small-scale farmers and are

consumed locally. Rice cultivation is the principal activity and source of income for about 100

million households in Asia and Africa.

Most believe that rice originated in India, around 3000 BC, when locals discovered the plant

growing in the wild and began to experiment with it. Cultivation and cooking methods are

thought to have spread to the West rapidly and by medieval times, southern Europe saw the

introduction of rice as a staple grain. In several Asian languages, the words for rice and for food

are identical. Rice cultivation has been carried into all regions that have the necessary warmth

and abundant moisture favourable to its growth, mainly sub-tropical regions, rather than areas

that are too hot or cold. Fortunately, India has a conducive environment to produce rice.

India is the home country for rice and it is staple food for more than 65% of its population. It is

being grown in variety of situation. India is the second largest producer of rice after china. In the

year 2010 India‟s rice production was 132mMT, which is 26% of the global production.

The present study has three fold objectives that concern the agricultural economy of Andhra

Pradesh, particularly paddy farming sector. First it examines the existing paddy production

scenario in Andhra Pradesh. Secondly, it identifies the price discovery mechanism at different

stages of paddy value chain. Finally, it examines the impact of government policies on paddy

value chain.

World Production Scenario

According to the Food and Agriculture Organization (FAO) of the U.N., 80% of the world rice

production comes from 7 countries. However, if we talk about world rice production 2009-2010,

the figures below show the worldwide rice production by countries- in fact, the top ten countries

of world counted for their rice production.


Source: FAO, Regional Office for Asia and the Pacific, Bangkok.

There has been a major decline in world rice production since late 2007 due to many reasons

including climatic conditions in many top rice producing countries as well as policy decisions

regarding rice export by the governments of countries with considerable rice production. Global

rice prices started increasing in November 2009 after months of steadily declining since

reaching an all time high in May 2008. Problems related to rice supply in two major rice

producing countries- India and the Philippines- have been the primary reason for low world

production of rice and the reversal of price trend.

World Rice Production in 2010

As of January 2010, planting of paddy crops was already well advanced in southern hemisphere

countries. In South America, however, the season opened negatively due to drought or excessive

rainfall that has delayed sowing of the main crops. It is also feared that drought related to El

Nino may decrease rice production in Indonesia. Australia is expected to show an increase in

rice production though its output would remain below the highs of the early-2000s. The rice

production outlook is uncertain in southern African countries in view of the January and March

cyclone period there.


World trade in rice in 2010 is predicted to recover slightly to 30.5 million tonnes. This increase

is supported by a strong import demand from Asian countries, especially the Philippines.

Purchases by Brazil and the United States might also rise, while deliveries to African countries

could diminish. The 2010 trade recovery would be sustained by increased rice exports by

Thailand which and also by China, Myanmar and Viet Nam, compensating for reduced

shipments from Cambodia, the United States and Uruguay. Indian stocks, however, would not

be available to the international market but will provide relief to the Indian domestic rice

market as the country doesn't need to turn to import in the near future.

As a result of the improved 2009 production estimates, the FAO forecast of world rice stocks at

the close of the marketing years ending in 2010 has been raised by 6 million tonnes to 123

million tonnes, representing a 1% drop from opening levels. Much of the contraction to close the

year with a 24% draw down to 24.5 million tonnes. Conversely is expected to be in the five major

exporting countries, which, as a group, are predicted, rice importing countries like Indonesia

and the Republic of Korea, are expected to build their inventories. Relative to world

consumption, global rice reserves appear ample and sufficient to cover roughly 27 percent of

utilization in 2010.

Area, Production and Yield of Rice in India


From a nation dependent on food imports to feed its population, India today is self-sufficient in

grain production and also has a substantial reserve. The progress made by agriculture in the last

four decades has been one of the biggest success stories of free India. Agriculture and allied

activities constitute the single largest contributor to the Gross Domestic Product, almost 33% of

it. Agriculture is the means of livelihood of about two-thirds of the work force in the country.

India is the world's second largest rice producer, followed by China. The production of rice in

India has shown an increasing trend. It has increased from 34.58 million tonnes in 1960-61 to

92.76 million tonnes in 2006-07.

The demand for rice in India is projected at 128 million tons for the year 2012 and will require a

production level of 3,000 kg/hectare significantly greater than the present average yield of 1,930

kg/hectare. Government of India is targeting to achieve production of 129 million tons of rice by

2011-12 with the growth rate of 3.7% along with other food grains.

Paddy in Andhra Pradesh

Source: Department of agriculture and cooperation, Andhra Pradesh

Rice is the major food crop in Andhra Pradesh (AP) and the state is often called „Rice Bowl‟

(Annapurna) of India. It is grown round the year in three seasons, the kharif, rabi and summer.

Rice is grown under irrigated conditions in the command areas of tanks and canals and under

tube wells in rainfed areas. It is also grown as dry rice under rainfed conditions during kharif


season in hilly tracts. In terms of rice productivity, the state with its productivity level of 2471

kg/ha, ranks fourth in the country after Punjab, Tamil Nadu and Haryana. Comparison of mean

yield of best entry under All India Coordinated Research Project (AICRP) on rice over 7 years

period with the state average yield for irrigated rice indicates a gap of 36 percent.


CHAPTER II Review of literature

Asia‟s rice based livelihood systems are the contiguous and largest of all food producing systems

of the world. Asian rice lands produce 92% and consume 90% of the world‟s rice and provide

food and livelihood base to slightly more than half of the total world population (little more than

3 billion). The total rice harvested area of 135 million hectares is mostly scattered among small

and resource poor farmers and provides employment to a large number of rural landless.

These rice lands also support more than 50% of the world‟s hungry.

Rice is a preferred staple food for more than one half of the world‟s population. Rice is rich in

genetic diversity, with thousands of varieties grown throughout the world. In its natural

unmilled state, rice comes in many different colours, including brown, red, purple and even

black.

The rice supply chain provides livelihood to millions of people across the developing world.

(Rice is the staple food for 65% of the total population in India). The global changes in trade and

technology development have profoundly changed the situation today. The small and marginal

farmers at one end of the chain are not only economically disadvantaged but often politically

powerless, and when their interests are pitted against those of more powerful actors at the other

end, they often lose. Therefore, understanding the institutional and political economy

underpinnings of the organizational structure of a particular commodity or a sector is crucial for

designing a set of measures that enables the poor to take fuller advantage of greater access to

markets.

Hundreds of millions of people spend more than half their incomes on rice to feed their families.

At the same time, rice farming is a major source of employment, especially for the poor, and

about four-fifths of the world‟s rice production is grown by small-scale farmers in low income,

developing countries. All over the world, rural women have traditionally played, and continue to

play, an important role in both rice production and rice post-harvest activities.

In many areas, tasks related to rice planning, weeding, harvesting and processing are the

domain of women. Numerous actors take part in the value chain that links rice farmers to final

consumers: farmers, local traders, millers, wholesalers, retailers, and exporters in addition to

the state owned Food Corporation and Public Distribution System. Other participants include

transporters, seed companies, agrochemical companies, agricultural equipment companies,

irrigation companies, banks, inspection agencies, commerce and tax departments, agricultural


departments, farm organizations, miller organizations, research organizations, extension

organization, policymakers, and consumer organizations. The relations among different

participants in a sector determine the means by which benefits are distributed within the chain

and influence the way different actors try to improve their positions within the chain. From the

constraints identified, it is possible to derive policy recommendations to raise the returns of

poorer households within the sector.

Pre-Production

With the green revolution, the dependency of farmers on external inputs has increased. This

dependency has increased the costs of cultivation and also created several ecological problems.

The productivity oriented extension systems have encouraged excessive monoculture of the crop

and varieties. India which once had 30,000 varieties of rice; today gets 75% of its rice

production from just 10 varieties (Return to Good Earth, 1990). Availability of good quality

seeds in sufficient quantities locally is a major requirement. Retaining farmers‟ control over the

seed is a major challenge with new legislations coming in, favoring corporate control over the

seed. Similarly the various GM rice varieties in the pipeline for approval bring in the issues of

patents and monopoly control over the seed by the MNCs in addition to posing new hazards.

The new GM varieties of rice biofortified with beta carotene, iron etc could add to the health

problems rather solving them. In spite of the reports across the world on the GM contamination

in rice, Indian government/research establishments are aggressively promoting the GM path.

In addition the IPR implications of such research are much less understood. Many of the

successful models established by various organizations on local resource based, organic

production systems are remaining as isolated cases. The present support systems in the form of

subsidies, credit or insurance favor only external input (chemicals, hybrids etc) based

production systems. Government subsidies ultimately reach fertilizer and pesticide industries

and do not support farmers to effectively make use of their local resources. This call for a

complete recasting of the way government and financial institutions supports the provision of

inputs.

The national and state governments recently initiated few programs on the capacity building on

organic farming. All these initiatives are welcome, but without a paradigm shift in the

conceptual understanding replacing the chemical inputs with bio-inputs may not really solve the

problems of small producers and sustainability. All these are aimed at promoting (large scale)

certified organic production to fetch premium price in international markets.


Production

Rice is grown under a wide variety of conditions in India. Rice is the only cereal that can stand

water submergence, and this helps to explain the long and diversified linkages between rice and

water. For hundreds of years, natural selection pressures such as drought, submergence,

flooding, and nutrient and biotic stresses led to a great diversity in rice ecosystems. Historically,

rice cultivation has been a collective enterprise. The investment and shaping of the landscape

that are needed for the ponding system (terraces) require collective organization within the

community. Water management also relies on collective interest: crop and water calendars must

be organized for large blocks of fields in order to manage water efficiently and organize such

work as land preparation, transplantation and drying for harvesting. With construction of dams

and after the Green Revolution, rice became predominantly a canal-irrigated crop.

Traditional Tank systems were totally neglected. Gradually farmers even in rainfed areas started

cultivating rice under tube well irrigation. This has led to exhaustion of the ground water and

several cascading ecological and economic problems. An acre of rice production in ponding

conditions requires about 6 million liters of water which translates to 5000 liters of water for

each kilogram of rice production. This shows the burden on the scarce natural resources.

An innovative system of growing rice with less water was initiated in Madagascar named System

of Rice Intensification (SRI). This system which is based on sound ecological and agronomic

principles not only reduces water utilization by about 40% but reduces the seed quantity

required to 2 kg/acre and increases the yields by at least 20%. The experiences from Andhra

Pradesh, Tamil Nadu and Jharkhand show the advantages of the system. SRI for the first time

after green revolution has brought in several innovations from farmers into mainstream

agriculture. SRI also clearly demonstrates the biological potential of soil to support the plant

given suitable conditions. SRI is best suited for the organic production systems. While SRI is

suitable for certain conditions, there are various other such successful initiatives which need to

be understood and promoted.

Though paddy is a self pollinated crop and has wide variation, research scientists focused on

developing hybrids - as a high-end technology by public sector research and to retain control

over the seed by the private companies forcing the farmers to buy seed every year. This would

increase the cost of seed at least by three times.


Post-Production

Most resource-poor farmers have very limited capacity for retaining their produce after the

harvest until they get good prices. Prices are generally low immediately after the harvest and the

access of the small producers to infrastructure like storage and processing facilities is quite

limited. In addition, lack of transparency and lack of awareness regarding the procurement by

the Govt. agencies/mill owners add to the woes of the farmers. Also there are several moves to

withdraw the minimum support prices and market intervention operations.

Procured rice is distributed through the Public Distribution System in the country. Similarly this

rice is also used in the Food for Work program and national food assurance programs.

While all these are aimed at providing food to the poor, such initiatives lead to „sanskritisation‟

of food habits which also lead to changes in cropping patterns. The millets were completely left

out of the support structures, and the growers suffer due to lack of demand and effective

markets. Some innovative ideas like Rice Credit Line, which advances food to labor in lean

periods and gets in return their labor, have been tried in states like AP.

Growing awareness about the health hazards of the chemicals used in production processes has

increased the demand for organic foods. Several organizations have stepped into the organic

production systems to capture the premier (but now also increasingly those in Asia‟s bigger

cities) western markets. But it has limitations for small scale producers like high price of

certification, inaccessible distant markets and difficulties to meet the strict international

standards for organic production in a local/Indian context etc. National organizations like

APEDA (Agriculture Produce Export Development Agency) have programs to subsidize the

certification but focus on international markets. Local markets are only starting to develop.


CHAPTER III Methodology

The present study was based on analysis of secondary data and primary data collected by CSA

previously. CSA has collected primary data from farming community of 12 villages in 3 districts

(Nalgonda, Warangal, Karimnagar) in Telangana region of the state were selected. Data was

also collected from the commission agents, Millers, Traders involved in the rice chain.

The village covered under the study was both rainfed and irrigated area, the irrigation sourse

was manly tubewell. The villages are selected based on the access and availability of partner

organizations. However, farmers were selected on random basis from each village. The survey

was taken up with 100 farm households growing Paddy in districts of Andhra Pradesh. The

study was taken up in 12 villages Haridasnagar, Agraharam, Pothireddy palli, Venkatapur,

Padira in Karimnagar (5 villages in Karimnagr), Maryala, Cheekatimamidi, Kanchal thanda,

Chowderpally, Masanpally(5 villages in Nalgonda district), Singarajupalli, Einabavi (2 villages

from Warangal district). The data on cost of cultivations in different methods of Paddy

cultivation especially farmers growing paddy with conventionally (Using chemicals), farmers

growing paddy without pesticides (NPM) Non-Pesticidal Management, farmers growing paddy

organically (without fertilizers and pesticides) and finally farmers growing Paddy by SRI

(System of Rice Intensification).

The data analysis has done with the help of MS excel.

Methodology adopted for collection of Data:

Survey by questioners (By CSA)

Individual interviews with the farmers (By CSA)

Reports of different studies

Reports by daily News papers

Different websites

Group discussion with the farmers (By CSA)

Data already collected by CSA (Especially in Srikakulam and Kurnool district)


CHAPTER IV Results and Discussion

Paddy value chain Numerous actors take part in the value chain that links rice farmers to final consumers: farmers,

local traders, millers, wholesalers, retailers, and exporters in addition to the state owned Food

Corporation and Public Distribution System. Other participants include transporters, seed

companies, agrochemical companies, agricultural equipment companies, irrigation companies,

banks, inspection agencies, commerce and tax departments, agricultural departments, farm

organizations, miller organizations, research organizations, extension organization,

policymakers, and consumer organizations. The relations among different participants in a

sector determine the means by which benefits are distributed within the chain and influence the

way different actors try to improve their positions within the chain. From the constraints

identified, it is possible to derive policy recommendations to raise the returns of poorer

households within the sector.

A. Factors and Relationship

Land Holdings

Source: Andhra Pradesh Human development Report, 2007

The Majority of the farmers growing Paddy in the study area are small and marginal farmers.

Out of the 100 household interviewed 90 % are small and marginal farmers and only 10% of the

Year Share in number of holdings

Marginal Small Semi-Medium Medium Large

1955-56 38.6 18.3 17.7 16.7 8.7

1970-71 46.0 18.5 17.4 12.7 4.3

1976-77 46.6 20.3 17.4 12.7 4.3

1980-81 49.3 20.9 16.0 9.1 2.1

1985-86 54.2 20.8 15.2 8.0 1.8

1990-91 56.0 21.2 14.5 6.9 1.3

2000-01 60.9 21.8 12.4 4.3 0.6

2005-06 61.6 21.9 12.0 4.0 0.5


farmers are Big farmers. Even though majority of the farmers having 5 to 10 acres, rice

cultivation is confined to only 1 to 2 acres and the main reason for restricting the Paddy

cultivation is irrigation, water usage, fluctuating rainfall patterns. As per the Department of

Agriculture data on land holdings in the state is being collected from 1970-71 through a

quinquennial Census of Land holdings and the latest relates to 2000-01. The average size of

holdings in the State, which was 1.36 hectares during 1995-96, had declined to 1.25 hectares

during 2000-01.

The data on land holding structure from 1955-56 to 2005-06 show that operational holdings

have become much less concentrated where as absolute number and area covered by large and

medium holdings has declined since the mid-1950s. There has been significant increase „in the

shares of marginal and small farmers in the number of holdings. The share of marginal farmers

in the number of holdings increased from 46% in 1970-71 to 61.6 percent in 2005-06

Quality seed

Andhra Pradesh is known for its rich diversity of rice varieties. The varietal diversity represents

the wide diverse agro-climatic conditions, growing seasons and consumption preferences.

Medium to long duration (120-170 days) varieties are grown in fertile Krishna Godavari Zone.

State has a long coastal belt and short duration (110-125 days) varieties are grown in the

Northern Coastal Zone. Southern Zone mainly grows long duration (165-170 days) varieties and

Southern Telangana grows medium duration varieties while Northern Telangana grows mainly

the short duration varieties. The fine quality of grain preferred for consumption.

Availability of quality seed timely and at affordable price to all the farmers is important for good

crop but it is a constraint for rice farmers in India. The Supply of certified rice seed from public

institutes‟ accounts for about 15 percent and the private companies for about 8 percent only. The

remaining about 77 percent requirement is met either by storing own seed or by farmer-to-

farmer exchange. Analysis of certified/ quality seed distributed from 1990-91 to 2000-01

reveals that not much progress was made for increasing the quantity of seed distributed . There

was some increase from 1997 but it again declined in 2001. Private companies are increasing

their seed supply in the market. The potential for marketing good seed can be judged by the fact

that Co-operatives in Andhra Pradesh are producing rice seed with farmers and marketing it not

only in the state but also in other states too.


The preference of farmers in selecting a particular variety varies from place to place and region

to region and the market preferences of that particular area. In the survey area 50 % farmers are

growing IR-64, 20 % farmers are growing MTU-1010, At about 10% of the farmers are growing

BPT and Remaining farmers are using other varieties.

Last four to five years farmers are growing only old rice varieties viz., Badava mashuri, Vijetha,

sona masuri, swarna were grown in east and west Godavari districts of Andhra Pradesh. As per

farmers voice they said that they are getting only 35 to 45 bags/acre out of which 20-25 bags is

going to the land owners on Lease (A study by Jana Vignana Vedika, 2007).

Hybrid Rice

Andhra Pradesh has highest area under hybrid rice seed production. Though the industry and

the government is pushing hybrid rice, there is lesser acceptance by farmers. The area under

hybrid rice in India has increased only by 1 % (from 1.2 lakh ha in 1997 to less than 2.0 lakh

acres in 2005) in the last one decade. In AP the adoption is very less. Seed industry is trying

hard to push hybrids as it can increase the seed dependency. Unfortunately, the agriculture

university and Directorate of Rice Research (DRR) located in AP are also spending most of their

resources on hybrid rice development. DRR has a collaborative research project with Mahyco

Research Foundation to develop and market hybrid rice in India.

GM rice

In Andhra Pradesh, during 2005-06 GM rice field trails were conducted in the farmers‟ fields.

After resistance from the farmer‟s organizations and civil society organizations, the trials were

discontinued. However, the trials in Haryana, Tamil Nadu and Utter Pradesh were burnt by the

farmers and Chhattisgarh government has burned the field trials in Raipur. The rice traders

association has moved to Supreme Court and could get stay on conduct of field trials in basmati

rice growing regions as the trade security measure.

Fertilizer usage

The data on cost of cultivation in the sample area shows that there is no correlation between the

dosages that the scientist, are recommending in different crops and the actual usage on farm by

the farmers. The officials are calculating the requirement of fertilizers as per the scientific

recommendations. As per the official recommendations the fertilizer requirement in paddy is


one bag of D.A.P, 2 bags of Urea, 40 kgs of Potash but in practice farmers are using 3 bags of

urea, 1.5 bags of D.A.P and 25 kgs of potash.

As per the records of Agricultural department as on 27th September,2008, the sowing status

was 75.5 lakh hectares and out of which 46.52 lakh hectares is pulses, Sorghum, Jowar, Bajra,

Ragi, Sesamum and castor mainly are rain fed crops. The consumption of fertilizer is very less in

these crops, even if they use it is very minimum that is 2 to 2.5 bags per hectare. So for 46.52

lakh hectares of Dryland crop might have consumed 5, 81,500 Metric tonnes. In such cases as

per the Govt. if 6 lakh Metric tonnes were used for Dryland crops the remaining 22 lakh metric

tonnes is sufficient for wetland crops. If this much quantities of fertilizer are really available in

market there no need of farmers demanding fertilizers.

Fertilizer crisis

The usage of fertilizer came down in the study area and they used to apply 2 Bags of Urea, one

Bag of DAP, 1 Bag of SSP and one bag of MOP but this year due to hike in fertilizer prices they

have applied only one bag of urea, one bag of DAP, 25 kg of MOP. The fertilizer cost of 10

farmers from Kurnool of different social strata indicates that the average cost per acre of paddy

is Rs.2438 (Table-)

During this year government could able to supply enough fertilizer only few districts viz.,

Visakhapatnam, Chittoor, Nizamabad, Medak, Mahaboobnagar and as per that there should be

shortage of fertilizer, even though more fertilizer is supplied to other districts still there is crisis.

The excess has moved to other states and only big farmers have access to the fertilizers. The

small and marginal farmers did not get enough fertilizers. Majority of the fertilizer subsidy

disbursed in cash out of the Rs.22, 000 crores corpus announced by the Union Government

three weeks ago in August 20 has gone towards imported urea. Out of this fund only Rs.6000

crores has been disbursed for Indian manufacturers.

Due to shortage of fertilizers in Andhra Pradesh there is lot of malpractice and adulteration

happened with Fertilizer traders, Government Agencies in Andhra Pradesh. To know the facts

the revenue department and Agricultural Department conducted a survey by seeing bill books

from dealers, and collected information from 22,500 farmers. According to this 80 % of the

fertilizers were used by East Godavari, West Godavari, Krishna, Guntur, Khammam farmers and

the rest of the 20% fertilizers are used by the farmers of remaining districts. The major farmer


attacks on dealers, government agencies are from these 20% utilizing districts. The 10% of the

farmers involved in the survey said that they are not getting fertilizers on time and here and

there the agencies have sold fertilizer bags Rs.5 to Rs.10/- more than the MRP rates.

Fertiliser 2003-04 2007-08 Difference

in four

years (in

Rs./bag)

Production

cost/bag

MRP/ba

g

Subsidiy

/bag

Production

cost/bag

MRP/ba

g

Subsidy/bag

DAP 696.95 486.20 210.75 2513.55 486.20 2027.35 1816.60

MOP 368.20 231.25 136.95 1169.76 231.66 938.10 801.15

Urea

(Gas

based)

500.80 250.80 250.00 500.80 250.80 250.00 0.00

Urea

(Naptha

based)

850.80 250.80 600.00 1750.80 250.80 1500.00 900.00

Complex

Fertilise

rs

20:20:0:

13 Phos

540.60 378.15 162.45 1707.69 327.24 1380.45 1218.00

28:28:0

0

694.20 471.65 222.55 1941.86 389.01 1552.85 1330.30

23:23:0

0

598.20 415.50 182.70 1328.44 319.54 1008.90 826.20

16:20:0

0

496.40 368.80 127.60 1314.40 305.50 1008.90 881.30

10:26:26 613.90 434.10 179.80 1965.19 374.24 1590.95 1411.15

12:32:16 631.40 440.35 191.05 2057.02 397.12 1659.90 1468.85

14:35:14 666.85 449.80 217.05 2222.12 425.62 1796.50 1579.45

15:15:15 523.45 362.55 160.90 1281.54 286.29 995.25 834.35

17:17:17 573.60 420.80 152.80 1622.76 301.81 1320.95 1168.15

19:19:19 621.75 431.10 190.65 1742.12 337.32 1404.80 1214.15

SSP

(Powder

)

190.75 158.25 32.50 456.80 176.80 280.00 247.50

Source: Circulated to Cabinet by Government of AP, 2007


The government increasing chemical fertilizer subsidies is worry some. During 2008-09

estimates are reaching Rs.119772 when compared to Rs.18299 crores in 2005-06, Rs.25952 in

2006-07 and Rs.40338 crores in 2007-08.

Years 2005-06 2006-07 2007-08 2008-09

Fertiliser Subsidy 18299 25952 40338 119772* (estimated)

Pesticides in Rice Production

It is the large farmers who use more pesticides in rice production (Chari et al. 2000).

Occurrence of pest and diseases is more frequent in the command coastal areas,

where yearly two to three crops are grown. The predominant and endemic pests like brown plant

hopper (BPH), blast and rodents in Godavari delta consume maximum pesticide load into the

paddy ecosystem. Rodents (90% Bandikoot bengalensis, 10% Musa muscus) also cause

significant loss in the costal area. Chemicals are being to kill this rodent. A variety of

insecticides, fungicides, rodenticides and herbicides (Endosulpon, Monocrotophos, Carboryl,

Quinolphos, Chloropyriphos, Ekalux, Carbofuran, Metacid, Bavistin, Contof, Tilt) are used as

mono and in cocktails. Use of pesticides is harming the ecosystem. Farmers realize that rice and

fish production system has been is adversely affected by pesticide use in coastal Andhra

Pradesh. Farmers also have the feeling that the high use of pesticides, which particularly heavy

spraying at milky stage may have residual effect in the produce, is harm-full for both humans

and animals (through fodder). High rates of use of pesticides (chlorinated compounds,

carbomates, granules, some times pyrothroids, systemic insecticides and fungicides, strong

herbicides like round up, spraying pesticides at milky stage of the crop) for controlling fungal

diseases and insect pests of paddy, for example, may lead to high levels of toxic residues

entering the non-agricultural environment.

The organochlorine pesticides from the surrounding paddy fields are another source of pollution

in the rivers of, Krishna and Godavari at Andhra Pradesh and are responsible for deterioration

of water quality. Besides these, additional nutrients enter the river with the domestic sewage

from the settlements especially the Godavari and Krishna command areas.

The intensive use of pesticides leaves high level residues in soil and groundwater. Organic

activity is an essential component of humification in improving soil structure is thereby


impaired. Slowly degrading compounds cause a gradual build up of residues in the soil and

threat to underground water in the form of deposits. Organochloride insecticides tend to

accumulate in the biological food chain of predators.

There is increase in prices of pesticides, within three month to 70 to 80%. Pesticide industries

especially MNC‟s are selling some crucial molecules @ 16 times more than the actual prices are

indirectly responsible for hike in prices of other 14 generic molecules. The chemical that is

generally promoted against spodoptera available in the name of PROCLAIM in the market is

sold in the market @Rs.8000

per liter and the same chemical is available in Pakistan and chaina @ Rs.500, imagine the kind

of robbery that‟s happening with Indian farmers. In India 6000 crores worth of pesticides are

available in the market and out of that 60 % share goes to 20 MNC‟s Bayer, Monsanto,etc., and

the remaining 40% share goes to 1000 small Indian companies. The prices of “Glyphosate” a

chemical used to control weeds increased to Rs.500/lit within 3 months period of time. The

prices of chemical “Cartap Hydrochloride”- 50% S.P that are used to control stem borer in crops

like paddy increased to 100%. The chemical used to control Sucking pests “ Imidacloprid”

Increased from Rs.750 to Rs.1400

Pesticide Name 2007-08

Price Rs. /Lit

2008-09

Price Rs/Lit

Percentage

increase

Acephate 75 % 350 625 75

Monocrotophos 270 450 67

Glyphosate 320 500 56

Cartap Hydrochloride 40 80 100

Cartap Hydrochloride 50 350 700 100

Phorate Granules 36 52 44

Hexaconazole 5 % 240 400 67

Profeophos 50 % 350 450 29

Chloropyriphos 20 % 160 250 56

Cypermethrin 25 % 275 350 27

Imidacloprid 17.8 % 750 1500 100

Acetamapride 1000 1800 80

Quinolphos 220 350 59

Butachlor 180 300 67


Farm mechanization

Data from the study indicates that 98 % of the farmers are preferring paddy harvesters for

harvesting paddy due to severe shortage of labour in the kharif season. One more complaint is

that the straw that is coming by mechanical harvesters is not having that much quality and the

milch- animals and livestock do not prefer to eat ultimately this indirectly leading to shortage of

fodder in the villages. Farmers are spending Rs.1500 to Rs.2500/ acre based on the hours of

harvest in the study area.

Irrigation

In Andhra Pradesh as for as irrigation system is concerned the total land having complete

irrigation facility is only 45 lakh hectares, out of which 15 lakh hectares of land is producing two

crops in a year but the remaining land of 30 lakh hectares fallow land. Second crop is grown in

few hectares of fallow land under rain fed conditions. The Gross area irrigated under wells

accounted for a major share of 46.6 per cent (27.96 lakh hectares) followed by Canals with 37.2

percent (22.31 lakh hectares) and Tanks with 12.7 percent (7.62 lakh hectares) in 2005-06.The

Net area irrigated in the State increased to 43.93 lakh hectares in 2005-06 from 38.81 lakh

hectares in 2004-05 showing an increase of 13.2 percent. Net area irrigated under Wells

accounted for a major share of 45.2 per cent (19.87 lakh hectares) followed by Canals 35.8

percent (15.72 lakh hectares) and Tanks 15.1 percent (6.62 lakh hectares) in 2005-06. Source-

wise gross and Net area irrigated. In the most intensively cropped areas under rice, where

groundwater is often used for irrigation, water tables have been falling at the alarming rate of

one meter per year or more! In Andhra Pradesh, the total irrigated area (net) increased from

27.47lakh ha in 1955 to45.27 lakh ha in 2000. Much of the growth in irrigated area in A.P. since

1985 has come from tube wells and the area under tanks has decreased. There was no

improvement in irrigated area from 1975 to 2000 under canal system. Rice is the most

important irrigated crop in A.P. In A.P., large parts of new irrigated area are being cropped with

rice and the proportion of rice area that is irrigated is increasing.

Water management also plays an important role in realizing genetic yield potential of rice

varieties and hybrids. Irrigation water management influences crop growth and grain

production. Yield reduction in rice in some potential areas is often due to improper water

management. During wet season cyclic submergence gave similar grain yield to that of

continuous submergence. The irrigation water management varies from 2500 mm under

continuous submergence, to 1250m m under intermittent irrigation to 1050 mm under


irrigation once a week. Further cyclic submergence requires less water (DRR, Agro techniques

for increased rice production).

Crop loans

The farmers in the study area are taking Rs.1500 to Rs.25000 to meet the input requirement for

rice cultivation. There was delay in issue of crop loans to farmers ultimately the farmers has to

depend on the money lenders to get loan @ 36%. The target of crop loans this year was 20

thousand crores out of which the target for kharif itself is 14 thousand crores. The crop loans

issued to farmers by august, 28th is only 5,939 crores only. Even today banks are not showing

any interest on crop loan as a result of this 95% of farmers growing crops on lease did not

received any loan from institution.

Statistics show that the Indebtedness in farm households in the state is highest in the country.

About 82 percent of the 60.34 lakh, households are found weighed down by the loan burden

compared with the national average of 48.60 percent. According to the national sample survey

and the state directorate of Economics and statistics, the average outstanding loan per farmer

household in Andhra Pradesh is Rs.23,965, almost double the national average of Rs.12,585.

The cumulative financial burden on the indebted 49,49,300 farm households is about Rs.11,861

crore. The indebtedness among the social groups in the state too is higher than the national

average – 78.40 percent in STs (36.54 percent nationally), 79.20 percent in SCs (50 percent

nationally), 83.25 percent in OBCs (51.41 percent nationally) and 83.72 in others (49.48

percent).

The statistics also highlight substantial levels of landlessness. Farmers are being forced to sell or

give up their land because of their inability to repay debtsFrequent droughts, lack of planning

and knowledge on institutional credit, farming practices, dwindling size of land holdings and

excessive reliance on private money lenders are some of more issues the farmers face.

According to the survey by Reserve Bank of India Rs.534 out of every 1000 rupees of

credit to farmer is going from Money lenders in Andhra Pradesh.

Another report by world bank says that only 24% of the farmers are getting institutional

credit in Andhra Pradesh

According to Tribal development reports, Seethampeta, in tribal areas money lenders

are collecting Rs.3000/- worth of Paddy grains on 5000 rupees credit they‟ll give

The interest rate by private money lenders was reported to be 24 to 34 % in Kurnool

district and 36 to 60% in Mahaboobnagar


Loan waving scheme was proposed by central government and as per the estimates

approximately Rs.71,680 crores of loans may be waived during this year. But actually the total

amount waived by different banks till 7th july, 2008 was below Rs.70, 000 crores. As per the

Banker‟s committee report, In Andhra Pradesh nearly Rs.12, 557 crores worth of loans were

waived off by this scheme. But during implementation of the scheme, as per the terms and

conditions it implied to 66.25 lakh farmers @ 10,197 crores were expected to be waived off. Out

of this 56 lakhs of small and marginal farmers worth loans worth of Rs.8,420 crores, 10.25 lakh

big farmers loans worth of 1,770 crores. What about the 25 lakh farmers who doesn‟t have any

bank account, this farmers doesn‟t come under the coverage. But in reality this scheme has

helped only 20 to 30% of farmers; even in this 90% of farmers are big f In Guntur district 3.80

lakh small and marginal farmers waived of loans worth of Rs.810 crores. During this year kharif

the crops loans to be given in the district was Rs.1100 crores and till now only Rs.500 crores

were given. Despite of all these things the cost of cultivation has drastically increased due to

increase in seed prices, increase in fertilizer prices, and Second time purchase of seeds due to

non-germination of seeds. Diesel crisis increased the ploughing costs. This situation pushed the

farmers once again into the clutches of money lenders and the farmers have to lend the money

@ Rs.5 interest rate. According to a report Khammam district farmers have already got loan of

Rs.500 crores, Nalgonda district farmers got loan of Rs.400 crores from private money lenders.

(Report from PRAJA SHAKTHI, 17TH Semptember, 2008)

Power Supply Problems

All farmers in the sample area expressed the power supply problem and they said that there is

interrupted supply of power in the kharif season. The power supply was only 7 hrs. High voltage

during this interruption is burning the motors in the bore-wells. This is costing another Rs.2000

to Rs.3000 in the season that is adding to the cost of cultivation.

In Andhra Pradesh as on July, 2008 there was demand of power of 200 million units and the

supply was only 174.5 million units. The 7 hours power to Agriculture is restricted to 3 to 4 hrs

in different districts. The supply is not more than 4 hrs in Srikakulam, Power supply was given

in 3 intervals i.e., morning, After noon and night shifts in Krishna district. Power is supplied in

two shifts in Anantapur district.

Crop insurance

Crop insurance to the insurance to farmers is delayed in this year and the crop insurance of

2006 was already paid before September 1st week itself. The major reason for this delay might be


that this total amount has not been counted in the allocated budget. In Andhra Pradesh

government has already brought small and marginal farmers under crop insurance coverage.

The state and central governments would bear the 10% discount announced on premium.

According to this the State government has to bear 5% premium along with bank service charges

which may be around 6.72 crores of rupees. Compensation of 539.89 crores has already paid to

6.43 lakh farmers exaggerated with crop damage. During 2007 there was crop damage of 14,092

in Kharif and 10,732 farmers in Rabi and these amounts to be 7.25 crores in Kharif, 4.19 crores

in Rabi.

Source: Rythuvani, October, 2007

40% of net sown area irrigated, 60% dependent on rains

Most irrigation from non-perennial sources

Affects adoption of improved crop production techniques because of high risks and low

margins

Damage due to floods and heavy rains:

The damage due to floods in August 2006 there was severe havoc in 13 districts and there was

damage in 525085 acres, produce worth of Rs.525.66 crores. For this damage government has

only paid Rs.45.59 crores and the crop loss not beyond Rs.750 per acre.

During February 10-11 of this year, due to untimely rains 7 districts in the state suffered heavy

loss of Rs.695 crores and there was heavy loss to paddy crop. Government announced that they

will facilitate to make crop issuance scheme for the benefit of the farmers. State Government

increased the compensation to farmers on natural disaster, the hike was only Rs.400 to 500 and

that benefit goes to a farmer having 2.5 acres.

The Crop losses paid by Govt. on natural disasters(Crores)

Year Central Govt.(crores) State.Govt(Crores)

1995-96 87.91 29.3

1996-97 93.14 31.05

1997-98 98.29 32.76

1998-99 103.3 34.43

1999-00 107.69 35.9


Drought is another disaster that is having major impact on paddy chain. Every year 80 lakhs of

small and marginal farmers are affected by the drought. According a survey out of net cultivated

area 30 lakh acres in kharif and 12 lakh acres in Rabi of small and marginal farmers are affected

in Andhra Pradesh. The cultivated land has to kept fallow every year. During 1981-82 the total

cultivated area was 280 lakh and out of that 83.64 lakh acres were kept fallow. In 2004-05 the

fallow land due to drought increases to 110.45 lakhs.

Hailstorms

This is another problem that is causing a major mess to Andhra farmers, that too mainly in

Telangana Region. In Enabavi village of our study area even though farmers have overcome the

issue of cost of cultivation by shifting towards organic, this is a major problem of natural

calamities that is causing severe damage. During 2007-08 in Enabavi, there was severe damage

in 60 acres of Organic Paddy due to hail storms.

Source: Based on Primary data from present study

In 2004 between January 20th-25th, 80 thousand acres of paddy crop was damaged in

Warangal, Adilabad, Karimnagar, Khammam, Ranga Reddy, Anantapur and Medak

districts.

Activity Men Women Men

cost/Day

Women

Cost/day

Machine

Ploughing 2 0 300 0 2400

Puddling 2 0 300 0 0

Land Preparation 1 1 150 70 0

Sowing 1 1 150 70 0

Seed treatment 0 2 0 150 0

Transplanting 1 17 150 1190 0

Fertilizer application 2 3 300 210 0

Manure Application 1 2 150 300 0

Weeding 0 15 0 1050 0

Harvesting 0 0 0 0 2000

Straw removing 1 5 150 350 0

Drying `1 2 150 300 0

Bagging 1 1 150 70 0

Transportation to

market

2 0 300 0 0

15 49 2250 3760 4400


During 2004 February, 19,20th there was damage on Paddy crop in Doktala, Ponnala,

Patan villages

2004 April, 24th and 25th there was damage of crop around 82160 acres due to hailstorms

Due to hailstorm in 2007 may, 4th there was crop losses about Rs.200 crores in

Karimanagr, Waranagal, Adilabad and the entire paddy kept for drying was damaged.

Gender segregated activities of Paddy Cultivation

Women play a key role in agriculture and food security of the family. Women head

approximately one third of the households living below the poverty line and are major

producers, earners, buyers of family food and meal-makers. Historically the wage rate for

women had been lower than men and this along with the fact that they are more efficient in

carrying out certain agricultural activities increases their demand in comparison to men. Their

participation in rice cultivation at various stages is also quite high. They dominate in carrying

out all activities except land preparation. Wage rates in most states are highly discriminatory

even for the same type of work. In some cases they get almost half the wage of men. This makes

their food security further vulnerable. This is inspite of the fact that they are considered more

efficient in carrying out some activities like weeding and harvesting. Women also play

significant role by processing paddy, selecting and storing seed. They are more experienced and

efficient in these tasks than their man counterparts. But their contributions and skills are

recognized, neither by the family members nor by the researchers and policy makers.

Surprisingly enough most officials are either not aware or they do not want to acknowledge such

field realities.

Decision making in Paddy chain

The study mainly focused on involvement f women in different Activities of paddy cultivation

and it was found that nearly 15 men labour is involved in one acre production of paddy and 49

women labour are required. Recently mechanical harvesters and transplanting machines have

replaced the women involvement. The cost of labour has drastically increased i.e. Rs.50 to men

and Rs.30 to women in 2005-06 to Rs.150 to men and Rs.70 to women in 2008. This is making

paddy cultivation a dilemma to farmers.


Data indicates that in most of the activities there is collective decision making, except seed

storage, ownership of land, money management nearly 15% women alone take decision apart

from men and collective decision making. In case of seed storage 39.8 % women are taking

decision.

In case of Purchase of inputs 61.6% men only take decision and 38.4% take collective decision in

the family. In case of varieties to be grown 46.1 % would take collective decision. In case of

ownership of land and machines there is 69.23% and 76.92% of collective decision is there.

The gender involvement data , of Einabavi and Singarajupalli villages is same. The activities

like ploughing, puddling and other land preparation acivities are carried out by men.

Transplantation and weeding are the two activities that purely involve women. In case of SRI

paddy cultivation, weeder is operated by men only. Harvesting is another major activity which

involves 90% women. It is very clear that, where there is more of physical activity, women are

involved. Transporting is taken care of by men. There is difference in wage rates also. When

men are paid Rs 120, women are paid 100. The wages for most of the operations are 60 and 50.

Rs 60 for men and rest 50/40 for women.

In case of decision making, all the decisions except how much to be kept for household

consumption, are taken by only men. Women are informed the decisions taken. This clearly

indicates there is increase in participation of women in decision making of rice cultivation in the

form of collective decision making

Women Men Collective

Purchase of Inputs 0 61.6 38.4

Seed storage 39.8 60.8 0

Variety to be grown 0 53.84 46.1

Agriculture land use 0 46.15 53.84

Cropping pattern 0 30.7 69..23

Credit accessibility 0 61.53 38.47

Ownership of machines 30.76 69.23

Ownership of Land 15.39 7.69 76.92

Money Management 15.38 7.69 76.9

Transportation to market 0 53.85 46.15

Household consumption 0 46.15 53.84

*Data from current study


B. Constraints and opportunities in paddy value chain

The farming is in crisis since last 4 to 5 decades and farmers are committing suicides as farming

has become unviable. During 1950‟s the percentage share of Agriculture in India was 55%. It has

drastically come down to 14.6% in 2009-10. On the other hand the other industries are

managing the prices on their own and food grain prices were controlled by the government and

insisting the farmers in such a way that the farmers is not even getting minimum support price.

If you go through the prices of different commodities from 1997 to 2007, in this decade itself

there is 25% increase in rice prices, 25% increase in wheat prices, 25 % increase in pulses, 17%

increase in prices of Maize, 7% increase in cotton prices at consumer level. But there is nominal

increase in Minimum support price at farmer level by the government.

Minimum Support Price of Rice in India

Keeping in view the interests of the farmers as also the need for self reliance, the government is

announcing Minimum Support Prices (MSP) for major crops from year to year. Farmers are free

to sell in the open market or to the Government at the MSP depending on what is more

advantageous to them.

The price support policy of the Govt. is directed at providing to insurance to farmers against any

sharp fall in farm prices. The minimum price is fixed beyond which the market price cannot fall.

There were substantial increases in the MSPs of rice and wheat after the mid-nineties. MSP of

paddy was increased by Rs 35 per quintal in 1997-98.

Minimum support price of paddy (Rs/quintal)

Kharif Crop (According to Crop

year)

As on 10.06.2010 (Rs.

per quintal)

Commodity Variety 2004-

05

2005-

06

2006-

07

2007-08 2008-

09

2009-

10

2010-11

Paddy Common 560 570 580 645/850 850 950 1000

Grade

'A'

590 600 610 675/880 880 980 1030

Source: Directorate of Economics and Statistics, Department of Agriculture and Cooperation


State-wise Procurement of Rice in Major Rice Producing States under MSP

Source: Department of Food and Public Distribution

Source: Department of Food and Public Distribution


C. Factors that affect Rice Prices

Weather

Role of weather in rice production is immense. Temperature, rainfall and soil moisture

are the important parameters that determine the crop condition. Further, natural

calamities can also affect crops. Markets keep watch of these developments.

Minimum Support Price

Changes in the minimum support prices (MSP) by the government also have immense

impact on the price of rice

Government Policies

Exchange rates, fiscal policies, export incentives and export promotion also influence

price.

Substitute Product

Availability of substitute products at cheaper rate may lead to weakness in demand. This

situation happens especially when the main products price tends to become higher.

Consumption

Rice consumption depends on two factors - population and Income. Lets take for

example Asia. Rice is the staple food of Asia. Low-income groups consume more rice

according to the per capita income increase. But as the income increases, there arrives a

point when the consumption starts to dip. Income growth and reduction in population

result in a low consumption of rice.

Seasonal Cycles

Seasonal cycles are present in rice cultivation. Price tends to be lower as harvesting

progresses and produce starts coming into the market. At the time of sowing and before

harvesting price tends to rise in view of tight supply situation.

Demand

International demand as well as domestic demand both affects the prices of rice.

Breakthrough in the technology may increase the productivity and would lead to more

supply. This may bring some softness in the price.


D. Cost of cultivation in Paddy

The data on cost of cultivations was analyzed separately for farmers practicing conventional

paddy cultivation (inundated paddy using chemicals), Non-Pesticidal Management (Without use

of chemical pesticides), Organic system of production and System of Rice Intensification (SRI)

with low water usage.

In case of conventional farming the net income that the farmer is getting is Rs. 4519.02, in NPM

paddy the Net income is Rs. 6342.00/acre, in Organic (based on farmers declaration and sold in

domestic markets) method the net income is Rs. 11819.00/acre and in SRI the net income on

Paddy is Rs.9633.88/acre. During the peak periods (transplantation, weeding, harvesting)

during the season there was a sudden increase in wages of labour in all the villages. The

S.NO Practices Conventional

farming

(Rs/Acre)

NPM

(Rs/Acre

Organic

Rs/Acre

SRI Rs/Acre

1 Land preparation 1341.23 1236.89 1164.00 1200.00

2 Sowing 0 0 0 0

3 Transplanting 1266.00 1289.00 1280.00 573.00

4 Ploughing 1800.00 1607.69 1500.00 1550.00

5 Puddling 560.00 546.15 514.00 500.00

6 Transplanting 1340.80 1303.84 1200.00 1300.00

7 Fertilizer Cost 2400.00 1764.61 0 820.00

8 Plant Protection 1500.00 0 0 0

8 Weeding 1050.00 742.30 890.00 1200.00

9 Harvesting 3000.15 2888.46 1800.00 1900.00

10 Labour cost 4522.8 4366.53 3200.00 4125.12

12 Yield (Quintals/Acre) 24 23.7 24.6 24.8

13 Straw yield(Quintals) 55 54 52 52

14 Straw income/Acre 1400.00 1350.00 1350.00 1350.00

15 Price

realized/Quintal*

850.00 875.00 895.00 865.00

16 Total Cost of

cultivation

17280.98 15745.47 11548.00 13168.12

16 Gross income 20400.00 20737.50 22017.00 21452.00

17 Net income 4519.02 6342.03 11819.00 9633.88

*Data from 100 farm house holds and available data with CSA

(MSP) was Rs. 850/q. Wherever farmer could sell paddy directly they realized better price.


increasing labour costs and shortage during the peak periods is leading to large scale

mechanization in the form combine harvesters, transplanters and large scale usage of

weedicides is taking place in the paddy growing areas of Andhra Pradesh. In the current season

(Kharif, 2008) with the shortage of chemical fertilizers and the hike in the prices of pesticides

the chemical usage have drastically came down. The tenant farmers incur an additional cost of

Rs.2000 to Rs.3000 tenancy leaving net income of only Rs.2000.

The Paddy farmers in Andhra Pradesh are spending on an average 16 thousand rupees per acre,

this includes, pesticides, fertilizers, tractor, diesel and labour. The average yield is 27 q/ acre

yield and if this is sold as per the Minimum Support Price (MSP) farmers realize Rs.18000 per

acre. Despite of the hard work and time in the entire season ultimately the farmer is getting only

Rs.1000 to Rs.2000/ acre as net incomes.

The Acreages/ production/productivity/Cost of cultivation in major rice growing

states of India

S

N

o.

Particulars A.P T.N KARN

ATAK

A

ORIS

SA

W.B U.P PUNJ

AB

HARY

ANA

1 ACRAGE (Lakh acres) 98.34 50.65 36.82 110.7 142.83 138.88 65.24 24.95

2 Production (Lakh

tonnes)

175.7

5

78.3 86.1 102.9 217.6 166.9 152.8 49.1

3 Productivity

(Kg/Acre)

1784 1546 2348 930 1523 1212 2342 1851

4 Seeds (Rs/Acre) 305 1010 405 239 405 467 362 129

5 Fertilizer (Rs/Acre) 1163 1432 2226 720 819 666 1026 1206

6 Pesticides (Rs/Acre) 454 214 431 142 70 26 525 624

7 Labour, Management

(Rs/Acre)

3475 3700 3910 2871 3780 2393 1940 3307

8 Machinery (Rs/Acre) 1086 1630 1853 1081 1224 820 1590 1276

9 Irrigation charges

(Rs/Acre)

379 455 235 43 548 752 1350 1292

10 Interest on Investment

(Rs/Acre)

447 783 285 466 646 750 653 947

11 Land use tax (Rs/Acre) 18 0 6 0 15 3 0 0

12 Rental value or Lease

(Rs/Acre)

3876 2600 2753 1738 2236 1890 3757 3508

14 Cost of cultivation total

(Rs/acre)

11784 12248 12365 7363 9948 7900 12857 12966


The above data shows that the productivity of rice is highest in Punjab followed by Haryana and

Andhra Pradesh. Seed cost is highest in Tamil Nadu. Rental value in Andhra Pradesh @

Rs.3475/ acre is highest and puts a big burden on the tenant farmers.

Decrease in Farmers’ annual income

The Agricultural development in Andhra Pradesh is very steady for the last 10 years compared to

Non-Agricultural sector. The other sectors show a growth rate of 10 to 12 % annually but the

farming sector is showing only 3 % growth rate annually in Andhra Pradesh. According to a

report by Sample survey (N.S.S) the annual income to the farmers in Andhra Pradesh through

agriculture is only Rs.9000

Farmers Share in the Rice Chain

Farmers are getting a minimum share in the value chain of commodities and most of the share is

going to middlemen, Trades in Paddy. The small and marginal farmers are not having any go

down facilities to store the produce until she gets a better price, poor economic status is the

main reason that even though they are not getting fair price they are selling the produce below

the MSP(Minimum Support price). In Andhra Pradesh, approximately 203.48 lakh quintals of

Paddy is produced both in kharif and Rabi. At the time of harvesting farmers are selling to the

commission agent @ Rs.650/75 kilograms of Bag. Within 3 to 4 months time the stored paddy if

the commission agent sells in the market, he would get Rs.1250/ 75 kg bag. As a whole the

farmers in the state are getting only Rs.17, 635 crores and the traders for simple 2 to 3 moths‟

storage are getting Rs.33, 913 crores. This indicates that farmers are losing Rs.16, 278 crores in

Paddy itself.

The data from the Survey area clearly shows that 80% farmers are selling their produce

to the middlemen immediately after harvesting, to meet their family requirements.

The AMC, Civil supplies is delaying the procurement of rice from the farmers and 60% of

the produce harvested is going to middlemen

15 Productivity(Kg/Acre)

as per CACP

2146 1766 1900 931 1400 1260 2850 1808

16 Production cost

(Rs/Quintal)

555 679 706 544 640 637 494 775


The Government Agencies and Civil supplies instead of purchasing directly from the

farmer they are procuring from Millers, Traders and paying the bonus of Rs.50 to them

instead of paying it to farmers

The Payment by AMC civil supplies is by cheque and it is taking nearly 30 to 45 days

after selling the produce and the middlemen is giving spot cash or 10 to 15 days payment

This attract the farmer even thought they‟ll procure paddy by less price as he has to meet

his family needs

Only big farmers having go-down, storage facilities are able to store the Paddy till the

AMC, Civil supplies department procures and getting the MSP and Bonus

In case of farmer it is equally important to him to market his produce as that of producing crop.

Farmer is facing lot of burglary in marketing his produce in the market. Every year farmer is

losing 17% of profit by immediately selling the produce in rice to meet his immediate needs.


E. Marketing of Paddy

How much a farmer get if he directly sell in the market

This is an experience of direct marketing from the farmers to the consumers. CSA has facilitated

the entire supply. During 1997-98 the stock f Paddy after they sell in the market was calculated

to be 25 quintals in Enabavi , organic village in Warangal district. It was directly linked to

consumers that were agreed to buy the rice @Rs.23/kilo, The available stock was 2500 kilo with

the farmers. The total value of 2500 was Rs.57000 and he was requested to pay 50% of the

amount immediately to the farmers as advance.If the farmer have directly sold paddy in the

local market the price they might have got was Rs.1900/ quintal. But when they were linked

directly to consumer, they got Rs.2300/quintal. The profit margin is 400/Qunital. For 20

qunitals the profit margin was Rs.8000. After deducting the Cost of milling, Transport, the

farmer could able to get Rs.6000/ profit margin/Qunital.

Marketing interventions by the VOs (Village organizations)

The objective of collective marketing at IKP is (a) to enable the rural poor to obtain the best

price for their forest produce and Agricultural Commodities,(b) to minimize the cost of inputs to

the rural poor farmers and (c) to create Marketing facility at their doorsteps.Starting with the


procurement of Neem Fruit and Red gram in 2001 inMahabubnagar the marketing

interventions in IKP have registered a significantincrease in this financial year with pick up in

paddy procurement activity. In addition to the V.Os, MSs have successfully implemented village

level collective marketing of Paddy, Maize, Chillies, Neem, Red gram, Soya bean,

Castor,Groundnut, Turmeric, Cashew, and NTFP besides Agricultural Inputs etc.

Maize procurement undertaken by CBOs in 2005-06 at Minimum Support Price @ Rs.540 per

quintal has enabled the farmers of the state to get a net benefit of Rs.50 to Rs.100 per quintal.

Similarly Paddy Procurement under MSP 2007-2008 benefited farmer by Rs.75/- to Rs.100/-

Per Quintal. Various marketing initiatives are taken up in 2007-2008. Paddy procurement is

taken up by our CBOs in many districts. During this year upto December 2007, CBOs have

procured a total of 45.91 lakh quintals of agricultural and NTFP commodities worth Rs.303.61

crores. VOs have an ambitious plan to scale up the marketing activities by opening 6000

Procurement Centers by 2013-2014. Every VO will function like a Mini Market Yard.

Trends of traders and commission agents

CSA has interviewed 3 commission agents in the Bhonagir AMC and the major findings are as

follows

The commission agents are

1. Juluru Narasimha Rao& co

2. Faizer Rahaman Chisti

3. Ranga Kristaiah and company

The area of operation by them is as follows:

Particulars Juluru Narasimha Rao Faizer Rahaman

chisti

Ranga

Kristaiah &

Co

Area of operation 4 to 5 villages 15-20 Villages 16-18

Turn over There is decrease in Turn over

as there is decline in

Productivity and FCI & Civil

supply is also Purchasing the

commodity

No change in Turn

over

Turnover is still

maintained

Turn over 30 to 40 lakhs earlier but 50 Lakhs 50 Lakhs


approximately came down to 20 Lakhs

Where they sell the

procured Rice

Local rice millers Local rice millers,

FCI, Civil supplies

Local Rice

millers, FCI,

Civil supplies

The average price

they are offering to

farmers

Rs.780 approximately Rs.800

Approximately

Rs.775

Approximately

The process of

selling to Millers

Bidding and Auction Bidding and

Auction

Bidding and

Auction

The commission

after selling to

millers

5% 5% 5%

Storage and

baggage

Provided by miller Provided by miller Provided by

miller

Gunny bag cost Rs.15 to 20 Rs.15 Rs.18

No.of.Hamali 5 8 6

Hamali charges Rs.16/bag Rs.16/bag Rs.16/bag

Payment schedule

to farers

15 days 2 to 3 days 10 days

Preference of

selling by

Commission

agents

Millers and FCI Millers and FCI Millers and FCI

As per their opinion, every year the procurement of paddy by FCI, Civil supplies starts late.

Where there are rains it‟ll stop the procurement. By that time these agencies starts procuring

from the farmers almost 75% of procurement by the money lenders might be over.

Survey of local market

The grades announced by the AMC in Bhonagir area is as follows:

GRADE-A: B.P.T, Samba Masuri, IR-64, MTU-1010, Hamsa, Surekha, JGL, Yerramallelu

Normal : Swarna Mashuri, 7027, Gottimokkalu, MTU-1001

Three years Arrivals in AMC bhongir

S.No. Year Quantity(Quintals) Value

(Rupees)

Procurement by FCI& Civil

Supplies

1 2005-

06

1,25,094 6,31,73,587

2 2006- 4,90,920 58,42,06,623 18,09,347


07

3 2007-

08

10,91,883 73,78,29,825 24,19,018

4 2008-

09

3,64,007 as on Dec

Source: Records of AMC Bhonagir

During 2006-07 the total arrival was worth of Rs.58 crores, 42 laks arrival FCI& Civil supplies

purchased only grains worth of Rs.24 lakhs, 19,018.

Data on the prices of Paddy at Bhongir Market During 2008

S.NO Month Year Variety Minimum

Price

Maximum

Price

Model

price

1 Jan 2008 IR-64 770 770 770

2 Feb 2008 IR-64 790 790 790

3 Mrach 2008 BPT 800 800 800

4 April 2008 BPT 790 790 790

5 May 2008 IR-64 775 775 775

6 June 2008 IR-64 775 775 775

7 July 2008 BPT 775 775 775

8 August 2008 BPT 775 775 775

9 Sep 2008 Hansa 800 860 830

2008 MTU-1010 780 800 790

10 Oct 2008 IR-64 820 860 830

Source: www.agmarknet.in

The above data clearly shows that there is no much difference between the Minimum price,

Maximum price and Model price. On an average the prices of IR-64 in the Bhongir market is

Rs.777.5 even though the MSP announced is Rs.850+ Bonus of Rs.50/-.

Main Problems in Marketing

The major reason for burglary of the farmers is the lapses in the marketing system and due to

these, farmers have to sell their produce in village itself. To repay the loans even though the

prices are less he is forced to sell the produce in the village itself, despite of the fact that the

prices after harvest would be low. They are selling the produce to those money lenders who lend

the money for crop production. Apart from this they are not having proper storage facilities in

the villages.


Food Corporation of India is procuring rice from traders and millers as per their requirement

and when they are requested to directly purchase from farmers showing so many causes. The

rice traders, millers in the state are having good contact with the FCI and they are managing FCI

to procure rice from them, so that they can procure rice below MSP from the farmers and they

can get the Extra Bonus, instead of FCI directly paying to farmers. Millers are showing fake

authentication that they have procured the paddy on MSP.

Details of rice procured from millers by FCI from last 7 years

This clearly shows that the interest that FCI sowing to procure rice from millers is not there in

procuring Paddy from the farmers. During 2006-07 Food Corporation of India and Civil

Supplies Department procured one lakh tonnes and 6 lakh tonnes of paddy only in the state

when the production of paddy including Kharif and Rabi was 180 lakh tonnes. It clearly shows

that remaining nearly 173 lakh tonnes of Paddy is procured by millers and traders below MSP

rates.

Source: Rythu Vani, 2007

Food Corporation of India, department of civil supplies is the major source of rice procurement

in Andhra Pradesh. The negligence they are showing in procurement of Paddy is going to cost a

huge on food security. This is also going to influence the new scheme of Rs.2/kilo. Due to lack of

buffer stocks if you import rice it will cost much as it includes huge cost of transportation. If you

see the data from 2001 onwards, in 2001-02 the target for procurement was 47 lakh tonnes and

in that year they could able to procure 46 lakh tonnes. From that year onwards they could able

to procure 25 to 60 % over the target. The civil supplies department is also moving in the same

path, the farmers are selling the paddy to the private commission agents. Due to this majority of

the farmers are not even getting Minimum support price announced by the government.

Year Procurement from millers (Lakh Metric

Tones)

Total

Raw Boiled

2001-02 46.35 17.61 63.96

2002-03 19.59 6.55 26.14

2003-04 29.27 13.18 42.45

2004-05 26.35 12.55 38.9

2005-06 25.28 20.55 45.83

2006-07 31.91 16.53 48.44

2007-08 42 20 62


Commission agents, millers are saying that they have procured on MSP, showing the records

with fake bills and they are claiming the bonus announced by the government.

FCI and civil supplies departments are starting their procurement very late in the season

at that time all the paddy might have been procured by Commission agents and millers

The cost of rice till it reaching to FCI may become Rs.12

During August the prices of paddy in the retail market was Rs. 23.08 and this has

reached to Rs.24.12.

It was estimated that there might be 36 lakh tonnes of Paddy stored unlawfully with

traders and millers

Cumulative paddy procurement by millers, fci, civil supplies in the state

Cumulative Paddy Procurement (In Tonnes)

S.NO As on 22-02-08 As on 22-02-08

1 Arrived 55,54,327 44,80,482

2 Purchased By FCI 7,789

3 Civil Supplies 18,241 40,520

IKP-Civil Supplies 74,247 63,710

Sub-Total 92,488 1,04,230

Grand Total 1,00.277 1,22,697

4 Purchased By Miller

FAQ 51,78,437 40,76,183

NON-FAQ 2,75,559 2,81,602

TOTAL 54,53,996 43,57,785

5 TOTAL Paddy Purchased By

Govt.Agencies & Millers

FAQ 52,78,768 41,98,880

NON-FAQ 2,75,559 2,81,602

TOTAL 55,54,327 44,80,482

Source: Rice Vision, Vol-5, Issue-7, February, 2008

The above data clearly indicates that 80% of the purchases by FCI is from millers and millers.


District wise food grains held in AP region as on 15.2.2008 by FCI

FCI District Storage

Capacity(Lakh

tonnes)

RICE Total

Rice(Lakh

Tonnes) Raw Boiled Grade-A Common Grade-A Common

Guntur 200200 58120 30040 10900 0 99060

Kakinada 496610 21028 325774 1704 2813 351319

Karimnagar 235842 100648 27002 17667 374 145691

Khammam 110840 2817 40258 1273 1041 45389

Kurnool 136364 36432 12431 1842 0 50705

Mahaboobnagar 190000 48327 23884 6389 0 78600

Nalgonda 417814 98846 42530 19076 240 160692

Nellore 110000 15360 23290 1920 0 40570

Portblair 7500 1265 0 0 0 1265

Sanathnagar 103333 52085 13279 735 0 66099

Srikakulam 90529 1066 97085 0 0 98151

T.P.Gudem 446880 129093 133173 1344 174 263784

Vijayawada 318590 171028 18468 7810 2699 200005

Vizag 159842 7136 91697 0 1052 99885

Warangal 173415 30888 65190 6661 5453 108192

Grand Total 3271621 825316 944181 83646 13886 1867029

Source: Rice Vision, Vol-5, Issue-7, February, 2008

Wastage of Food Grains by FCI

This year nearly 10 lakh tonnes of food grain were damaged in FCI go downs, even though Food

Corporation of India (FCI) had spent 242 crores to protect these food grain,it was not successful.

This is mainly because of lack of good storage facilities in Food Corporation of India. The total

quantity of grains might have been used to fed nearly One crore population. According to the

RTI filed by Ashish Bhattacharya of Delhi, it came to know that during last 10 years, nearly

hundred of crores worth of food grain was damaged in FCI. According to the report of FCI

during 1997-2007 period 1.83 lakh tonnes of Wheat, 3.95 lakh tonnes of Rice, 22 thousand

tonnes of Paddy. In Andhra Pradesh, Karnataka, Tamil Nadu and Kerala nearly 43,069 tonnes

of food grains were damaged.


F. Rice exports and levy systems

As per the government order issued on 24.7.2008, the millers, has to pay new levy prices to

newly procuring rice on this year MSP. The old Levy rates would applicable to the rice procured

before june,24th in which major procurement by rice millers has already over. This year levy free

certificates were issued to the millers who doesn‟t have paid 100% levy by August and this has

given a scope for free trade of rice in Andhra Pradesh. There were heavy stocks approximately

3.5 lakh tonnes of rice laid in Kakinda port and the rice millers paid Rs.60 to Rs.70/- more than

MSP to East and west Godavari farmers as these districts are near to Kakinada port. Suddenly

there was ban on Non-Basmati Export to other countries. As per the rice millers generally the

export Non-Basmati Rice would be grown in Rabi. Due to ban on Non-Basmati exports there

will be impact on Rabi acreage of rice this year and this problem was solved when central govt

gave permission to export Non-Basmati rice.

When ban was imposed on Non-Basmati rice, in local commission agents, Millers and traders

have drastically reduced the procurement prices According to the Rice millers association they

felt that the ban on Non-Basmati might have influenced Mainly southern states. There was

procurement of rice below MSP at that time. If this ban was not there may be competition

among the millers and there might be incidences where they have purchased rice by giving

Rs.60 to Rs.70 above MSP. According their view due to regulation on inter-state exports there is

impact on boiled rice that is not usually consumed in Andhra Pradesh. The boiled rice millers

are paying levy and selling this in Kerala and tamilnadu. When there is regulation on this may

impact on cropping pattern of farmers of Andhra Pradesh and there is chances to swift to

commercial crops in Rabi. Generally two varieties “MTU-3626” (PRABHAT) which is generally

called as “Bondalu” is used as boiled rice.,Millers used to buy this variety by paying higher price

than MSP. But when there is no regulation the purchases from farmers will not be there And

there is possibility in shifting of farmers to commercial crops.

Hike in Levy prices

This year there is hike levy prices and as per Rice Vision The Levy prices for common Raw rice is

Rs.1492.60, Para Boiled Rice Levy is Rs.1486.00, Grade-A raw rice levy is Rs.1540.10 and

Paraboiled raw rice the levy prices are Rs.1532.80 and if the rice mills are below 8 km of FCI, the

transport charges are included in Levy itself. The rice millers during 2007-08 as per the

estimate of Indian government paid 94.98 % of Levy. The Levy aid by millers itself is 70 lakh 43


thousand, seven hundred thirty six tonnes and this does not include the procurement by Civil

supplies corporation and Procurement by other agencies.

Rice Processing Mills

There has not been significant increase in the capacities in rice milling in the last five years

(Ministry of Food Processing Industry, 2003). There is a large number (90,000) of old hullers,

which need modernisation. Details of different types of rice processing units are presented in

Table 9. Modern mills help in recovering good quality rice bran for oil extractions. Presently

annual rice bran extractions is about 525,000 t. of which 300,000 t. is edible oil. Besides large

quantity of rice bran cake is produced as a by-product from rice bran oil mills and this cake is

used for animal feed and for export. The slow rate of modernization of hullers is attributed to

the compulsory levi imposed on mills by the states. Rice mills do not provide a healthy

environment for the workers. Dust in the rice mill is a serious health hazard and lead to

respiratory disease. Instead of managing the problem of dust most mill owners keep on shifting

the duty of the workers in a way that no one gets exposed to the dust for longer duration.

Disposal of water from the par boiling units is another hazard for health as well as for the soil

and/ or river/stream water where it is disposed. Though there are some regulations to control

environmental pollution but in practice there is hardly any check on it. Enough safety measure

like gloves and physical protectors to the eye, head and against dust allergy are not provided to

the workers in the mill.

Huller mills started replacing hand-handling and presently paddy is milled in huller, disc-

sheller and rubber-rolt-sheller mills.

The comparative installation costs and out terms of rice from three types of mills employed in

India.

Huller mill Disk Sheller Rubber Roll

Sheller

Capacity (1 tonne / hr) (1 tonne / hr) (2 tonnes / hr)

Installation Cost Rs.40,000 Rs.65,000 Rs.1,80,000

Out turn of raw-milled

rice

Rice 63-65% 65-67% 67-70%

Brokens 2% 2%

Bran 35-37% 5% 5%


Husk 22-27% 22-25%

Broken percentage in

Rice

30-40% 22-30% 10-15%

*Data from Status paper on Rice - P.V. Subbaiah Choudary, Advisor, CIFA, S.M. Ahamed Ali,

Director-Institutional Development, FFA

G. Value addition to enhance profitability

Value addition could also enhance profitability of rice production. A wide spectrum of product

development can be identified like better extraction and preservation of bran oil, processed and

canned ready to eat products, vitamin, iron or calcium enriched flaked or puffed rice, flavored

rice, starch extraction from broken rice etc. Besides, tailoring rice varieties specially suited for

such product development can be considered. Cultivation of organic rice for niche domestic and

export markets may be considered for value addition. Identification and scientific validation of

medicinal rice varieties with theraptic value and their cultivation for wider marketing is another

area deserving attention.

Number of rice mills in the study states, 1998

Source: Annual Report, 1997-98, Ministry of Food Processing Industries, Govt. of India

Demand for sorted, graded and polished rice in the export market; particularly for basmati rice

is high. This has given rise to installation of export oriented units (EOU) and 40 such units have

come up in the last five years (MFPI, 2003).

Main Marketing Channels in Andhra Pradesh

Producer Market/Agent Mill TraderWholesalerRetailerConsumer

Producer Market/Agent MillWholesalerRetailerConsumer

Producer Cooperative MillTraderWholesalerRetailerConsumer

Producer MillFCIPDSConsumer

Producer MillConsumer

States Hullers Sheller

mills

Huller cum

sheller

Modern

rice mills

Total

Andhra Pradesh 4609 1776 2364 12995 21744


Hike in rice prices

The acute shortage of Rs. 20 per kg superfine rice in twin cities for the last couple of weeks

continue to leave consumers high and dry despite the government claims on availability of

excess rice in godowns across the State.The problem may aggravate with millers stopping

production of superfine Sona Masoori rice, the most preferred variety by consumers. As of now,

the city is getting 50 to 75 metric tonnes per day as against the demand of over 500 metric

tonnes per day, say traders.While some shopkeepers have been displaying a „no-stock‟ board,

others are selling the rice as and when wholesalers deliver the stock. Few other traders had

totally stopped selling superfine rice (with five per cent or less broken rice) for Rs.20 fearing

losses and in turn, are selling other varieties forcing consumers to shell-out more. People

expected some relief after the government fixed the rate of superfine rice at Rs. 20. But there

seems to be no relief given the increasing prices of essential commodities as well as other

varieties of rice.

Miller’s voice

As per the millers it is not It‟s not feasible for them to sell rice at Rs.20,” contends Hyderabad

Millers Association vice-president Y. Shankar Reddy. He says it would be better if the

government enhances the price from Rs. 20 to Rs. 24.

Exponential Growth rates of wholesale price index some important agricultural

commodities.

Crop Period 1981-01 Period 1981-91 Period 1991-01 Chow Test F-

Values

Rice 3.6314* 2.699* 3.9583* 16.8533*

Wheat 3.278* 2.4401* 3.8563* 20.6862*

Pulses 4.2586* 4.3046* 3.7245* 0.90878

Tea 3.417* 4.3953* 2.7281* 1.3328

Raw Cotton 3.7844* 2.4764* 2.9401* 7.4794*

Jute 3.3946* 4.2647* 3.0681* 0.6699

Sugar 3.1176* 2.1267* 3.2858* 2.4548*

Edible Oils 2.9866* 3.7683* 1.052* 18.3388

Cotton Yarn 4.2851* 3.4688* 4.027* 2.4125

* significant at 5 % level of significance.

Source: Computed using data from Indian Agriculture in Brief,2000


CHAPTER VIII Summary and Conclusion

Major constraints for improvement of the livelihoods/income of small and marginal rice

producers is the lack of knowledge about prices, quality parameters, sustainability aspects of

rice production and lack of lobbying power. There is more number of agricultural laborers

including a significant number of women than cultivators. Lack of local earning sources force

them to migrate to other areas. There is a need to lobby for their wage rights while being

sympathetic to the labour needs of small and marginal farmers. Planning activities that may

enhance their capability to earn more will go a long way in ensuring food security of this

vulnerable group. Organic rice production and manual processing of rice may help to generate

employment to the poor and particularly woman.

Conclusion

The major problems in rice cultivation seem to be high water and chemical usage, and the

resultant ecological and economic crisis. Ecological/organic farming methods are proven to

sustain production and provide better margins to farmers

Organising farmers and moving them up in the value chain has shown to be bringing in

additional benefits to the farmers.

The current support systems do not support sustainable production models. There is an

urgent need to make the shift.

The GM rice poses new threat to rice cultivation in the country. The contamination reports

from US and other countries already show the scale and range of the problem. As the

country of origin of rice, India should abandon the GM rice, as better rice varieties are

available in the existing traditional varieties.

The major change that has happened recently is increase in cost of labour i.e. Rs.4000 on an

average/ per acre.

There is severe power crisis that needs to be addressed as most of the paddy cultivation is

irrigation through bore-wells

We need to promote the participation women in supply chain and there is shift towards

collective decision making from men alone taking decision


There is increase in cost of cultivation and increase in pesticide prices and it is the time to

promote organic method of cultivating paddy with increasing organic matter in the soil to

prevent ecological issues like methane emission

Promotion of SRI , Dry paddy cultivation to reduce the usage of water in the rice fields

Organizing the farmer cooperatives and arranging finances for holding, processing and

selling paddy on better price by the farmer collectives

To Sustain the rice production system we need to shorten the rice chain and as per the study

the share of farmer in the regular system is only 33% but in case of Farmers directly selling

or farmers cooperatives marketing rice

Due to lack of market information regarding prevailing prices, arrivals etc., most of the

producers market the paddy/rice in the village itself, which deprives them of getting

remunerative returns

Generally, the price of paddy/rice goes down in the post harvest period (3-4 months

immediately after harvest) due to heavy arrivals in the market and later shoots up, which

results in unstable prices.

Grading of paddy/rice at producers‟ level ensures better prices to producers and better

quality to consumers. However, most of the markets are lagging behind in providing grading

service at producers‟ level

To avoid the distress sale, storage facilities in villages are found to be inadequate. Due to lack

of storage facilities at rural stage, substantial quantity is lost.

Providing better access to credit to farmers to reduce dependence of money lenders

Lack of market finance is one of the major marketing problems in the smooth running of

marketing chain.

Most irrigated rice cultivation is highly chemical input intensive and there is a need to

increase efforts to make production practices sustainable.


References

Department of Agriculture & Cooperation Andhra Pradesh

FAO

Center for Sustainable Agriculture

Rythuvani Oct‟2007

Directorate of economics and statistics

Department of Food and public distribution

APMC Bhonagir

www.agmarknet.in

Rice Vision Vol-5 Issue-7 Feb‟2008

Rice-P.V. Subbaiah Choudary, Advisor,CIFA, S.M. Ahamed Ali Director-Institutional

Development, FFA

Annual Report 2007-08, Ministry of Food Processing Industries GOI

http://www.agmarknet.in/


Annexure

I. Procurement of Rice under MSP by Govt. in Andhra Pradesh

Procurement of Rice under MSP by Govt. in Andhra Pradesh (Fig in '000 tonnes)

State 2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

2009-

10

Andhra

Pradesh

6425 2635 4230 3906 4971 5328 7597 9061 4471

Tamil Nadu 852 107 207 652 926 1077 969 1199 981

West Bengal 48 126 925 944 1275 642 1429 1667 977

Chhattisgarh 1921 1291 2374 2837 3265 2865 2743 2848 3069

Source: Department of Food and Public Distribution.


II. Minimum support price of paddy (Rs/quintal)

Kharif Crop (According to Crop

year)

As on 10.06.2010 (Rs.

per quintal)

Commodity Variety 2004-

05

2005-

06

2006-

07

2007-08 2008-

09

2009-

10

2010-11

Paddy Common 560 570 580 645/850 850 950 1000

Grade

'A'

590 600 610 675/880 880 980 1030

Source: Directorate of Economics and Statistics, Department of Agriculture and Cooperation


III. Share of Various Countries in World Production of paddy

Year 2008

COUNTRY Production % Share

World 685013 100.00

China 193354 28.23

India 148260 21.64

Indonesia 60251 8.80

Bangladesh 46905 6.85

Viet Nam 38725 5.65

Myanmar 30500 4.45

Thailand 30467 4.45

Philippines 16816 2.45

Brazil 12100 1.77

Japan 11029 1.61

Pakistan 10428 1.52

USA 9240 1.35

Egypt 7253 1.06

Cambodia 7175 1.05

Korea, Republic of 6919 1.01

Nepal 4299 0.63

Nigeria 4179 0.61

Sri Lanka 3875 0.57

Iran 3500 0.51

Madagascar 3000 0.44

Source: FAO, Regional Office for Asia and the Pacific, Bangkok.


IV. All-India Area, Production and Yield of Rice along with coverage under

Irrigation

All-India Area, Production and Yield of Rice along with coverage under Irrigation

Area - Million Hectares

Production - Million Tonnes

Yield - Kg./Hectare

Year Area Production Yield Area Under

Irrigation (%)

2000-01 44.71 84.98 1901 53.6

2001-02 44.90 93.34 2079 53.2

2002-03 41.18 71.82 1744 50.2

2003-04 42.59 88.53 2077 52.6

2004-05 41.91 83.13 1984 54.7

2005-06 43.66 91.79 2102 56.0

2006-07 43.81 93.36 2131 56.7

2007-08 43.91 96.69 2202 56.9

2008-09 45.54 99.18 2178 NA

2009-10* 41.85 89.13 2130 NA

2010-11** 36.95 80.41 2177 NA

Source: Directorate of Economics and Statistics, Department of Agriculture and Cooperation.

* Fourth Advance Estimates as released on 19.07.2010.

** First Advance Estimates as released on 23.09.2010.

Note: The yield rates given above have been worked out on the basis of production & area

figures taken in '000 units.

Value Chain Analysis of Paddy in Andhra Pradesh

Business

production of paddy

value chain analysis

price of paddy

marketing of paddy

hyderabad page

total paddy value chain

paddy prices

rao director naarm