Introduction

This note analyses the impact of the Covid-19 pandemic on the production and cost of cultivation of crops grown in the monsoon (kharif) season. The note is based on a survey of 164 informants from 26 villages across 13 States of India. The survey, conducted by the Foundation for Agrarian Studies (FAS) between mid-September and mid-October, 2020, was based on telephone interviews.¹ Detailed socio-economic surveys of 24 of these villages have been conducted by the FAS over the past decade under a programme of village studies titled the Project on Agrarian Relations in India (PARI). In addition, in 2020, interviews were conducted in two village panchayats, Adat and Tholur, in Thrissur district, Kerala.

The 26 villages are drawn from a diverse cross-section of villages in India. Based on previous survey data, a socio-economic classification of households was undertaken for all the PARI villages. Sample households were selected from the FAS database. In Kerala, two village panchayats were surveyed by Deepak Johnson of the Economic Analysis Unit, Indian Statistical Institute, Bangalore, in 2018–19. Of the 164 informants, 22 were from landlord/rich capitalist farmer households, 36 from rich/middle peasant households, 45 from poor peasant households, 38 from manual worker households, and the remaining 23 from households engaged in business and other non-agricultural activities. In the Kerala villages, two informants were interviewed from each of the following groups: households with operational holdings of less than 1 ha., of 1–2 ha., and of more than 2 ha.

The interviews were conducted with the full consent of the informants. The questions in the interviews sought primarily to understand the effects of the pandemic on agricultural production, employment, income, and food security in rural India.

Survey Villages

The survey villages represent diverse agroecological regions with varied levels of economic development (Table 1 and Figure 1). The villages are also characterised by different agricultural production systems and agrarian relations.

In villages with a high share of irrigated area, public canals are the predominant source of irrigation in Ananthavaram in Guntur district of Andhra Pradesh, Alabujanahalli in Mandya district of Karnataka, Gharsondi in Gwalior district of Madhya Pradesh, Tehang in Phillaur district and Hakamawala in Mansa district of Punjab, Kothapalle in Karimnagar district of Telangana, Palakurichi and Venmani villages in Nagapattinam district of Tamil Nadu, and Harevli in Bijnor district and Mahatwar in Balia district of Uttar Pradesh. These villages fall under the command areas of different canal irrigation systems. However, groundwater irrigation is also used as supplementary irrigation for cultivation, particularly in the rabi season. The two villages surveyed in Kerala fall in the low-lying, kole wetland region and are irrigated by canal.

Groundwater is the main source of irrigation in the surveyed villages of eastern India (Katkuian and Nayanagar in Bihar and Panahar, Amarsinghi, and Kalmandasguri in West Bengal) and in Nimshirgaon in Kolhapur district of Maharashtra. Water lifted from rivers using diesel or electric pumps is the main source of irrigation for lowland cultivation in Mainama (Dhalai district) and Muhuripur (South Tripura district) in Tripura.

When socio-economic surveys were conducted under PARI, the share of irrigated area in total gross cropped area (GCA) was less than 10 per cent in Bukkacherla, Zhapur, Warwat Khanderao, and Khakchang. In Siresandra and Rewasi, the share was around 50 per cent. The sources of irrigation were tubewells, and cultivation depended on monsoon rains.

Kharif Cultivation During the Pandemic

Of the 164 respondent households in the sample, 129 households farmed land during the kharif season.

In villages where irrigation was greater than 50 per cent of GCA, rice was the main kharif crop (Table 2). Some villages also had perennial crops sown in the kharif season. For instance, sugar cane was the important crop in Katkuian and Nayanagar in Bihar, Nimshirgaon in Maharashtra, and Harevli in Uttar Pradesh. In the other villages, the crops were more diversified with different pulses and millets mostly grown in the kharif season (Table 2). For instance, finger millet was the main crop in Siresandra in Karnataka; lentil, sesame, and groundnut in Zhapur in Karnataka; and pearl millet, cluster bean, and green gram in Rewasi in Rajasthan. In Warwat Khanderao, Maharashtra, cotton was the main monsoon crop along with different pulses. Jhum or slash-and-burn cultivation was the main agricultural activity in Khakchang, Tripura, during the monsoon. In the two villages surveyed in Kerala, only banana was grown in the kharif season. The main crop in these two villages was lowland rice, cultivated in the rabi season.

Increase in Area Sown

The official estimate showed that there was an increase in the area sown in the current kharif season (2020–21). The area under kharif crops in 2020–21 was 1116.88 lakh hectares, an increase of 4.8 per cent over 2019–20 (according to a statement issued on September 25, 2020).² The higher acreage in 2020 has been attributed to a good and timely monsoon. The area under rice cultivation, the main kharif crop, was recorded at 407.14 lakh hectares, 5.6 per cent higher than in the previous year. At the same time, the area under oilseeds increased by 9.8 per cent, followed by a 4.1 per cent increase in the area under pulses and a 1.2 per cent increase in the area under coarse cereals. However, there was a marginal decrease in the area under sugar cane, jute, and cotton cultivation in 2020–21, as compared to the previous year.

In this regard, three observations are particularly relevant. First, region-specific factors (combined with a generally good and timely monsoon) contributed to the increase in area under cultivation. In Bihar, for example, there was a distress-driven return to farming during the pandemic year. In the two villages in northern Bihar where labour outmigration, especially from households of landless workers, is traditionally high, many migrant workers did not return to the cities for work during the lockdown. Instead, they leased small plots of agricultural land for personal cultivation. In Nayanagar (Samastipur district, Bihar), a Scheduled Caste migrant worker informed us that for the first time in his life, he had leased 0.4 acres (10 cottah) to cultivate rice for family consumption.

Secondly, a capitalist farmer from Tehang village in the Doaba region of Punjab told us that, because of the increase in costs of cultivation during the pandemic, he leased in an additional five acres of land in order to increase his total income.

Thirdly, in canal-irrigated villages, the good monsoon helped to increase the area sown on previously fallow or uncultivated land. In Palakurichi and Venmani villages in Nagapattinam district, Tamil Nadu, kharif cultivation entirely depends upon water being released from the Mettur Dam on the Cauvery river. A rich peasant from Venmani said: “After almost 11 years, the farmers were able to cultivate the kuruvai [a short-duration rice crop] because the Mettur Dam was opened in early June in this year.”

Increase in the Cost of Cultivation

The survey data also show that, while there was an increase in the area sown, there was also a sharp increase in the cost of cultivation of several kharif crops across all States. This was on account of increases in the cost of material inputs (seeds, fertilizers, and pesticides), machine use, and hired labour.

Increase in the Costs of Material Inputs

Although not widely reported across classes and regions, there was an increase in the input costs of seeds, fertilizers, and pesticides in 2020 over the previous year (Table 3). A poor peasant from Ananthavaram village, Guntur district, Andhra Pradesh, reported that, because of limited stock in the local inputs shop, the per-acre cost of fertilizer for rice in 2020 had gone up to Rs 1,300 from Rs 1,150 in the previous year. In the two villages in Bihar, shortage of urea supply resulted in an increase in urea prices from Rs 350 per 45-kg bag to Rs 400 per bag. Farmers from Hakamwala village in Punjab told us that the price of cotton seed had increased by Rs 50 per packet in the lockdown period. Respondents attributed the increase in the costs of inputs to disruptions in the supply of inputs during the lockdown.

Hike in the Price of Diesel

The increased cost of cultivation in 2020 is associated with a hike in diesel prices, which significantly pushed up cultivation costs across States. The price of diesel in Punjab rose in June from Rs 62.03 to Rs 71.98 per litre, an increase of 16 per cent in a month. June is normally the busiest time for land preparation, irrigation, sowing and transplanting, and plant protection (all mechanised operations), and farmers incurred higher costs at the beginning of the season this year. Marginal and small peasants, who comprise the majority of those who hire machines for these operations, were also disproportionately affected. For instance, the survey shows that the increase in cost of hired machines for ploughing ranged from 10 to 50 per cent more than in the kharif season of the previous year (Table 4).

Similarly, the cost of irrigation increased significantly for poor peasants in the villages where diesel-operated pumps are the primary means of irrigation. A landless manual worker from Katkuian village (West Champaran district, Bihar), who leased in one acre of land for rice cultivation this year, said that

rental payments for the pumps increased because of the increase in the price of diesel this year. As a result, the cost of irrigating my rice crop increased to Rs 5,500 an acre in this year. The cost was Rs 3,500 an acre in the previous year.

Increase in Wage Costs

Another important source of the increase in cost of cultivation was the increase in the cost of hiring labour in the kharif season. Two patterns emerged from the survey. First, the increase in the cost of hiring labour varied by region. The increase in wage rates was higher in relatively well-irrigated regions than in relatively dry regions (Table 5). This is because rice cultivation, which is labour-intensive, predominated in these irrigated regions.

Secondly, classes responded differently to the increase in the cost of hiring labour.³ In Punjab, some large farmers shifted to mechanised operations during the sowing and transplanting of kharif rice, whereas relatively smaller farmers were unable to shift to mechanised operations because of high rental costs. In Tehang, Jullundur district, Punjab, AS, a big capitalist farmer, grew rice over a larger area than before and shifted to direct seeding of the crop. Hiring or buying the machinery for this involved an additional cost, which a large farmer could afford, and AS adopted the technology to avoid losing sowing days during the season. On the other hand, small peasants in several States expressed concern about the high costs of hiring machinery.

In many rice-growing areas, farming is heavily dependent on migrant workers. In the case of Punjab, agricultural labourers from Bihar and eastern Uttar Pradesh are employed for these operations, whereas in Ananthavaram, a coastal village in Guntur district of Andhra Pradesh, inter-district migrant workers are employed for sowing.

As Table 5 suggests, the increase in the cost of hired labour, as reported by farmers in regions that are relatively well irrigated, resulted in an overall cost increase. However, this increase varied across regions. In Ananthavaram, Guntur district, Andhra Pradesh, wages for sowing and transplanting rice rose from Rs 3,500 the previous year to Rs 4,500 this year. This increase was not entirely paid out to labourers, as reported by a large farmer in the village, as it included the cost of transportation of seedlings. In Tehang, in the Doaba region of Punjab, the increase in cost of rice transplantation was much higher, Rs 2,000 per acre.

The increase in wage costs was less in villages where farmers had already been hiring local labourers in the pre-pandemic period. In Alabujanahalli village, Mandya district, Karnataka, the cost of transplanting rice increased by Rs 200 per acre. Respondents from Hakamwala in Punjab, where the practice of hiring local labourers from the village was already in place, reported an increase of Rs 500–600 per acre in the amount paid as wages.

Bukkacherla in Andhra Pradesh, Nimshirgaon in Maharashtra, and Panahar in West Bengal, all of which depend on labourers from neighbouring villages or districts, also faced labour shortages, which then drove up the wages of hired labourers during the pandemic period. A landlord from Panahar village in Bankura district, West Bengal, reported that workers from the western part of the State who traditionally transplant and harvest rice did not come this year because of the lockdown and fear of infection. The cost of hiring local labourers on piece-rated wages for rice transplantation increased by Rs 300 per acre. In Muhuripur village, Tripura, because of the absence of migrant labourers from Bangladesh, a similar situation was observed.

In contrast, many workers who migrate from Katkuian and Nayanagar in Bihar and Amarsinghi in West Bengal for agricultural and non-agricultural work returned to their villages during the pandemic. This ensured an abundant supply of workers for agricultural operations in these villages. The rich peasants of these villages reported that there was a marginal increase in the wage rate for rice transplantation, mainly because of the urgency of completing the task. Poor peasants used family labour and exchange labour to complete agricultural operations. AR, a poor peasant from Nayanagar in Bihar, reported that he used exchange labour to transplant rice on their half-acre plot of land.

Supply Chains and Output Prices

The Covid-19 pandemic had an adverse impact on an agricultural sector already burdened by a poor marketing system. Agricultural supply chains were affected severely during the lockdown (Ramakumar 2020). Rawal and Verma (2020) reported that the number of operational mandis reduced during the rabi crop selling period, i.e., April 2020. There was a decline in the total quantity of rabi produce sold when compared to the same marketing period in 2019. This evidence of disruption in the agricultural supply chain has three broad facets. First, the current survey reveals that there was an extremely high increase in the cost of marketing for cultivators during the lockdown due to increased transportation costs. Secondly, in the study villages in Bihar and Madhya Pradesh, the prices of winter maize and wheat crashed, leaving small cultivators with low incomes. Finally, farmers faced an economic crisis following specific instances of heavy rainfall and crop failure, and therefore became dependent on higher amounts of loans before the kharif season.

Official data from Agricultural Marketing Information System Network (AGMARKNET) show that, even in regulated markets, particularly in 2020, more than 45 per cent of the major kharif crops were sold below the minimum support price (MSP).⁴

Realised Prices and Cost of Marketing for Farmers in the Rabi Season, 2020

A rapid assessment survey conducted by the FAS during the lockdown (April–May, 2020) showed that local markets collapsed, gravely affecting the sale of rabi crops by poor peasants. The disruption in the supply chain led to a slump in local farm harvest prices for most agricultural produce (Modak, Bakshi, and Jonson 2020). A huge crash in the prices realised by farmers along with increases in the cost of marketing were reported by several studies conducted in rural India (Reardon et al. 2020; Ceballos, Kannan, and Kramer 2020). In our study, we collected detailed information on sale of agricultural produce in the rabi season, including marketing agency, realised prices, and transport facilities. The data further established instances of severe price crash of certain crops during the lockdown, which has affected the lower rungs of the peasantry the worst. Table 6 reports the magnitude of the fall in prices for rabi crops across States. Two noteworthy points emerge. First, Punjab, where the presence of APMC mandis and implementation of MSP helped farmers realise better prices, performed better than other States. A serious lack of institutional mechanisms for marketing and dependence on local traders in several survey villages appear to have been crucial factors in the price decline. Specifically, the prices of maize and wheat, the two most important rabi crops, fell.

Secondly, the prices that farmers received for vegetables fell sharply in the survey villages in West Bengal and Tripura.

An increase in transportation costs also affected crop incomes in the rabi season. Marketing costs increased sharply because of the increased demand for motor vehicles to transport produce. In Hakamwala in Punjab, MS, a poor peasant farming three acres of land, does not own a tractor or trolleys with which to transport his produce to the nearby mandi. He reported that he hired ten tractor trolleys at a cost of Rs 500 each for two days to sell his produce – this increased his marketing cost by Rs 10,000.

Rise in Indebtedness/Informal Credit for Farming

Poor peasant and manual worker households across the study villages reported that they had taken loans to meet increased costs of cultivation in the kharif season. The loans were taken from input dealers, moneylenders, local traders, and others at interest rates ranging from three to six per cent per month. There have been instances of farmers being denied formal loans (such as Kisan Credit Card loans) because they could not repay previous loans taken during the lockdown. A poor peasant from Nayanagar village in Bihar had this to say:

I have taken a loan of Rs 16,000 from a merchant and input dealer at a four per cent monthly interest rate. The interest rate of informal loans increased to four from three per cent this kharif season, because many poor people are seeking credit these days.

A poor peasant from Ananthavaram village in Guntur district of Andhra Pradesh reported:

I usually take an advance of Rs 20,000 from the private trader at the beginning of the kharif crop season. This year, maize production was very low, and so I had to take additional loans to cover the expenses of kharif crops.

In contrast, landlords and rich capitalist farmers and rich peasants were in a better situation – most managed to get loans from commercial and cooperative banks, besides meeting additional expenses from their own savings.

Conclusion

There are three main findings of the survey. First, there was an increase in the acreage and output under kharif crops in 2020–21. This increase was, first, because of good and timely rainfall, and secondly, many households, including those with migrant-worker earnings in a normal year, returned to farming during the pandemic year, leasing in small plots of land. Thus, in some areas, the increase in acreage and output in kharif production was driven by the loss of work for migrant labour. Secondly, increases in costs of inputs, diesel, and hired labour significantly increased the aggregate cost of cultivation of kharif crops. Lastly, the increase in MSP between 2019–20 and 2020–21 for kharif crops (for instance, 3 per cent for rice, 5 per cent for cotton, 2–4 per cent for different pulses, and 5 per cent for oilseeds) did not compensate for the increase in the cost of cultivation of kharif crops. As a consequence of increased costs and a less-than-adequate increase in output prices, farm households will not reap the full benefits of increased production this kharif season. In fact, incomes may actually be less than in the previous year. A heavily indebted class of poor peasants who are primarily dependent on informal credit is also under severe income distress.

If higher levels of foodgrain production are to translate to higher farming incomes, input prices must be further regulated, more formal credit disbursed to farmers, and higher procurement prices assured to them.