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Diesel & wages to push up food inflation -Mayank Mishra
-The Business Standard


A delayed monsoon has forced farmers in Western UP to use alternative sources of irrigation, incurring 25-30% extra costs

Saharanpur/Muzaffarnagar (UP): If the latest inflation reading at eight per cent, largely fuelled by near double-digit food inflation, has left us worried, get ready to pay even more for food in coming months.

Though the monsoon deficit has reduced to only 17 per cent, the rise in input cost might result in a further rise in food prices. A delayed monsoon forced farmers to use alternative sources of irrigation, incurring 25-30 per cent extra costs.

Western Uttar Pradesh, considered a key agricultural zone, had a rainfall deficit of 47 per cent till the first week of August. But the net sown area in paddy and sugarcane fell 10 per cent and 15 per cent, respectively. "Diesel prices have gone up significantly in the past one year. Pesticides cost a lot more now. Even the price of urea has increased. And, wages have gone up considerably. We will be lucky to recover costs, given the current state of food prices," said Naresh Tikait, chairperson of the Bharatiya Kisan Union.

Twenty-six districts of western Uttar Pradesh account for the bulk of sugarcane production in the state and the region is a significant contributor to the central rice pool. Sugarcane accounts for nearly 57 per cent of the total net area sown in the region, followed by rice, particularly basmati, at slightly over 18 per cent. The region is also known for fruits, vegetables and pulses.

While most farmers Business Standard spoke to do not share Tikait's pessimism, they do, however, concede the two major drivers of costs - diesel prices and wages of farmhands-could push prices of food higher.

"In some areas, wages have gone up from Rs 225 to Rs 275 a day. In areas where farmers are unable to pay the inflated wages, labourers ask for animal fodder as extra compensation. In some areas, workers have reduced hours if they do not get higher wages," said Veer Singh of Khedi Duddadhal village in Muzaffarnagar district. Other farmers sitting nearby nodded in agreement.

Factors like the village jobs scheme, rations to the poor and a decline in labour migration due to prolonged communal disturbances have pushed up farm wages considerably this year. "It is a chicken-and-egg situation. Farm wages are going up because inflation is high. And, food prices increase because labour cost is constantly rising. Whenever the state advised price of sugarcane or the minimum support price of other items go up, labourers are the first to demand disproportionate raises. Since there is a shortage of labour, we don't have a choice. Mechanisation is not an option because it is capital intensive," said Rajpal Singh, a farmer in Shaharanpur. He added labour costs had already increased by 25 per cent this year and might go up further during harvest if the price of basmati rice goes up.

Another contributor to higher input costs is the nearly 15 per cent rise in the price of diesel since August 2013. According to farmers, the cost of irrigating farms using diesel-run generators works out to be four to five times more than tube-wells.

According to farmers, the cost of irrigating a hectare of land with power supplied by state utilities works out to Rs 600-900. Erratic power supply makes this a limited option. The cost goes up to Rs 3,000-4,000 a hectare with generators.

"Another factor is the consistent dip in the water table in the region. This means more generator hours," said Dheeraj Latiyan of Budina Kala village. He runs a primary school to supplement his farm income.

Increased irrigation costs escalate the cost of production of a quintal of sugarcane by Rs 50 and basmati rice by Rs 200 a quintal, according to farmers. With other key states like Punjab and Haryana also facing deficient rainfall, input costs of several food items are likely to be significantly higher this year.

Farmers are apprehensive about the likely fall in productivity because of less than normal rain. "Less rain means less than normal level of humidity. Kharif crops need a certain level of humidity," said Tikait. As it is, the sugarcane yield at 55 tonnes a hectare in Uttar Pradesh is 10-12 tonnes less than the national average.