Why there is a case for Basmati as a paddy replacement in Punjab — despite no MSP and lower yield

In Punjab, nearly 30-31 lakh hectares (74 to 76 lakh acres) are dedicated to the rice crop (kharif season), out of which 25-26 lakh hectares come under paddy.

The area under Basmati crop has remained around 5 lakh hectares over the last several years. File

Crop diversification is a key issue in Punjab. The state has large areas under the water-guzzling paddy crop mainly on account of the assured returns to farmers in the form of Minimum Support Price (MSP) from the government and the high yield it offers. But the aromatic Basmati rice, which has fluctuating prices and no MSP, still offers hope as the best alternative to paddy. Here’s a look at the economics of growing Basmati.

How much area could be increased under Basmati?

In Punjab, nearly 30-31 lakh hectares (74 to 76 lakh acres) are dedicated to the rice crop (in the kharif season), out of which 25-26 lakh hectares come under paddy. The area under Basmati crop has remained between 4-5 lakh hectares over the last several years. Basmati’s early and late varieties are sown between June and July, and harvested in September and October.

Rice exporters say there is a huge demand for Basmati, and the state has the potential to grow it in vast areas. It is estimated by experts that at least 10 lakh hectares could easily be brought under the Basmati crop in the state, which will help reduce the area under paddy.

What is the yield of Basmati as compared to paddy?

Punjab grows both short-duration and long-duration paddy varieties. The average yield of short and long-duration paddy varieties is around 28 and 36 quintals per acre, respectively. Basmati, too, has long and short-duration varieties. The average yield of these varieties is between 20 and 25 quintals per acre — which is 8-10 quintals less per acre as compared to paddy.

The market for the crops

Paddy is procured by the Union government on MSP for distribution under the Public Distribution System. Basmati is neither procured by the government nor has any fixed price. It is procured by traders and exporters as Indian Basmati has large demand abroad.

What is the profit margin for each crop?

The MSP of paddy was Rs 2,060 per quintal in the 2022-23 kharif marketing season. The Basmati rate remains between Rs 3,200 to Rs 4,000 per quintal during September (for early varieties) and October-November (for late varieties).

Currently, its rate is Rs 4,600 per quintal as some farmers, who had held back some crops after harvesting, are now bringing it to the market, said Vinod Gupta, a Fazilka Mandi-based commission agent. He said that Basmati’s demand hardly goes down and its rate remains good. But, he added that local traders form cartels to give less to farmers and that the government must check such practices.

As per the MSP of paddy, a farmer could sell paddy worth Rs 57,680 to Rs 74,160 per acre depending on yield, Basmati could be sold for between Rs 64,000 to Rs 1 lakh per acre despite the lower yield. Last year, the average rate of Basmati remained between Rs 2,500 to 3,500 per quintal.

What are the benefits of the Basmati crop?

Experts say that 4,000 litres of water are required to grow a kilo of paddy. Basmati cultivation, on the other hand, is largely dependent on rainwater as it takes place during the main monsoon season. Even if some early varieties are sown in June, they are harvested at least a month before the main basmati and paddy varieties, thus saving water. Basmati cultivation can also reduce stubble burning — farmers use its stubble for fodder.

“It hardly needs any pesticides. The state government bans the sale of around 10 pesticides during the Basmati-growing season for the past five years, which indicates that it does not need those chemicals. According to an estimate by the Punjab Agriculture Department, farmers spent Rs 200 to 250 crore less on pesticides on Basmati over the past five years since 2017-18 years. This is a big cut in costs,” said Ashok Sethi, Director of the Amritsar-based Punjab Rice Millers & Exporters Association, in an interaction with Basmati farmers.

What is the role of Punjab’s Basmati in the export market?

Basmati is a premier and heritage product of Punjab. It is known for its flavour, length and taste due to Punjab’s excellent weather, soil and irrigation (through river and canal water). Also, Punjab is among the states and Union Territories (Haryana, Uttar Pradesh, Jammu and Kashmir, Himachal Pradesh and Uttarakhand are the others) that have a Geographical Indication (GI) tag for Basmati.

The annual Basmati rice export from India is around 4 million tons (worth Rs 36,000 crore), out of which Punjab contributes between 35 to 40 per cent.

Is there any hurdle Punjab’s Basmati faces in the export market?

Experts said that despite the government’s efforts to ban pesticides during the basmati-growing season, several farmers have indulged in unnecessary and excessive usage of chemicals combined with fertilisers. Several shipments of such crops are rejected after landing on US and European shores, owing to strict health regulations.

How can the government increase the Basmati area in Punjab?

Some experts say the Union and state governments must encourage farmers by giving them a bonus of Rs 8,000 to Rs 10,000 per acre. Haryana gives bonuses to those who are growing crops other than paddy. They suggest several other measures: Good quality seeds, rice exporters’ collaboration with the Department of Agriculture, strengthening of canal/river water, and setting up of solar panels.

A testing lab has already been set up in Amritsar to help farmers. The government can help educate farmers about the judicious use of only authorised pesticides. Exporters also said that pesticides unregistered in the EU and the USA are freely available for sale in India, which needs to tighten regulatory control over the sale and distribution of such products.

Date: 16-Jan-2023