The real price of paddy

Two farmer suicides in Kerala have brought into focus the red tape-ridden, lax government system of crop procurement and payment. The distress is felt across rice-producing areas and is a problem that runs deep, with land under the crop’s cultivation and production itself dropping, find Sam Paul A. and Abdul Latheef Naha

Updated - February 08, 2024 04:03 pm IST

Published - November 17, 2023 09:24 am IST

Dashed hopes: The family of K.G. Prasad at his cremation site at Ambedkar Colony, Kuttanad, Alappuzha

Dashed hopes: The family of K.G. Prasad at his cremation site at Ambedkar Colony, Kuttanad, Alappuzha | Photo Credit: Suresh Alleppey

Trigger warning: The following article has references to suicide. Please avoid reading if you feel distressed by the subject. 

A tiny, discoloured house with a leaking asbestos sheet roof stands on five cents of land at Ambedkar Colony, Thakazhi grama panchayat in Kerala’s paddy-rich Kuttanad region in Alappuzha district. A plank of faded plywood serves as its main door. A small crowd has gathered around the house as it has been two days since the family’s breadwinner, K.G. Prasad, 55, a paddy farmer, took his life after he failed to obtain an agriculture loan for rice cultivation.  

Omana, his wife, still reeling from the shock of her husband’s passing, sits on a worn sofa in the unlit interiors of their home, as her children stand by with grit and confusion writ large on their faces.  

Prasad, who had been growing paddy for 25 years for a living, ended his life on November 11. Banks had allegedly denied him a loan citing a low CIBIL score, a number based on loan repayment and credit history, determined by the Credit Information Bureau (India) Limited. In a note believed to have been written by him, he accused the Kerala government and three banks of pushing him to take the extreme step. He was the district president of the Bharatiya Kisan Sangh, a Sangh Parivar organisation.  

Prasad’s death has triggered widespread protests and angered the farming community at large. Paddy farmers see him as a victim of the government’s flawed procurement policy, which often results in delayed procurement of harvested paddy and payments.

Paddy procurement in Kerala has been going through uncertainty since the pandemic. Supplyco or the State Civil Supplies Corporation, the nodal agency for paddy procurement in Kerala, has been involved in the process since 2005. Once the paddy is procured, payments to farmers are made, in most cases, from banks under the paddy receipt sheet (PRS) loan scheme for which the Supplyco stands guarantee.

PRS is a receipt issued by Supplyco, on purchase of paddy from a farmer. The system allows the farmer to take a loan equivalent to the price of his paddy by producing the receipt sheet at a select commercial bank. Later, the government repays the amount with interest to banks. This arrangement was introduced to avoid payment delays involved in securing the Central and State government shares.

Two months ago, another paddy farmer K.R. Rajappan, 88, from Vandanam in Alappuzha, ended his life following a delay in getting the price of paddy from the government. According to a relative, Rajappan had been visiting the banks to get the remaining ₹1.14 lakh for paddy procured from his land. Financial distress, coupled with health issues in his family, drove him to take the extreme step, says the family.

The payment cycle  

Hours before he died, Prasad called a friend to tell him that he had received the paddy procurement price for the last (2022-23) puncha crop season — between November and April — from a bank as post-harvest credit on the production of the PRS. “It is the government’s responsibility to repay the PRS loan with interest to the bank [as per the norm]. But since it failed to fulfil its responsibility, it affected my CIBIL score. When I approached banks for a fresh loan, they denied it. I have no money to buy fertilisers this season. I have failed in my life,” Prasad is heard telling a friend in a voice clip of a telephone conversation that was circulated on social media after his death. 

In his purported suicide note, Prasad mentions a mortgage loan taken in 2011 for agricultural purposes from a nationalised bank and closing the loan under a ‘one-time payment scheme’ offered by the bank in 2020 after defaulting on the loan. At a paddy polder less than 2 km from the Ambedkar Colony, where Prasad owns 60 cents of land, ready-to-harvest golden yellow rice plants with a reddish awn sway in the wind. Besides cultivating paddy in the additional crop season (June to November), Prasad, last week, planted paddy seedlings on 3.5 acres of land taken on lease at another polder in Thakazhi in the puncha crop season.

“Earlier he used to cultivate paddy on up to 9 acres in two seasons every year. Despite suffering repeated crop losses due to floods in recent years, he continued to cultivate rice, though on a reduced scale. Sometimes he borrowed from moneylenders at exorbitant interest rates. He repaid them when the government paid the procurement price after the end of crop seasons,” says Prasad’s wife Omana, an MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) worker. She says after the last puncha season, Prasad had to wait several months to receive the procurement price. Recently, when he approached the banks for an agricultural loan for buying fertilisers for the puncha season, they refused to lend. 

Arguing the case 

Until 2021, the farmers were given money within two months. However, in the last two years, Supplyco fumbled with payments to farmers, after banks denied loans following its failure in repaying previous PRS loans on time. As crisis loomed, the government formed a consortium of banks to carry forward the PRS loan scheme. In the last season, after a delay of several months, the farmers were paid for their paddy through PRS loans again.

The National Farmers Protection Committee (NFPC) alleges that the delay was due to the State government’s mismanagement. “The problem started with the Supplyco plunging into a financial crisis following the free food kit distribution. It had to divert funds to pay the suppliers,” says Pandiyode Prabhakaran, general secretary, NFPC. “We want the Central government to pay the farmers directly,” he said. But Supplyco officials are tight-lipped about the reason for the crisis.

According to Food and Civil Supplies Minister G.R. Anil, the Centre owes Kerala ₹637.6 crore as its share of procurement price from previous years. However, the Central government officials are of the view that they are holding the amount because the State has yet to furnish the accounts for the paddy procured in the last few years. The State government also owes money to Supplyco.  

Soon after Prasad’s death, the Minister said the PRS loan dues had not affected Prasad’s CIBIL score. He said Prasad had been paid for the paddy procured from him in the 2021-22 season and the PRS loan made available to him in lieu of the procurement price was repaid to the bank. In the 2022-23 season, as much as 4,896 kg of paddy was procured from him and the procurement price of ₹1,38,655, was given to him under the PRS loan scheme. The loan repayment date was not yet due, the Minister contended.  

Though the government maintains that farmers taking PRS loans do not incur any liability, banking experts say that banks consider farmers borrowers and if the government delays repayment, it will affect farmers’ CIBIL ratings. “We have signed many papers saying that we will be responsible for repayment default. It will certainly reflect on our potential borrowings,” says Desiya Karshaka Samajam (DKS) president Muthalamthodu Mani.  

As uncertainties persist over procurement of paddy harvested in the current season, nearly 25% of farmers in Palakkad, the traditional rice bowl of Kerala, and other districts have sold their produce to private mills at lower prices with many selling for as low as ₹18 a kg, as against the current procurement price of ₹28.20 a kg.

Although there was a gradual increase in the minimum support price given by the Central government in the last several years, the farmers have not benefited from it as the State government slashed its share in proportion to the Centre’s addition. “Paddy farmers cannot be blamed if they turn against the State government. Instead of listening to their long-pending demand to raise the procurement price to ₹35 a kg, the State government took away what is due to the farmer from the Centre’s share,” says Prabhakaran of the NFPC.  

In 2022, the procurement price was ₹28.20 with the Centre giving ₹20.40 and the State chipping in with ₹7.80. And today, even as the farmer gets ₹28.20 a kg, the State’s share has reduced further to ₹6.37. In other words, when the Centre increased ₹2.43 in the last couple of years, the State government reduced as much from its share. The State is making away with the ₹2.43 hiked by the Centre for a kilogram of paddy, the farmers say. “The government will have many arguments to offer. But we are losing ₹2,430 per tonne,” says Krishna Kumar, a farmer from Alathur near Palakkad.  

Food growth at stake 

The Kuttanad wetland system, which is part of the Vembanad wetland system, is known for the cultivation of paddy at 1-2 metres below sea level on land created by draining delta swamps in brackish waters. Farmers in the region, spread across the districts of Alappuzha, Kottayam, and Pathanamthitta, face severe distress due to climate change and paddy procurement problems.  

P.A. Thomas and other farmers of the 85-acre Mulavanakari paddy polder at Muttar in Kuttanad are engaged in field preparation activities with sowing for the puncha season planned for next week. “The present crisis is unlike any other. In a place like Kuttanad, the threat of flood and drought persists every season. Last puncha season I cultivated paddy on 14 acres at two different places and harvested the crops in March and April. While I received the procurement price for the paddy harvested in March as a PRS loan without delay, I had to wait till last month to receive the price of the other crop. The government is making a mockery of paddy farmers,” says Thomas, 61, who is also the secretary of the Mulavanakari paddy polder.  

According to a report by the Department of Economics and Statistics, the paddy cultivation area in Kerala declined by 39% and rice production by 20% between 2001-02 and 2021-22. The area under paddy cultivation fell from 3.22 lakh hectares to 1.96 lakh hectares, and rice production from 7.04 lakh tonnes to 5.62 lakh tonnes in this period.

With paddy cultivation turning bitter for farmers, many are quitting the sector. Suresh M.U., Anujith Udayakumar, and John Joseph returned to their native Kuttanad from West Asia during COVID-19. They tried their luck in paddy farming at the 30-acre Kallepuram Vadake paddy polder in Thakazhi but found it to be a misadventure. “We cultivated paddy thrice between 2021 and 2022. Floods and drought resulted in crop losses to the tune of ₹20 lakh in the three seasons, and we decided that enough is enough,” says Suresh.  

“It is a matter of major concern for Kerala. It is a dream for any State to achieve self-sufficiency in food. But Kerala unfortunately has no such dream. The State needs 40 lakh tonnes of rice a year. But it produces much less. The government wants its people to be dependent on the rice coming from other States forever,” says Mani of the DKS.  

Back in Thakazhi, an eerie silence lingers in the living room of Prasad’s small house. Life ahead is an unanswerable question for Omana, who must shoulder all the responsibilities alone now. “We are going through financial distress, including missing home loan EMIs, but I didn’t expect him to do this,” she says, her voice trembling.  

(If you are in distress, please reach out to these 24x7 helplines: KIRAN 1800-599-0019 or DISHA – 0471-2552056, 1056)

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