India's food security depends vitally on wheat and rice production in Punjab, which contributes more than 50 per cent of the central pool of cereal stocks. The sustainability of wheat and rice production at the present scale in Punjab has been questioned by some experts, both on economic and ecological grounds. The evaluation of empirical evidence on economic and ecological aspects of wheat-rice cultivation in Punjab, however, shows that it is quite sustainable: the economics of rotation is sound, a growing domestic market is assured for the next few decades and the minimum support prices programme will continue in the foreseeable future. The returns are the highest among the competing crop rotation combinations and there is no imminent ecological threat. The fall in the water table has neither crossed the danger mark nor has the fall been caused by wheat-rice cultivation per se.
REVIEW OF AGRICULTUREEconomic & Political Weekly december 29, 200781Sustainability of Wheat-Rice Production in Punjab: A Re-examinationH S ShergillIndia’s food security depends vitally on wheat and rice production in Punjab, which contributes more than 50 per cent of the central pool of cereal stocks. The sustainability of wheat and rice production at the present scale in Punjab has been questioned by some experts, both on economic and ecological grounds. The evaluation of empirical evidence on economic and ecological aspects of wheat-rice cultivation in Punjab, however, shows that it is quite sustainable: the economics of rotation is sound, a growing domestic market is assured for the next few decades and the minimum support prices programme will continue in the foreseeable future. The returns are the highest among the competing crop rotation combinations and there is no imminent ecological threat. The fall in the water table has neither crossed the danger mark nor has the fall been caused by wheat-rice cultivation per se. The objective of this paper is to assess the sustainability of wheat and rice production in Punjab at the present scale. Sustaining wheat and rice production in Punjab at the present level is vital for country’s food security as more than 50 per cent of central stock of cereals is procured from this state. At present, about 80 per cent of sown area of the state is under wheat cultivation in the rabi season and about 60 per cent under rice in the kharif season. About 85 per cent of the value of crop output of the state is contributed by these two crops alone. The sustainability of this high degree of specialisation in wheat-rice monoculture is seriously doubted by some farm experts, both on economic as well as ecological grounds. They strongly plead for a massive shift of area out of wheat-rice rotation to other crops to create a diversified and sustainable cropping pattern in the state. The doubts on the sustainability of present level of wheat-rice production in Punjab have been mostly expressed in newspaper articles and government reports, but have never been examined systematically on the basis of empirical evidence. Moreover, a massive shift of area out of wheat-rice cultiva-tion in Punjab will not only adversely impact the food security of the country, but will also result in a big fall in Punjab farmers’ in-comes. That is why Punjab’s farmers are not willing to reduce the area under wheat-rice rotation, despite the incentives offered by the government. The purpose of this exercise, therefore, is to evaluate the empirical evidence on the economic and ecological sustaina-bility of wheat-rice cultivation in Punjab at the present scale. 1 Question on Sustainability: A Synoptic ViewThe economic viability of wheat-rice rotation in Punjab is supposed to have been undermined by the following three developments:(1) emergence of a marketing constraint due to the slow growth of domestic demand for cereals; (2) the minimum support prices (MSP) and assured purchase programme for wheat and rice be-coming unsustainable in the liberalised and globalised economy; and (3) the continuous decline in returns from wheat-rice culti-vation making it unprofitable for Punjab farmers.The ecological processes that are supposed to have eroded the sustainability of wheat-rice cultivation on the present scale are:(1) The continuous fall in groundwater level due to cultivation of wheat and rice on a rotational basis on almost the entire sown area in central Punjab; and (2) the soil fatigue and fertility fall caused by continuous cultivation of wheat-rice monoculture over the last four decades or so.The empirical evidence on and the reasoning behind these economic and ecological questions on the sustainability of Thanks are due to Pramod Kumar, director, IDC Chandigarh for provid-ing the research facilities to carry out this study and to Varinder for col-lection and processing of the data used here.Email: profshergill@gmail.com
REVIEW OF AGRICULTUREdecember 29, 2007 Economic & Political Weekly82wheat-rice specialisation in Punjab is evaluated to arrive at an integrated and holistic assessment on the long-term prospects of this rotation in the state. To keep the information base the same, most of the data used in this study are taken from state government re-ports [Johl 1986, 2002] that give the most comprehensive statementof the questions on the sustainability of wheat-rice specialisation. 2 MarketingProspects The doubts on marketing prospects of Punjab wheat and rice were first voiced in the mid-1980s and have persisted since then. The accumula-tion of surplus cereal stocks during 2001-03 with the Food Corporation of India (FCI) was presented as the fi-nal proof of the domestic market not being able to absorb wheat and rice produced by Punjab. A careful exami-nation of the empirical evidenceon the current and future demand-sup-ply balance of cereals in the coun-try, however, does not warrant any suchconclusion. The relevant facts on the current cereal balance pre-sented in Table 1 indicate that the growth of cereal production barely kept pace with the growth of popula-tion during the 1990s. These figures do not reveal any real surplus of cereals emerging in the country during the 1990s. The temporary accumulation of surplus food stocks with theFCI must be traced to other factors, and not caused by overproduction of cereals. The country continues to be barely self-sufficient in cereal production. Even this self-sufficiency is merely technical, because 20 crore Indians are still not getting enough food for want of purchasing power.The future marketing prospects of Punjab grains are also quite secure. The projections of demand for cereals for the year 2020 (given in Table 2) range from 223.6 million tonnes to 296.2 mil-lion tonnes. The estimates of availability of cereals from domes-tic production (summarised in Table 3) range from 222.0 million tonnes to 267.8 million tonnes. The message from the matching of these demand and supply projections is clear: by 2020, India will be barely self-sufficient in cereal production. There is thus little probability of the country having a glut of grains in the next few decades, and Punjab farmers not being able to find a market for their wheat and rice in the country itself. A thick and growing home market for Punjab cereals is quite assured. The misgivings on this count are unfounded.3 Viability of Minimum Support PricesSustainable commercial production of a farm product is condi-tional on farmers being able to sell their entire surplus produce at remunerative prices year in, year out. For the last four decades, this necessary condition for large-scale commercial production of wheat and rice by Punjab farmers has been ensured by the MSP programme run by the central government. But, the continuation of the MSP programme in the coming years is now seriously questioned by many experts. The following devel-opments are said to have made its continuation doubtful: (i) the mount-ing food subsidy bill of central govern-ment; (ii) the World Trade Organisa-tion (WTO) stipulations on farm sub-sidies and price support; (iii) mis-alignment ofMSP of wheat and rice with world market prices; and (iv) the comfortable food stock situation in the country. It is asserted that on ac-count of these developments the cen-tral government is no longer keen on continuing this programme. The slow growth ofMSP of wheat and rice dur-ing the 1990s, it is argued, is a clear indication of the lukewarm attitude of the central government towards theMSP programme.The empirical evidence on recent trends in realMSP of wheat and rice, and the realpolitik of food security in an overpopulated country, however, do not justify such misgivings on the continuation of the MSP programme. The trend regressions on realMSP of wheat and paddy for the 1991-92 to 2001-02 period presented in Table 4 (p 83) clearly reveal that the MSP of wheat and paddy grew faster than the general price level, and the realMSP of wheat and paddy increased at the rate of 1 per cent per year over this period. This improvement in terms of trade of wheat and paddy even in the new liberalised and WTO-conditioned economic environ-ment is a sure indication of the central government’s commit-ment to continue the MSP programme for sustaining wheat and rice production in the surplus producing states. The MSP pro-gramme is also not so incompatible withWTO stipulations. The WTO membership does not impose any compulsion per se to wind up theMSP programme for foodgrain. It can very well continue so long as the gross subsidy or aggregate measure of support (AMS) to the farm sector is less than 10 per cent of the value of farm output and price support is to ensure food security and not for dumping cheap grains in the world market. The misalignment thesis is also not supported by facts. The comparison of MSP of wheat and rice with the global prices [Ramesh Chand 2003: 89-91] shows that throughout the 1990s, theMSP of rice was lower than the world market price. Even the MSPof wheat was lower than the world market price in most of the years, except for the few years when the world wheat market had gone into slump. On the whole, theMSP of wheat and rice in India have remained quite in line with the world market prices of these grains.Table 1: Population, Per Capita Income and Cereal Production in India (1991 to 2001)Variable Description 1991 2001 % Change (1991 to 2001)Population (crore) 85.2 103.3 21.24Per capita income (rupees, at 1993-94 prices) 7212 10754 49.11Cereal production (million tonnes) 155.3 187.0 20.40Wheat and rice production (million tonnes) 129.0 155.0 20.20Cereal production per capita (kg/year) 182.35 182.06 -0.16Wheat and rice production per capita (kg/year) 152.0 150.0 -1.32Per capita availability of cereals (kg/year) 164.00 144.32 -12.00Per capita availability of wheat and rice (kg/year) 136.20 118.92 -12.69Source: Government of India,Economic Survey, various issues.Table 2: Demand for Cereals in India: Estimates for 2020Source of Estimate Estimated Demand For Cereals by 2020 (million tonnes)Mark W Rosegrant et al (1995) 237.3G S Bhalla et al (1999) 296.2Parduman Kumar 254.5US department of agriculture 267.0P S Rangi et al (wheat and rice only) 208.92 to 209.87R S Paroda 260.0 to 287.0R Thamarajakshi 274.0 to 287.0Tim Dyson and A Hanchata 223.6P C Bansal 241.35Cereals include wheat, rice and other grains.Table 3: Production and Availability of Cereals in India: Estimates for 2020(million tonnes)Source of Estimate Estimated Production EstimatedAvailability Mark W Rosegrant et al (1995) 256.2 237.0G S Bhalla et al (1999) 251.0 232.2Parduman Kumar 269.9 to 309.9 249.7 to 285.9US department of agriculture 240.0 222.0P S Rangi et al (wheat and rice only) 188.82 to 218.54 174.66 to 202.15Cereals include wheat, rice and other grains.
REVIEW OF AGRICULTUREEconomic & Political Weekly december 29, 200783The apprehensions on the sustainability of the food subsidy bill of the central government are the product of the failure to grasp the realpolitik of food security in a country like India. In spite ofits apparent big size, the food subsidy accounts for less than 5 per cent of the central government expenditure, and less than 1 per cent of country’s GDP. The contribution of food subsidy in the fiscal deficit of the central government, and its burden on the economy is rather marginal. It is unbelievable that a country with more than 100 crore people, of which 20 crore are poor, cannot afford to spend even 1 per cent of its GDP to ensure the food security of its population. The vital economic function of food subsidy in ensuring food self-sufficiency and food security is widely accepted; and the po-litical role of food security in ensuring the stability of the present regime is also acknowledged, albeit grudgingly. It is the food se-curity and political stability compulsion that ultimately makes the food subsidy bill bearable and the MSP programme for wheat and rice sustainable. The food security situation in the country will remain delicate in the coming few decades, hence the political compulsion for continuing the MSP programme will re-main in operation. The illusion of a comfortable food stock situa-tion has vanished and the grim reality of a difficult food balance has again manifested. One can say with considerable confidence that the compulsions of food security will ensure the continua-tion of MSPprogramme in the years to come. The sustainability of wheatandricecultivation in Punjab, therefore, is not endangered by the imminent discontinuation of the MSP programme in the near future. 4 ReturnsfromWheat-RiceRotationThe economic viability of a crop rotation combination is eroded if the real return per hectare it declines continuously overtime. The scales are finally tipped against it when the returns per hectare from a crop rotation combination falls below what can be obtained from alternative crop rotation combinations. The empirical evidence on both these aspects of wheat-rice cultiva-tion in Punjab is assessed in this section to determine its eco-nomic viability.4.1 RealReturns It has been repeatedly asserted that economic viabilityof wheat-rice rotation in Punjab has been eroded by the continuous decline in its real return per hectare since the early 1990s. For evaluating the empirical validity of this assertion, the widely accepted proxy for real return per hectare, the net financial return per hectareatconstant prices, is used. The estimates of the net re-turn per hectare (at constant prices) from wheat-rice cultivation for the 1990-91 to 2000-01 period are presented in Table 5, and do not reveal any decline in the real return per hectare over this period. Rather, the real return per hectare from wheat-rice rotation grew at the compound rate of 2.18 per cent per year; registering a total increase of about 24 per cent over this period (1990-91 to 2000-01). Furthermore, this growth in the real return per hectare from wheat-rice cultivation has been quite steady; only in two years out of 12, was there a dip in the real return per hectare. The proposition of declining real returns, during the decade of the 1990s, making wheat-rice cultivation unremunerative to Punjab farmers, therefore cannot be sustained in the light of ground level empirical evidence. 4.2 ComparativeReturnfromWheat-RiceRotationThe information on net financial return per hectare from the wheat-rice rotation and 10 other crop rotation combinations that can be grown as alternatives to it is given in Table 6. The substan-tial comparative advantage of wheat-rice rotation over its com-peting crop rotation combinations is quite evident. Even the best Table 4: Trends in MSP of Wheat and Paddy (Nominal and Real): Regression Results (1991-92 to 2001-02)Dependent variable Intercept Coefficient of R-Sqr Growth Rate Eq No (Log form) Time Variable (%/Year) MSP wheat 3.16 0.09 (10.01) a 0.93 9.42 1MSP paddy 3.36 0.08 (17.24) a 0.97 8.33 2MSP wheat deflated by GDP implicit price deflator 4.01 0.01 (1.97)a 0.33 1.04 3MSP paddy deflated by GDP implicit price deflator 4.26 0.01 (2.63) b 0.46 1.00 4(1) Figures in parentheses are t-values. (2) a, b indicate significant a 1%, 5% levels for a two – tailed test.Table 5: Return from Wheat and Rice Rotation(1990-91 to 2001-02 in Rs/ha)Year Gross Return: Value of Output Variable Costs of Return (At Return (At (Wheat+Paddy Fine) Production Current Prices) Constant Prices) 1 2 3=(1-2) 41990-91 20,66611,8148,8828,8821991-92 25,24112,77012,47111,0991992-93 30,90614,58316,32313,3791993-94 35,56815,93919,62914,6481994-95 35,20417,07818,12612,4151995-96 33,30118,98714,3149,0021996-97 44,62421,11523,50913,9931997-98 45,16621,60923,55713,0871998-99 47,52821,99125,53713,0961999-2000 55,31125,77728,93413,3962000-01 58,18529,18129,00413,7462001-02 59,80828,58631,22214,257 Average for three years ending 2001 to over Total increase three years ending 1992-93 (%) 24.10 Growth rate (% per year) 2.18Return at constant prices estimated by deflating returns at current prices with national income deflator.Source: Estimated from information given in the reports of Commission for Agricultural Costs and Prices (CACP): Government of India. Table 6: Financial Returns: Comparison of Crop Rotation Combinations(2001-02) Crop Rotation Combination Returns (Rs/ha) Returns (Relative Kharif Season Crop Rabi Season Crop to Wheat-Rice Rotation)Paddy (fine) Wheat 31,222 100Sugar cane Sugar cane 18,630 59.67Cotton (A) Gram 15,474 49.56Cotton (A) Barley 15,253 48.85Cotton (A) Rapeseed and mustard 10,599 33.95Basmati rice Linseed 12,581 40.30Basmati rice Field pea 11,802 37.80Basmati rice Barley 12,510 40.07Basmati rice Sunflower 5,627 18.02Cotton (A) Linseed 15,324 49.08Moong Rapeseed and mustard 5,020 16.08Source: Estimated from information given in S S Johl (2002), Table 1.3, p 20.Table 7: Extent and Pattern of Change in the Groundwater Level in Punjab: 1973 to 2000Zone Water Table Depth % of Area with Water (Metres) Table Depth 1973 2000Foot-hills zone Less than 5.0 32 30 5.0 to 10.0 32 47 Above10.03623Central zone Less than 5.0 39 6 5.0 to 10.0 58 41 Above 10.03 53South-west zone Less than 5.0 39 41 5.0 to 10.0 25 50 Above10.0369Source: S S Johl (2002).
REVIEW OF AGRICULTUREEconomic & Political Weekly december 29, 200785excessive. It may be observed that the annual water consumption requirement of sugar cane is 1,600 mm, of cotton-wheat rotation 1,065 mm, of moong-sunflower 1,150 mm, and moong-winter maize rotation 1,115 mm, compared to 1,088 mm of wheat-rice rotation. So, the water consumption requirement of wheat-rice rotation is not more than the other crop rotation combinations that may be cultivated in its place. Even if a size-able amount of area is shifted out of wheat-rice to these other crop rotation combinations, the demand on groundwater would be almost the same. On the basis of groundwater use there is nothing to choose among the crop rotation combina-tions cultivatable in Punjab at present. The inescapable conclu-sion that emerges from the comparison is that the fall in the water table in central Punjab is due to double cropping on the entire sown area with the help of tubewell irrigation, and not due to wheat-rice rotation per se.By collating the two conclusions, we can understand that neither has the fall in the water table in Punjab crossed the danger mark nor it is caused by wheat-rice cultivation per se. The wheat-rice cultivation in the state is neither less nor more sustainable thanthe other crop rotation combinations, so far as its impact on the groundwater level is concerned.5.2 SoilFatigue Another ecological process that is supposed to have eroded the sustainability of wheat-rice cultivation is the soil fatigue caused by this monoculture. The continuous cultivation of wheat-rice monoculture over the last four decades, it is asserted, has resulted in a serious deficiency of micro-nutrients in the soil and has adversely affected its fertility. The virtual stagnation of wheat and rice yields in recent years is attributed to the decline in soil fertility caused by this monoculture. But the stagnation in wheat and rice yields in the state is a multi-factor phenomenon and cannot be attributed solely to wheat-rice monoculture. To assess the net impact of wheat-rice mono-culture on wheat and rice yields, the effect of other factors needs to be separated out. One empirical procedure of doing is to compare the trend of wheat and rice yields in Punjab with that in the rest of India where this monoculture phenomenon is absent. Only if wheat and rice yields are found to have declined at a faster rate in Punjab than in the rest of India, there will be some ground for blaming wheat-rice monocul-ture. The regression results of such an exercise are presented in Table 9. The dependent variable in these regressions is the difference between Punjab yield and the rest of India yield of wheat and rice, respectively. The sign and size of the trend rate of the yield differential variable indicates the relative performance of wheat and rice yields in Punjab vis-à-vis the rest of India. It may be observed that during the 1991-92 to 2001-02 period, the difference between wheat yield in Punjab and the rest of India increased significantly. It means the wheat yield in Punjab grew at a faster rate than in the rest of India over this period. The results on the comparison of rice yield show that the difference between Pun-jab yield and the rest of India yield remained constant. It means both experienced the same trend rate over this period. These results suggest that apart from the flattening of yields caused by factors operating throughout India, soil fatigue resulting from the wheat-rice monoculture per se has not adversely affected wheat and rice yield in Punjab.Another procedure for examining the effect of wheat-rice monoculture on land fertility is to compare the yield grown under different crop rotation combinations. Quite reliable information on wheat yield under various crop rotation combinations practised in Punjabisavailable for a period of about two decades (1980-81 to 1998-99). This information is presented in Table 10 and shows that wheat yield per hectare is the highest on lands under wheat-rice rotation, compared to any of the other crop rotations prevalent in Punjab at present. Furthermore, this yield advantage of wheat-rice rotation, over other crop rotation combinations, has remained stable over the last two decades (1980-81 to 1998-99). The alleged detrimental effect of wheat-rice monoculture on soil fertility and yields is nowhere in sight. Rather, this monoculture seems to have some beneficial impact on land fertility. This beneficial impact is clearly confirmed by the fact that the wheat yield under wheat-rice rotation is higher than even land on that were kept fallow in the proceeding kharif season.On the basis of evidence presented in Tables 9 and 10, one may conclude with some confidence that fears of soil fatigue and fertility loss caused by wheat-rice monoculture are un-founded. There is no danger to wheat-rice cultivation in Punjab on that count.6 ConclusionsFrom the empirical evidence and analysis presented in this paper it clearly emerges that under the current parameters and con-straints, the economics of wheat-rice cultivation in Punjab is quitesound, and there is no imminent ecological threat to the continuation of this crop rotation specialisation. The doubts on the sustainability of wheat-rice specialisation are mere conjec-tures, not groundedinfacts. ReferencesBhalla, G S et al (1999):Prospects for India’s Cereal Sup-ply and Demand to 2020, IFPRI, Washington DC.Chand, Ramesh (2003):Government Intervention in Foodgrains Markets in the New Context, NCAP, New Delhi.Joshi, P K et al (2002): Measuring the Sustainability of Rice-Wheat Based Cropping System, NCAP, New Delhi.Johl, S S (1986): Report of the Expert Committee on Diversi-fication of Agriculture,Government of Punjab, Chan-digarh. – (2002): Report of the Expert Committee on Agricultur-al Production Pattern Adjustment Programme in Pun-jab for Productivity and Growth,Government of Pun-jab, Chandigarh. Rosengrant, M W et al (1995): Global Food Prospects to 2020: Implications forInvestment, IFPRI, Washington DC.Singh, Karm, P S Rangi and S Kalra (2004): ‘Wheat Pro-duction and Sustainability in Punjab: Growth and Di-versity’,Indian Journal of Agricultural Economics,No 4.Table 10: Impact of Crop Rotation Combinations on Yield of Wheat in PunjabCrop Rotation Yield of Wheat Combination (Kgs/hect) 1980-811990-911998-99Paddy-wheat 2,9973,9834,487Cotton-wheat 2,8583,3904,187Maize-wheat 2,9063,3953,907Fodder crop-wheat 2,679 3,469 4,092Fallow land-wheat 2,763 3,654 4,242Source: Karm et al (2004), pp 746-71.
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REVIEW OF AGRICULTUREEconomic & Political Weekly december 29, 200781Sustainability of Wheat-Rice Production in Punjab: A Re-examinationH S ShergillIndia’s food security depends vitally on wheat and rice production in Punjab, which contributes more than 50 per cent of the central pool of cereal stocks. The sustainability of wheat and rice production at the present scale in Punjab has been questioned by some experts, both on economic and ecological grounds. The evaluation of empirical evidence on economic and ecological aspects of wheat-rice cultivation in Punjab, however, shows that it is quite sustainable: the economics of rotation is sound, a growing domestic market is assured for the next few decades and the minimum support prices programme will continue in the foreseeable future. The returns are the highest among the competing crop rotation combinations and there is no imminent ecological threat. The fall in the water table has neither crossed the danger mark nor has the fall been caused by wheat-rice cultivation per se. The objective of this paper is to assess the sustainability of wheat and rice production in Punjab at the present scale. Sustaining wheat and rice production in Punjab at the present level is vital for country’s food security as more than 50 per cent of central stock of cereals is procured from this state. At present, about 80 per cent of sown area of the state is under wheat cultivation in the rabi season and about 60 per cent under rice in the kharif season. About 85 per cent of the value of crop output of the state is contributed by these two crops alone. The sustainability of this high degree of specialisation in wheat-rice monoculture is seriously doubted by some farm experts, both on economic as well as ecological grounds. They strongly plead for a massive shift of area out of wheat-rice rotation to other crops to create a diversified and sustainable cropping pattern in the state. The doubts on the sustainability of present level of wheat-rice production in Punjab have been mostly expressed in newspaper articles and government reports, but have never been examined systematically on the basis of empirical evidence. Moreover, a massive shift of area out of wheat-rice cultiva-tion in Punjab will not only adversely impact the food security of the country, but will also result in a big fall in Punjab farmers’ in-comes. That is why Punjab’s farmers are not willing to reduce the area under wheat-rice rotation, despite the incentives offered by the government. The purpose of this exercise, therefore, is to evaluate the empirical evidence on the economic and ecological sustaina-bility of wheat-rice cultivation in Punjab at the present scale. 1 Question on Sustainability: A Synoptic ViewThe economic viability of wheat-rice rotation in Punjab is supposed to have been undermined by the following three developments:(1) emergence of a marketing constraint due to the slow growth of domestic demand for cereals; (2) the minimum support prices (MSP) and assured purchase programme for wheat and rice be-coming unsustainable in the liberalised and globalised economy; and (3) the continuous decline in returns from wheat-rice culti-vation making it unprofitable for Punjab farmers.The ecological processes that are supposed to have eroded the sustainability of wheat-rice cultivation on the present scale are:(1) The continuous fall in groundwater level due to cultivation of wheat and rice on a rotational basis on almost the entire sown area in central Punjab; and (2) the soil fatigue and fertility fall caused by continuous cultivation of wheat-rice monoculture over the last four decades or so.The empirical evidence on and the reasoning behind these economic and ecological questions on the sustainability of Thanks are due to Pramod Kumar, director, IDC Chandigarh for provid-ing the research facilities to carry out this study and to Varinder for col-lection and processing of the data used here.Email: profshergill@gmail.com
REVIEW OF AGRICULTUREdecember 29, 2007 Economic & Political Weekly82wheat-rice specialisation in Punjab is evaluated to arrive at an integrated and holistic assessment on the long-term prospects of this rotation in the state. To keep the information base the same, most of the data used in this study are taken from state government re-ports [Johl 1986, 2002] that give the most comprehensive statementof the questions on the sustainability of wheat-rice specialisation. 2 MarketingProspects The doubts on marketing prospects of Punjab wheat and rice were first voiced in the mid-1980s and have persisted since then. The accumula-tion of surplus cereal stocks during 2001-03 with the Food Corporation of India (FCI) was presented as the fi-nal proof of the domestic market not being able to absorb wheat and rice produced by Punjab. A careful exami-nation of the empirical evidenceon the current and future demand-sup-ply balance of cereals in the coun-try, however, does not warrant any suchconclusion. The relevant facts on the current cereal balance pre-sented in Table 1 indicate that the growth of cereal production barely kept pace with the growth of popula-tion during the 1990s. These figures do not reveal any real surplus of cereals emerging in the country during the 1990s. The temporary accumulation of surplus food stocks with theFCI must be traced to other factors, and not caused by overproduction of cereals. The country continues to be barely self-sufficient in cereal production. Even this self-sufficiency is merely technical, because 20 crore Indians are still not getting enough food for want of purchasing power.The future marketing prospects of Punjab grains are also quite secure. The projections of demand for cereals for the year 2020 (given in Table 2) range from 223.6 million tonnes to 296.2 mil-lion tonnes. The estimates of availability of cereals from domes-tic production (summarised in Table 3) range from 222.0 million tonnes to 267.8 million tonnes. The message from the matching of these demand and supply projections is clear: by 2020, India will be barely self-sufficient in cereal production. There is thus little probability of the country having a glut of grains in the next few decades, and Punjab farmers not being able to find a market for their wheat and rice in the country itself. A thick and growing home market for Punjab cereals is quite assured. The misgivings on this count are unfounded.3 Viability of Minimum Support PricesSustainable commercial production of a farm product is condi-tional on farmers being able to sell their entire surplus produce at remunerative prices year in, year out. For the last four decades, this necessary condition for large-scale commercial production of wheat and rice by Punjab farmers has been ensured by the MSP programme run by the central government. But, the continuation of the MSP programme in the coming years is now seriously questioned by many experts. The following devel-opments are said to have made its continuation doubtful: (i) the mount-ing food subsidy bill of central govern-ment; (ii) the World Trade Organisa-tion (WTO) stipulations on farm sub-sidies and price support; (iii) mis-alignment ofMSP of wheat and rice with world market prices; and (iv) the comfortable food stock situation in the country. It is asserted that on ac-count of these developments the cen-tral government is no longer keen on continuing this programme. The slow growth ofMSP of wheat and rice dur-ing the 1990s, it is argued, is a clear indication of the lukewarm attitude of the central government towards theMSP programme.The empirical evidence on recent trends in realMSP of wheat and rice, and the realpolitik of food security in an overpopulated country, however, do not justify such misgivings on the continuation of the MSP programme. The trend regressions on realMSP of wheat and paddy for the 1991-92 to 2001-02 period presented in Table 4 (p 83) clearly reveal that the MSP of wheat and paddy grew faster than the general price level, and the realMSP of wheat and paddy increased at the rate of 1 per cent per year over this period. This improvement in terms of trade of wheat and paddy even in the new liberalised and WTO-conditioned economic environ-ment is a sure indication of the central government’s commit-ment to continue the MSP programme for sustaining wheat and rice production in the surplus producing states. The MSP pro-gramme is also not so incompatible withWTO stipulations. The WTO membership does not impose any compulsion per se to wind up theMSP programme for foodgrain. It can very well continue so long as the gross subsidy or aggregate measure of support (AMS) to the farm sector is less than 10 per cent of the value of farm output and price support is to ensure food security and not for dumping cheap grains in the world market. The misalignment thesis is also not supported by facts. The comparison of MSP of wheat and rice with the global prices [Ramesh Chand 2003: 89-91] shows that throughout the 1990s, theMSP of rice was lower than the world market price. Even the MSPof wheat was lower than the world market price in most of the years, except for the few years when the world wheat market had gone into slump. On the whole, theMSP of wheat and rice in India have remained quite in line with the world market prices of these grains.Table 1: Population, Per Capita Income and Cereal Production in India (1991 to 2001)Variable Description 1991 2001 % Change (1991 to 2001)Population (crore) 85.2 103.3 21.24Per capita income (rupees, at 1993-94 prices) 7212 10754 49.11Cereal production (million tonnes) 155.3 187.0 20.40Wheat and rice production (million tonnes) 129.0 155.0 20.20Cereal production per capita (kg/year) 182.35 182.06 -0.16Wheat and rice production per capita (kg/year) 152.0 150.0 -1.32Per capita availability of cereals (kg/year) 164.00 144.32 -12.00Per capita availability of wheat and rice (kg/year) 136.20 118.92 -12.69Source: Government of India,Economic Survey, various issues.Table 2: Demand for Cereals in India: Estimates for 2020Source of Estimate Estimated Demand For Cereals by 2020 (million tonnes)Mark W Rosegrant et al (1995) 237.3G S Bhalla et al (1999) 296.2Parduman Kumar 254.5US department of agriculture 267.0P S Rangi et al (wheat and rice only) 208.92 to 209.87R S Paroda 260.0 to 287.0R Thamarajakshi 274.0 to 287.0Tim Dyson and A Hanchata 223.6P C Bansal 241.35Cereals include wheat, rice and other grains.Table 3: Production and Availability of Cereals in India: Estimates for 2020(million tonnes)Source of Estimate Estimated Production EstimatedAvailability Mark W Rosegrant et al (1995) 256.2 237.0G S Bhalla et al (1999) 251.0 232.2Parduman Kumar 269.9 to 309.9 249.7 to 285.9US department of agriculture 240.0 222.0P S Rangi et al (wheat and rice only) 188.82 to 218.54 174.66 to 202.15Cereals include wheat, rice and other grains.
REVIEW OF AGRICULTUREEconomic & Political Weekly december 29, 200783The apprehensions on the sustainability of the food subsidy bill of the central government are the product of the failure to grasp the realpolitik of food security in a country like India. In spite ofits apparent big size, the food subsidy accounts for less than 5 per cent of the central government expenditure, and less than 1 per cent of country’s GDP. The contribution of food subsidy in the fiscal deficit of the central government, and its burden on the economy is rather marginal. It is unbelievable that a country with more than 100 crore people, of which 20 crore are poor, cannot afford to spend even 1 per cent of its GDP to ensure the food security of its population. The vital economic function of food subsidy in ensuring food self-sufficiency and food security is widely accepted; and the po-litical role of food security in ensuring the stability of the present regime is also acknowledged, albeit grudgingly. It is the food se-curity and political stability compulsion that ultimately makes the food subsidy bill bearable and the MSP programme for wheat and rice sustainable. The food security situation in the country will remain delicate in the coming few decades, hence the political compulsion for continuing the MSP programme will re-main in operation. The illusion of a comfortable food stock situa-tion has vanished and the grim reality of a difficult food balance has again manifested. One can say with considerable confidence that the compulsions of food security will ensure the continua-tion of MSPprogramme in the years to come. The sustainability of wheatandricecultivation in Punjab, therefore, is not endangered by the imminent discontinuation of the MSP programme in the near future. 4 ReturnsfromWheat-RiceRotationThe economic viability of a crop rotation combination is eroded if the real return per hectare it declines continuously overtime. The scales are finally tipped against it when the returns per hectare from a crop rotation combination falls below what can be obtained from alternative crop rotation combinations. The empirical evidence on both these aspects of wheat-rice cultiva-tion in Punjab is assessed in this section to determine its eco-nomic viability.4.1 RealReturns It has been repeatedly asserted that economic viabilityof wheat-rice rotation in Punjab has been eroded by the continuous decline in its real return per hectare since the early 1990s. For evaluating the empirical validity of this assertion, the widely accepted proxy for real return per hectare, the net financial return per hectareatconstant prices, is used. The estimates of the net re-turn per hectare (at constant prices) from wheat-rice cultivation for the 1990-91 to 2000-01 period are presented in Table 5, and do not reveal any decline in the real return per hectare over this period. Rather, the real return per hectare from wheat-rice rotation grew at the compound rate of 2.18 per cent per year; registering a total increase of about 24 per cent over this period (1990-91 to 2000-01). Furthermore, this growth in the real return per hectare from wheat-rice cultivation has been quite steady; only in two years out of 12, was there a dip in the real return per hectare. The proposition of declining real returns, during the decade of the 1990s, making wheat-rice cultivation unremunerative to Punjab farmers, therefore cannot be sustained in the light of ground level empirical evidence. 4.2 ComparativeReturnfromWheat-RiceRotationThe information on net financial return per hectare from the wheat-rice rotation and 10 other crop rotation combinations that can be grown as alternatives to it is given in Table 6. The substan-tial comparative advantage of wheat-rice rotation over its com-peting crop rotation combinations is quite evident. Even the best Table 4: Trends in MSP of Wheat and Paddy (Nominal and Real): Regression Results (1991-92 to 2001-02)Dependent variable Intercept Coefficient of R-Sqr Growth Rate Eq No (Log form) Time Variable (%/Year) MSP wheat 3.16 0.09 (10.01) a 0.93 9.42 1MSP paddy 3.36 0.08 (17.24) a 0.97 8.33 2MSP wheat deflated by GDP implicit price deflator 4.01 0.01 (1.97)a 0.33 1.04 3MSP paddy deflated by GDP implicit price deflator 4.26 0.01 (2.63) b 0.46 1.00 4(1) Figures in parentheses are t-values. (2) a, b indicate significant a 1%, 5% levels for a two – tailed test.Table 5: Return from Wheat and Rice Rotation(1990-91 to 2001-02 in Rs/ha)Year Gross Return: Value of Output Variable Costs of Return (At Return (At (Wheat+Paddy Fine) Production Current Prices) Constant Prices) 1 2 3=(1-2) 41990-91 20,66611,8148,8828,8821991-92 25,24112,77012,47111,0991992-93 30,90614,58316,32313,3791993-94 35,56815,93919,62914,6481994-95 35,20417,07818,12612,4151995-96 33,30118,98714,3149,0021996-97 44,62421,11523,50913,9931997-98 45,16621,60923,55713,0871998-99 47,52821,99125,53713,0961999-2000 55,31125,77728,93413,3962000-01 58,18529,18129,00413,7462001-02 59,80828,58631,22214,257 Average for three years ending 2001 to over Total increase three years ending 1992-93 (%) 24.10 Growth rate (% per year) 2.18Return at constant prices estimated by deflating returns at current prices with national income deflator.Source: Estimated from information given in the reports of Commission for Agricultural Costs and Prices (CACP): Government of India. Table 6: Financial Returns: Comparison of Crop Rotation Combinations(2001-02) Crop Rotation Combination Returns (Rs/ha) Returns (Relative Kharif Season Crop Rabi Season Crop to Wheat-Rice Rotation)Paddy (fine) Wheat 31,222 100Sugar cane Sugar cane 18,630 59.67Cotton (A) Gram 15,474 49.56Cotton (A) Barley 15,253 48.85Cotton (A) Rapeseed and mustard 10,599 33.95Basmati rice Linseed 12,581 40.30Basmati rice Field pea 11,802 37.80Basmati rice Barley 12,510 40.07Basmati rice Sunflower 5,627 18.02Cotton (A) Linseed 15,324 49.08Moong Rapeseed and mustard 5,020 16.08Source: Estimated from information given in S S Johl (2002), Table 1.3, p 20.Table 7: Extent and Pattern of Change in the Groundwater Level in Punjab: 1973 to 2000Zone Water Table Depth % of Area with Water (Metres) Table Depth 1973 2000Foot-hills zone Less than 5.0 32 30 5.0 to 10.0 32 47 Above10.03623Central zone Less than 5.0 39 6 5.0 to 10.0 58 41 Above 10.03 53South-west zone Less than 5.0 39 41 5.0 to 10.0 25 50 Above10.0369Source: S S Johl (2002).
REVIEW OF AGRICULTUREEconomic & Political Weekly december 29, 200785excessive. It may be observed that the annual water consumption requirement of sugar cane is 1,600 mm, of cotton-wheat rotation 1,065 mm, of moong-sunflower 1,150 mm, and moong-winter maize rotation 1,115 mm, compared to 1,088 mm of wheat-rice rotation. So, the water consumption requirement of wheat-rice rotation is not more than the other crop rotation combinations that may be cultivated in its place. Even if a size-able amount of area is shifted out of wheat-rice to these other crop rotation combinations, the demand on groundwater would be almost the same. On the basis of groundwater use there is nothing to choose among the crop rotation combina-tions cultivatable in Punjab at present. The inescapable conclu-sion that emerges from the comparison is that the fall in the water table in central Punjab is due to double cropping on the entire sown area with the help of tubewell irrigation, and not due to wheat-rice rotation per se.By collating the two conclusions, we can understand that neither has the fall in the water table in Punjab crossed the danger mark nor it is caused by wheat-rice cultivation per se. The wheat-rice cultivation in the state is neither less nor more sustainable thanthe other crop rotation combinations, so far as its impact on the groundwater level is concerned.5.2 SoilFatigue Another ecological process that is supposed to have eroded the sustainability of wheat-rice cultivation is the soil fatigue caused by this monoculture. The continuous cultivation of wheat-rice monoculture over the last four decades, it is asserted, has resulted in a serious deficiency of micro-nutrients in the soil and has adversely affected its fertility. The virtual stagnation of wheat and rice yields in recent years is attributed to the decline in soil fertility caused by this monoculture. But the stagnation in wheat and rice yields in the state is a multi-factor phenomenon and cannot be attributed solely to wheat-rice monoculture. To assess the net impact of wheat-rice mono-culture on wheat and rice yields, the effect of other factors needs to be separated out. One empirical procedure of doing is to compare the trend of wheat and rice yields in Punjab with that in the rest of India where this monoculture phenomenon is absent. Only if wheat and rice yields are found to have declined at a faster rate in Punjab than in the rest of India, there will be some ground for blaming wheat-rice monocul-ture. The regression results of such an exercise are presented in Table 9. The dependent variable in these regressions is the difference between Punjab yield and the rest of India yield of wheat and rice, respectively. The sign and size of the trend rate of the yield differential variable indicates the relative performance of wheat and rice yields in Punjab vis-à-vis the rest of India. It may be observed that during the 1991-92 to 2001-02 period, the difference between wheat yield in Punjab and the rest of India increased significantly. It means the wheat yield in Punjab grew at a faster rate than in the rest of India over this period. The results on the comparison of rice yield show that the difference between Pun-jab yield and the rest of India yield remained constant. It means both experienced the same trend rate over this period. These results suggest that apart from the flattening of yields caused by factors operating throughout India, soil fatigue resulting from the wheat-rice monoculture per se has not adversely affected wheat and rice yield in Punjab.Another procedure for examining the effect of wheat-rice monoculture on land fertility is to compare the yield grown under different crop rotation combinations. Quite reliable information on wheat yield under various crop rotation combinations practised in Punjabisavailable for a period of about two decades (1980-81 to 1998-99). This information is presented in Table 10 and shows that wheat yield per hectare is the highest on lands under wheat-rice rotation, compared to any of the other crop rotations prevalent in Punjab at present. Furthermore, this yield advantage of wheat-rice rotation, over other crop rotation combinations, has remained stable over the last two decades (1980-81 to 1998-99). The alleged detrimental effect of wheat-rice monoculture on soil fertility and yields is nowhere in sight. Rather, this monoculture seems to have some beneficial impact on land fertility. This beneficial impact is clearly confirmed by the fact that the wheat yield under wheat-rice rotation is higher than even land on that were kept fallow in the proceeding kharif season.On the basis of evidence presented in Tables 9 and 10, one may conclude with some confidence that fears of soil fatigue and fertility loss caused by wheat-rice monoculture are un-founded. There is no danger to wheat-rice cultivation in Punjab on that count.6 ConclusionsFrom the empirical evidence and analysis presented in this paper it clearly emerges that under the current parameters and con-straints, the economics of wheat-rice cultivation in Punjab is quitesound, and there is no imminent ecological threat to the continuation of this crop rotation specialisation. The doubts on the sustainability of wheat-rice specialisation are mere conjec-tures, not groundedinfacts. ReferencesBhalla, G S et al (1999):Prospects for India’s Cereal Sup-ply and Demand to 2020, IFPRI, Washington DC.Chand, Ramesh (2003):Government Intervention in Foodgrains Markets in the New Context, NCAP, New Delhi.Joshi, P K et al (2002): Measuring the Sustainability of Rice-Wheat Based Cropping System, NCAP, New Delhi.Johl, S S (1986): Report of the Expert Committee on Diversi-fication of Agriculture,Government of Punjab, Chan-digarh. – (2002): Report of the Expert Committee on Agricultur-al Production Pattern Adjustment Programme in Pun-jab for Productivity and Growth,Government of Pun-jab, Chandigarh. Rosengrant, M W et al (1995): Global Food Prospects to 2020: Implications forInvestment, IFPRI, Washington DC.Singh, Karm, P S Rangi and S Kalra (2004): ‘Wheat Pro-duction and Sustainability in Punjab: Growth and Di-versity’,Indian Journal of Agricultural Economics,No 4.Table 10: Impact of Crop Rotation Combinations on Yield of Wheat in PunjabCrop Rotation Yield of Wheat Combination (Kgs/hect) 1980-811990-911998-99Paddy-wheat 2,9973,9834,487Cotton-wheat 2,8583,3904,187Maize-wheat 2,9063,3953,907Fodder crop-wheat 2,679 3,469 4,092Fallow land-wheat 2,763 3,654 4,242Source: Karm et al (2004), pp 746-71.
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