
Farming : Profitability of farming Wheat and Paddy over 7 years
Published June 28, 2015 by vishalvkale
State
|
1996-97
|
1997-98
|
1998-99
|
1999-2000
|
2000-01
|
2001-02
|
2002-03
|
2003-04
|
Andhra Pradesh
|
1079
|
(457)
|
2975
|
1304
|
518
|
(7)
|
3186
|
4188
|
Assam
|
434
|
1390
|
2597
|
1844
|
(216)
|
(658)
|
(806)
|
(1080)
|
Bihar
|
918
|
1091
|
1848
|
712
|
(1950)
|
(876)
|
(1387)
|
(1263)
|
Haryana
|
1438
|
1842
|
2494
|
2069
|
6708
|
4641
|
989
|
2364
|
Kerala
|
0
|
(1515)
|
(61)
|
1923
|
1212
|
1452
|
1453
|
(1752)
|
Madhya Pradesh
|
779
|
(550)
|
(953)
|
(126)
|
(3843)
|
(2205)
|
(3477)
|
(906)
|
Karnataka
|
0
|
0
|
0
|
8787
|
2636
|
1950
|
4925
|
1798
|
Orissa
|
1014
|
1023
|
0
|
(370)
|
(18)
|
(375)
|
(3824)
|
(1516)
|
Punjab
|
2936
|
4912
|
2787
|
7184
|
7950
|
10239
|
4327
|
9881
|
Tamil Nadu
|
0
|
0
|
4642
|
1143
|
2073
|
317
|
3172
|
1069
|
Uttar Pradesh
|
3259
|
917
|
1250
|
1910
|
356
|
(203)
|
(1985)
|
1554
|
West Bengal
|
2160
|
1162
|
2891
|
(236)
|
(3385)
|
(3304)
|
(5539)
|
(3220)
|
To verify, let us take the yield per hectare data from the same research, and access Minimum Support Prices of Paddy from other sources {This one from RBI and This one }. Multiplying the two will give us a rough estimate of the value of the produce per hectare based on yield and solid documented and verifiable data; not field estimates. We can then subtract the resultant value of the farm produce from the value of the rough estimate above, to get an idea whether the key component : value of the produce, is anywhere near accurate. The resultant data table is tabulated below :
State
|
1996-97
|
1997-98
|
1998-99
|
1999-2000
|
2000-01
|
2001-02
|
2002-03
|
2003-04
|
Andhra Pradesh
|
4226.8
|
(2563.6)
|
(4577.0)
|
(3862.5)
|
(1807.0)
|
(2449.9)
|
(4078.0)
|
(3212.0)
|
Assam
|
1066.2
|
(1758.9)
|
(2926.6)
|
(1778.0)
|
607.7
|
808.5
|
(14629.6)
|
1064.5
|
Bihar
|
2169.6
|
(1535.9)
|
(1842.4)
|
(1439.2)
|
1076.8
|
1588.8
|
4513.8
|
1368.0
|
Haryana
|
3552.8
|
(4406.9)
|
(6275.6)
|
(5436.5)
|
(8936.6)
|
(7546.7)
|
(13790.7)
|
(9105.5)
|
Kerala
|
0.0
|
(7690.1)
|
(9711.1)
|
(9637.2)
|
(8630.4)
|
(7680.0)
|
5264.2
|
(8208.3)
|
Madhya Pradesh
|
2672.0
|
(1754.9)
|
(1842.6)
|
(2350.0)
|
(1290.0)
|
(1452.6)
|
(26893.3)
|
(591.3)
|
Karnataka
|
0.0
|
0.0
|
0.0
|
(10422.8)
|
(4456.2)
|
(8207.6)
|
(10859.1)
|
(7984.0)
|
Orissa
|
2195.5
|
(921.5)
|
0.0
|
(2400.3)
|
(1765.0)
|
473.2
|
(2928.6)
|
793.6
|
Punjab
|
1534.5
|
(2023.6)
|
(1474.7)
|
(1539.9)
|
(930.3)
|
(2292.1)
|
12335.6
|
(3042.1)
|
Tamil Nadu
|
0.0
|
0.0
|
(7844.5)
|
(6950.7)
|
(5165.2)
|
(5056.8)
|
24205.1
|
(6484.6)
|
Uttar Pradesh
|
1632.1
|
(146.7)
|
(485.1)
|
(58.2)
|
1682.8
|
1844.0
|
16382.3
|
907.5
|
West Bengal
|
4953.3
|
(4853.9)
|
(7974.7)
|
(3710.3)
|
(766.1)
|
228.6
|
18862.7
|
(872.9)
|
In most cases, we can see that the resultant value based on government declared data of prices is lower {at times much lower} than the produce value used in our calculation. That can only mean that the value assumption – that of the value of the farm produce – is reasonably usable as an initial level estimate that can help as a guide towards understanding the concept farming as a business enterprise. Having said that, let us not read too much into this : this requires deeper study; these numbers are only, as I have mentioned above, indicative of a reality which I shall look at in detail later on in this research I am undertaking
THE CONCLUSION
Why should we take into account only those costs which the farmers are paying of pocket for Agriculture, while allowing all costs – including those lovely 5-star lunches, Promoter / Investor Salaries etc as deductions for Business? The same concept needs to be used for farmers as well! For the farmer, the farm is his office, his business; any expenses he incurs while farming- his occupation – should be deductible. If we allow Owner and Promoter Salaries as deductibles, business lunches gifts etc as deductibles for arriving at the profitability of a business, the same concept applies to farming. The reason is that these expenses are incurred while conducting the business.
The above data clearly indicates that farmers as a whole, as a community, may not be making money, or at least a decent ROI – and this is even in the most advanced of states, like the case of Punjab. At least not when viewed as a business enterprise. And yet, this does not find mention in common articles in pink media {economic news} when analyzing taxation or power charges, or among some common Urban Indians. A deeper study, to be taken later, will reveal a lot more, and on both sides of the debate. This presentation is at best a rough estimate, and indicates the issues. But this study does indicate the need of introspection for us as a people. Remember – these are the people who manufacture the food we eat; yes : Manufacture. Their Farm Factories produce the end product that allows us to live!
Is the consumer really the king, as a multitude of marketing books proclaim her to be? Or is it a mere empty nice-sounding statement? Recent events would lead the cynic to question the entire premise of “king” or “queen” or anything remotely comparable; conversely, these same events would lead the avid supporter to comment “It is a mistake”, or “it wont happen to me” or “This is a one-off event”, jumping to the defence of Corporate India, who cuts their paycheck in that they are employees in some company or the other. Well, the same Corporate India cuts my paycheck, and I see no reason to defend it, or not ask some pretty hard questions of it.