Friday, May 9, 2008

cost of production of an acre of paddy per season


This is an attempt to give the reader a realistic idea of what it costs to work an acre of paddy for a season (two seasons per year) and the profit and benefit to the farmer is purely a factor of the yield, and the price he receives on the sale of the paddy. This is the cost for the year and ignores the cost of the land or water, which though very real is treated as zero. A farmer who is working another’s land has to pay the owner twenty bushels per acre per season and that is 420kg, which at Rs 30 a kg is 12,600.

This example is worked on the basis of 100 bushels per acre, which is average for good land here in Polonnaruwa, and the yield can vary between types of seed paddy planted but for the purpose of this exercise, this will do.

The fertilizer will cost Rs 1500/- at the subsidized price, which if one purchased in the open market would be over Rs 16,500/- which means the fertilizer price is subsidized to the tune of Rs15,000/- an acre or about Rs7.50 per kg of Paddy produced. The true cost to the nation should therefore include the unsubsidized price at which the government purchases the paddy. The cost of the seed paddy is Rs 2900/- The cost of preparation if paid labor is used except for the farmer who is working his land is Rs 4000/- and the cost of the ploughing using hired tractor driver and diesel is Rs6000/- The cost of weedicides and pesticides is Rs3000/- assuming a low use of such on the property. Then instead of using paid labor to cut, he uses a cutting and threshing machine, the cost is Rs7000/- and then the cost of drying and fanning the paddy before preparing the bales for sale is a further Rs3000/- not counting his labor in taking care of birds and mice and other pests during the growing season. The total cost is therefore Rs27,400/-

The maximum profit to the farmer who owns his own property therefore becomes, a function of the revenue of Rs63,000/- and cost of Rs27,400/- and is Rs35,600/-. And Rs23,000/- if you don’t own the land. On the basis of this being 6 months income, it is a maximum of Rs6,000/- a month. Don’t forget this is based on Rs30 a kg price. The government guaranteed price of Rs22 will only give a profit for the owner farmer of only Rs18,800/- halving his profit. By implication a farmer who has twice this extent stands to benefit twice as much and so on. Bear in mind that half the farmers probably get much lower yields and some have costs that are higher so while this is a guide, it is also a reflection that at this higher price the farmer is still pauperized, despite the government subsidized fertilizer.

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