Friday, May 9, 2008
a downside for yield in the rise in price of rice
Many of the small landowners, who have for the most part inherited their paddy fields have been in the habit of renting them to other farmers to farm and the payment as noted elsewhere is traditionally 20 bushels of paddy per acre rented per season. In today’s terms that is about Rs12,000 per season.
There are experienced farmers who farm large lots of lands on this basis as they have all the mechanical machinery to perform most of the tasks, using minimal labor. It is the next most efficient way of farming this land, short of amalgamating large tracts into one and farmed in one large area by one person. I have a neighbor who does not own any land but farms about 100 acres and does it well and has a higher yield and productivity per man hour than all the small farmers.
When the price of rice increased, the owner not content with the increased value of the rent as it is in kind, has in many cases decided to work the land himself this season and this farmer is now wondering what he should do iin the light of new events.
His solution was to sell some of his farm machinery and buy a large lorry and has decided to buy paddy from farmers and sell them to the large mill owners. Filling a 5 ton lorry he says he can make Rs30,000 per load after paying his wages for hauling and driving and taking account of the vehicle amortization cost. This is for less than a days work as in the morning he knows the millers buying price and he then offers a price to farmers, some of whom will sell their paddy and is able to fill the truck by early afternoon going from farm house to farm house. This he says has almost no risk while paddy farming is full of risk. We lose another efficient farmer this way!!!
In my opinion these landowners who have now taken back control of their land do not know the inherent costs in farming and assume that they can make a lot of money. Inevitably they will lose or at best make only a little and possibly less than the rent they would have received, with a lot more effort and risk. That is not to say that as their efficiency is much less, the output per acre will also fall for the same inputs such as fertilizer. The overall effect therefore is for a fall in yield and the government carrying the cost of the fertilizer subsidy that has actually contributed to a lower yield despite the higher prices in the market. I see no evaluation of this fact anywhere in the discussions of the increased acreage under cultivation.