Mitigate policy and institutional constraints to promote cotton in Punjab
Water stressed Punjab is in the middle of cotton planting season. Genetically modified Bt cotton is a possible replacement for rice in south-western districts. If price declines below the minimum support price (MSP), Cotton Corporation of India intervenes. Punjab Government has announced 33 per cent subsidy on seed and continuous supply of canal water for Rauni (pre-sowing) irrigation to promote cotton. With these interventions, Punjab is unlikely to exceed last year’s area of 2.5 lakh hectare due to serious policy and institutional constraints bedevilling cotton production. These constraints fall under India and Punjab Government domains.
Constraints in Government of India (GoI) domain
Bt cotton seed: The GoI approved first generation Bt cotton (Bollgard) developed by Monsanto in 2003 and the upgraded Bollgard II in 2006. Monsanto sub-licensed the proprietary gene that produces its own pesticides to fortify the plant against devastating boll worms to 49 seed companies in lieu of mutually agreed royalties and upfront payment. By growing Bt cotton, India emerged as the top producer and a major exporter of fibre in the world. High yields made cotton a profitable crop for Punjab farmers.
Under a policy shift, Union Agriculture Ministry slashed seed royalty by 70 per cent and capped 400-gram Bt cotton seed price at Rs 800 in 2016. It also floated the idea of compulsory licensing regime which is on hold. Competition Commission of India ruled that Monsanto has abused its dominance in the market. Monsanto’s appeal is pending in the Supreme Court. Pursuant to these decisions, it settled royalty disputes with the seed companies.
Due to non-adoption of cultivation and seed-purity protocols, Bollgard II has lost resistance to pink boll worm. The hoped-for local alternatives to Bt cotton have not materialised. Consequently, yield has declined despite additional pesticide costs.
Monsanto developed Bollgard III in 2009 which not only has another layer of protection against pests but also ‘kills’ them in three different ways and prolongs durability of resistance. This appears appropriate for the long duration bushy crop cultivated in India. As a fallout of above disputes, Monsanto has not introduced Bollgard III in India. Using the latest transgenic seeds, other countries have marched ahead. The GoI needs to find the sweet spot between protection of intellectual property and fair competition. Otherwise, the seed companies are unlikely to invest in India. Path-breaking research is very capital-intensive and requires cutting-edge skills. Our public sector R&D system lacks both.
Mixing of Bt and non-Bt seed: To prevent development of resistance to Bt toxins in boll worms, it was necessary to have 20 per cent non-Bt plants (known as refuge) in Bt fields. Originally, every packet contained Bt seed and a sub-packet of refuge seed. Due to deficient farmer advisories and the desire to maximise yield, farmers planted only Bt seed. Through another policy shift, seed companies were permitted to physically mix non-Bt refuge seed with Bt seed. Seed testing laboratories, however, do not have the capacity to determine the exact percentage of two types of seeds in a packet. It is possible some of the seed sold as costly Bt cotton, and subsidised by Punjab Government, may have a higher proportion of cheap non-Bt seed. The GoI needs to revert to the original practice of a sub-packet of refuge seed.
Import duty: Imposition of 11 per cent import duty in February 2021 and the pent-up demand (after lifting of Covid-19 lockdowns) resulted in unusually high prices of 2021–22 cotton crop. Removal of import duty in April 2022 lowered prices for the 2022–23 crop disappointing farmers although these were 25–30 per cent above the MSP. Striking a balance between conflicting interests of farmers and cotton textile industry is always a challenge for the Government.
Constraints in Punjab Government domain
Canal irrigation: Canal water is critical for sowing as ground water in the cotton belt is brackish. Through a surprise decision, Punjab Government has designated senior police officers for tackling canal breaches as if the breaches mainly result from water theft by farmers. Water Resources Department (WRD) expects Agriculture Department to check canal breaches. Till 1980, Punjab had the best canal irrigation system in the country. Due to free power and lack of maintenance, canals, sub-canals, distributaries, minors, Kassian and Khaal (field channels) are in a dilapidated condition. Forget about the tail-end, often farmers in the head- and middle-regions do not get water. On the first day of water release in mid-April, there were several breaches, and the release was curtailed. Subsequently there was another breach when water release was enhanced to meet farmer demand. Why would farmers damage their harvest-ready wheat? Real solution lies in Punjab Govt. providing funds specifically for timely rehabilitation of dilapidated canal irrigation network by WRD before cotton sowing in 2024.
Quality assurance of seeds and pesticides: Cotton failures in 2015 and 2021 due to pest attack primarily resulted from sub-standard seeds and pesticides, and deficient farm advisory services. Punjab Government paid Rs 1,200 crore as compensation to affected farmers but has not done anything tangible to strengthen the regulatory regime for quality assurance of seeds and pesticides. Manufacturers and suppliers of sub-standard seeds and pesticides, and their facilitator Govt. officials, are rarely penalised. Instead of providing 33 per cent subsidy on seed, some of which may be of suspect quality, the fiscally constrained Government should have spent scarce funds on: (i) augmenting analytical and human resource capacity of the testing laboratories at Faridkot, Gurdaspur, and Ludhiana, and (ii) operationalising robust and time-bound protocols for prompt collection, analysis, and follow-up action on a large number of seed and pesticide samples. Replacement of current target driven, predictable approach with a nimble footed, surprise and unpredictable strategy is a must. Appointment of competent and honest officers for sample collection, analysis, and follow-up action and as district Chief Agriculture Officers is a must. Technical training of regulatory personnel should inter alia cover legal aspects for convicting and sustaining penal action against suppliers/distributers of sub-standard inputs in the courts. Otherwise, there is no deterrent to supply of sub-standard inputs.
Insist on separately packed Bt and refuge seed: Despite the above referred mixing of Bt and refuge seeds, luckily some companies are supplying Bt seed with a sub-packet of refuge seed. Punjab Government may consider announcing now that from 2024–25 crop only such seed will be used. This will give lead time to seed companies to produce appropriately packed Bt seed.
Reduce marketing taxes: High marketing taxes (8.5%) are an indirect tax on farmers as traders offer correspondingly lower price. The Mandi taxes should be reduced to 2–3 per cent. Also, like Gujarat and Rajasthan, traders should be allowed to buy directly from the farmers by paying 1 per cent tax.
Strengthen marketing intelligence: PAU’s Marketing Intelligence Cell needs strengthening for making meaningful forecasts about the expected price band so that the farmers can make an informed choice about cotton planting area. In addition to generating relevant trade data, it will help in identifying the pain points in cotton value chain and their remediation. Other relevant crops for the Cell are Basmati, potato, and maize.
Labour issues: Cotton is a long duration labour intensive crop. Having lost pride in hard work, many farmers do not want to grow it. Availability and productivity of labour is impaired by MGNREGA without robust output parameters and availability of free/near-free food grains and other freebies to the landless.
Three plausible reasons for the decisions which do not optimise use of public resources are: (i) The pros and cons are not objectively evaluated before announcement by political leaders; (ii) Technocrats and bureaucrats lack the competence and courage to provide sound inputs for rational decision-making; and (iii) They second-guess what is music to politicians’ ears to avoid being humiliated for sound but unpalatable inputs. This does not portend well for Punjab agriculture.
