The cost of sustainable production for basmati rice grown by the Fairtrade certified producers

Abstract

The objective of the study is to understand the cost components of Basmati rice production, and whether the minimum price offered by Fairtrade International (FI) or the Government of India (GOI) adequately compensates the farmers. The study adopted a survey method for the assessment of realities on the ground. Data was collected from 327 FI certified Basmati farmers in four major Indian states – Jammu, Haryana, Uttarakhand and Uttar Pradesh. The main finding is that the Fairtrade Minimum Price (FMP), along with its premium, is 41 per cent to 78 per cent lower than the farmers’ costs for seed, labour, storage and transportation. The Minimum Support Price (MSP) provided by the GOI is 6 per cent higher than the FMP for the conventional Pusa variety, but 25 per cent lower than the FMP for organic Basmati. Neither the FMP or the MSP covers producers’ reported costs. No study exists in India examining the cost of production of Basmati farmers under Fair Trade contracts. The study is an important contribution to the ongoing debate on the benefits of Fair Trade farming from the perspective of farmers.