The Farmer's Input Bill

What inputs an Indian farmer buys for a crop - seeds, fertiliser, pesticides, water, labour and machines - and how these costs shape farm profits.

Every crop season, a farmer spends money before earning anything.

Main inputs

Seeds.
Fertilisers: urea, DAP and potash.
Pesticides and weedicides.
Irrigation: diesel or electricity for pumps.
Labour: for sowing, weeding and harvesting.
Machinery: tractors, harvesters, often hired.
Credit: interest on loans.

Cost of cultivation

The Commission for Agricultural Costs and Prices (CACP) estimates the cost of cultivation for crops, which helps set minimum support prices (MSP). It uses measures like A2+FL (paid-out costs plus the value of family labour) and C2 (which also includes rent and interest on owned land and capital).

Why inputs matter

Yields depend on good seeds, nutrients and water.
Profits depend on the gap between crop prices and input costs.

Rising costs

Input costs, especially labour and diesel, have risen, squeezing margins when crop prices stay flat.

Small farmer disadvantage

Small farmers buy inputs in small quantities, often on credit from dealers at higher effective prices.

The wheat budget

A Punjab farmer's wheat costs include seed, urea and DAP, weedicide, diesel for his tractor, hired combine harvesting and interest on his crop loan. What's left after selling at MSP is his profit.

Thinking farmers' costs are only seeds and water

Fertilisers, pesticides, labour, machines and credit add up.

Key takeaways

Farmers buy seeds, fertilisers, pesticides, water, labour and machines.
CACP estimates costs to help set MSP.
Rising labour and diesel costs squeeze margins.
Small farmers often pay more for inputs.