Despite major investments in rice production by government it is one of the less profitable crops for small farmers. Prices are often low immediately after harvest, while labor and fertilizer costs are high. The interest rates for informal sector credit, at 6-8% a month, eat into the farmers’ potential profit margin. Private sector pesticide companies have been aggressively promoting pesticide use on rice, but farmers have little information about how to use them correctly. Increasingly irregular rainfall, coupled with poor water control, leads to increasing frequency of both flooding and drought.
The production of beans and pulses is generally seen as more profitable than rice in the winter season, in part because of much lower labor requirements and input costs. Prices, however, are especially volatile because 70% or more of pulses such as black gram, green gram, pigeonpea and chickpea are exported to countries, especially India, whose demand from one year to the next is very unpredictable. Horticulture, poultry, small livestock and fishing offer rapidly growing, high-value markets. For very small landholders, these high-value commodities offer the attraction of growing markets and limited land requirements.