Proceedings of the conference on "Sustaining rural livelihoods" on Febuary 5th and 6th 2002 organised by the Green Foundation.
"Indian Agriculture and rural livelihoods in the context of globalisation" - Prof Damodaran
Today, I will present an overview and critical issues in Indian agriculture and rural livelihoods in the context of globalization. Let me start with a few statistics.
Why the broad range of 20-35%? If you take the growth of coffee from 1991-94 growth rate was 15-16% in area terms but after the coffee price boom, between 1994-99, growth accelerated to 35% because people wanted to take advantage of prices and so people started growing coffee by encroaching on reserved forest areas in places like Chickmangalur. This encroachment was not be farmers but by VIPs and the Supreme Court had to intervene and look into the encroachment. Production of commercial crops including coffee, tea, spices, vegetable, gherkins, grew by 23.48% in the same period. Growth in the area under food grain after 1991 was around 2.9% and production grew from 203-205 to 206 million tons in the same period. Obviously, one sees that there has been a substantial growth in commercial crops. And with that we come across the situation of problems of agro biodiversity, biodiversity, etc with all of them being under threat by a totally commercial activity. Agri-business is a very favored term and today people talk about converting everything into an agribusiness. I am not saying that it is all because of globalization process but there are certainly signs of it because in 1991 India had its economic reforms even though it was not very pronounced in the field of agriculture. There was the Bhanupratap Singh high powered committee on agriculture report in 1990 which said that agricultural enterprises should be treated as industries. For people like the farmer it will come as a shock because after doing landraces for ages you are telling him to shift to high yielding varieties of other crops and make it into a profitable venture. In 1993-94, the WTO came into the picture and created the conditions of globalizations and one of the most significant changes was that of the coffee board moving away from the scene of pooling of coffee and monopoly marketing it to a situation where small growers had to confront the market directly. This coincided with the steep increase in prices internationally and one of the most drastic dismantling of the command and control structures of the coffee boards withdrawing from the scene of marketing. So this is the larger context that I see. Now when we come back from plantations, we see that :
Total area under food grains in India between 1970-71 and 1990-91 has grown by 2.22%
- Whereas agricultural production increased in the pre-liberalization phase from 176.39 million tonnes to 203 million tones in the same period.
- Yield/hectare for food grains grown from 1380kg/hectare (all India) to 1620 kg/hectare representing a 17.39% increase
- Last and most significant, area under commercial crops has grown by 20-35% growth from 1990-91 to 1998-99. while production of commercial crops grew by 23.48%.
The inference is that Indian agriculture has clear limits on the extensive margin because the net area sown has been growing at a very niggardly pace and the system of vertical growth has been the predominant strategy (i.e. increase of yield and not of biomass). There are clear limits to this too. Why? The progressive growth in ground water irrigation in the deccan trap geological zone. My doctoral work has been on the externalities of bore well irrigation in Karnataka and I can tell you that in 1983-84 when I came to the villages in Hoskote, I found that (the farmer never used to tamper with land records as he does these days) dry land farming was the primary mode of cultivation. About 80% was under finger millets and bore wells had started coming into the Bangalore Kolar belt and the ground water table used to be at 175 feet and last month when I went back to the village it is at 800 feet! So this is the kind of situation in an area that was declared as a "red area". Incidence of bore well failure is very high. Unfortunately the small and marginal farmers who were given subsidized loans have gone in for bore wells. For what? For taking to high yielding varieties of coarse cereals that I have shown do not respond to irrigation. There are excellent schemes being given by the AICRT to
propagate water conservation measures, elementary seed drills, use their traditional halikar varieties of bullocks to plough their land - all traditional systems. But today they want to "advance", to get into "agribusiness" - i.e. - keep on producing and waiting for the civil supplies or FCI to come and pick up their stock. So at 800 feet, bore wells have been failing and landing farmers in debt.
I am told that the Karnataka government has been good enough to constitute a committee to study the agricultural crisis of farmer suicides. Some people say it is a psychological problem. I have done an analysis of farmer suicides - it is very easy to theorize on other people's problems but it is different when it happens to us. I am sure that it has a lot to do with the economic conditions of the farmers. Last year when I attended a meeting of farmer's families who had committed suicides that had assembled in Gandhi bhavan - it was a very sad story.
Now I can also share with you something very interesting. I had just returned from kerala where I found that most of the farmers who had committed suicides had switched to modern methods of farming. A lot of this comes from a shift in focus of the agricultural extension where they emphasize more yields, more pesticides, more fertilizers, high productivity, more chemical use which seems to have destroyed the lives of a lot of small farmers.
Let us now move to Andhra - I had recently visited the Guntur area, which is known for chillis. Guntur farmers don't necessarily have large holdings. Some of the chilli farmers have very small holdings. Their strategy is basically sell the chillis, get the cash and buy the food grains. They also have a food security problem. We often think that if you are raising a commercial crop you don't have food security problems but that is not the case. Farmers having small holdings who have gone in for a commercial crop have a bigger food security problem. This story goes like this - when I went to Guntur to study something for the spices board, I found agents from 5 pesticide companies telling farmers that this year the rains are very weak and the fertilizers wont work well so you need more pesticide to solve your plants ill health problems. So this kind of ingenuity you will not find in marketing agricultural extension marketing.
So where are we now? Ground water tables have declined; there are pressures on fertilizer subsidies, non-effective function of MSPs and regulated markets. What is the latest story from TN and Karnataka? We have had a bumper rice harvest - Kalyani and Masuri rice. For instance prices have gone up during the post harvest season this year. Two years back it was the other way around, prices were falling. Why is it so? Basically traders stocks have gone up. Many of the small farmers have lost their marketable surplus to traders. Traders are waiting for prices to go up and this is how things work. I also have a problem with the MSPs because of my empirical surveys on APMC systems working in Dharwad and Bangalore. Though the APMC act is very well meaning, it is designed to improve the lot of the farmers in the regulated markets, in reality it is not the farmers who sell in the APMC but it is the agents and middlemen and the gap between the price realized in the APMC and what the farmer gets is a neat Rs30-35 per quintal for maize and finger millets on an average. We can't avoid the middlemen anyway. Once the stocks move from the producers to the middlemen you will have this situation anyway. Now what is happening in Punjab? Last year there was an interstate restriction on food grain movements as part of the regulated markets imposed by the government last kharif season they lifted the restriction. Farmers from the UP mandis where the price was around Rs400 and the MSP was around Rs700, the traders cornered all the stocks at Rs400, sold it to the APMC for Rs700 and pocketed the difference. The point that I was always advocating even in my recent paper is that farm gate prices form the more important criteria of deciding whether the farmer is in a good state or not. MSPs don't make any difference and neither do APMC prices. There is a big gap from farm gate prices to the actual price and that is where the farmer is losing out.
Now when we come to the prices stabilization front. When coffee prices started falling and when rubber prices start falling, you have prices stabilization funds, buffer stocks, the coffee board may spend around 5-6 crores for mopping up the surpluses but when a big crises of this kind hits other food crops the CACP will apply an MSP which is meant for farmers but there are no stabilization funds that are meant for the system to stabilize the prices for the next few years - we don't have a strategy of that kind for food grains. The other point that Dr Vanaja mentioned was Common Property Resources(CPRs). Essentially all the semi arid small farmers have survived on CPRs, it is not a fable, it is a fact - it is a biomass economy and there is a healthy relationship between livestock, CPRs and subsistence agriculture. Unfortunately, where are the CPRs today? They are no longer available widely and that could be arising from the kind of problems that I mentioned. I have an interesting study done on total factor productivity (TFP) as economists call it. TFP growth was between 1.1-1.3% from 1956 while conventional inputs contributed another 1.1% thereby providing the 2.3% growth in crop production during those years. This means that even though the green revolution has contributed its might, a lot of the growth has come from better organization and translation of tech to operational practices. So out of the 2.2% growth, 1.1% came from new technology but the remaining 1.1% came because it was backed up by better org - the tech was sold well, it was backed up by marketing systems, agricultural credit and extension. So what contributed to the growth in the post green revolution period - 2 things - public investments high & agricultural extension was extensive.
Can the same thing be maintained during the post liberalization period for what Gordon Conway calls the doubly green revolution i.e. biotechnology? The other interesting point about the GR is that agricultural production went up initially and then tapered off until 1972 when it began to rise again. The reason for that is that the initial seeds were imported and resulted in the high yield. Then the ICAR started indigenisation from the imported germplasm and so that resulted in a reduction of productivity until the indigenisation was perfected around 1972 when it began to rise again. All this while it was backed up by solid investment by the govt. Now public investment in agriculture has decelerated so we don't have a guaranteed method of achieving what we achieved in the green revolution phase. The GR phase is now over and now we are supposedly entering the biotech phase so let us examine what the imponderable questions are. They are whether agricultural extension can continue to promote unsustainable activities and whether the social and ecological costs are acceptable and who will internalize these costs? Will the agricultural extension get the money that it requires as in the GR because we don't have money? Even if the government finds the money it will be put into biotech, GM or newer hybrid varieties with an eye to improve yields. Ag extension is going to aggressively promote the case of transgenics. There will be a social cost which is unknown. People say that there is a biosafety problem and there are strong reasons to suppose so. Supposing there is such a problem who will lap up the ecological and social cost? Is there a support mechanism in place for such cases? What should be the agricultural extension structure in such cases? Should it be following a precautionary principle even while it is advancing a tech such as a GM crop or should it be based on an aggressive promo of biotech? This is a stand that is not there.. We have biosafety guidelines issued by the Ministry of Environment but we don't have an agricultural policy that talks about agricultural extension in relation to biotech crops. If that is not there, farmers will suffer. Also, after 2001 will investment in biotech outpace conventional agriculture? What will be the process of indiginisation of safe GM crops? IARI has already started researching indigenous GM crops such as BT cotton, brinjal, cauliflower, sorghum. So what is the process? If declared safe, will it be indiginised or will we get the stock from abroad? Will international seed companies run the show or will the national seed company produce indigenous varieties of these crops? After all genetically modified germplasm will be very dangerous. The basic point is are we prepared? We just seem to have a GEAC that will say yes or no and there the matter ends. What follows? These are some of the questions we need to address in the biotech era.
Now on livelihoods. I was attending the world spice congress. The American delegate told me that for the American food industry, the primary issue is that of food security. This puzzled me. The FDA has been discussing food security with the meat and food industry. What is their concept of food security? The advanced countries, which were indifferent to food security, now want to have a definition of food security. Their definition is basically food safety in the light of September 11th and the anthrax scares. Having seen the last two rounds of the WTO, the terms about the production limiting programs in agriculture was taken right out of the EC program and put in the WTO agreement. Pierre Boudreaux the great French sociologist says the harbinger of the arrival of globalization is the common use of jargon. The colonization is not of countries but that of the mind. So if food security is being appropriated and being equated to that of food safety then we will have tremendous entitlement issues when it comes to negotiating terms on the Agreement on Agriculture in the WTO. People will be in trouble. So food security should be defined in terms of availability of food as opposed to safety. Also the issue of food security should not be confined only to farmers who are not involved in commercial crops. Any farmer could have food security issues.
The other issue is with respect to farm gate prices. That is what we should be monitoring and not MSPs because that is what affects the farmers directly. Who will do that? NGOs should bring this to the limelight.
Third is market reforms and insulation from these reforms. I am not against reforms. Let us consider what is happening to a wide variety of commodities today. Coconut. In part of Dakshin Karnataka or AP, TN, Kerala which survive not because of paddy but because of coconut. Recently there has been a big problem with mites. Copra is supposed to be the basic prod of coconut and it is supposed to be milled and turned into oil. Nowadays all market reforms are happening at the upper end of the food chain - there is a coconut oil futures market in Cochin. But there is no futures market or price hedging mechanism where the farmer is producing something. So most such reforms do not take place in and around the farm gate. They are all designed for the rich exporters and processors. Why is it that the government not getting into it? After 1991, MSPs are alive and kicking but it is going to the wrong people. Cash crops are now being abandoned to the play of market forces. Bu at the level of the farmer there is no reform. Now there is talk of precision farming that will avoid wastage - a very good idea. But what about simple biomass based economy like we have in large semi arid tracts of the Deccan. Why don't we revive them? Why are we talking about environmental programs separate from agriculture programs? You have to revive common property resources. You have to increase public investment. You also need to promote traditional practices that are environmentally appropriate for the region. There is a vacuum when it comes to that. Traditional farming systems should be highlighted. But unfortunately there is a policy fragmentation. You have an environment policy, a forest policy, an agriculture policy but each is going in separate directions. Unless we have an enveloping theme we will not make meaningful progress. The latest craze amongst Malnad farmers is vanilla cultivation as it fetches around Rs230 per kilo so they are all moving away from the traditional millets, etc aided by liberal extension on the part of the commodity board. But I am sure that it will go the way of the coffee farmers in a couple of years. They are also losing their traditional germplasm of fingermillets, etc. The need of the hour is a careful restructuring of the extension program, environmental policies so that even if we introduce new tech we will be safe.
Prof Damodaran is on the faculty of the Indian institue of plantation Management, Bangalore. He is an officer in ministry of environment and forests. He stayed in Hoskote for a while looking
into problems of farmers as part of government responsibility. He has a Phd in environmental economics.
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Agriculture issues on India Together
- The net area sown in India between 1970-71 to 1990-91 preliberlization phase grew by about 1.81% - keep in mind this is not the gross area sown but the area that is practically brought under the plough. Now the gross sown area has grown by 13.48% in the same period so one sees that there is a great increase in gross sown area which means that land that was intended for agriculture was not being cultivated. Obviously someone was claiming land for agriculture but was not actually using it for that purpose.
- The net irrigated area has however increased by 70.4% during 1970-71 to 1994-95 and by 10.9% from 1990-91 to 1994-95.
- During the same period, and this is the thing of great concern to agro ecologists, ratio of ground water to surface water irrigation was 3:1. So for every 4 litres used for irrigation, 3 litres is supposed to come from the aquifers and one litre from surface sources. This is bound to create some sustainability problems. It has already created problems, as we will discover soon.
- The gap between irrigated yield levels and unirrigated yield leves has narrowed down for coarse cereals for jowar, maize,etc.(1.98:1.56 tonnes/hec) as against a much larger gap obtained in 1981-82(1.64:0.99). Interestingly the gap between irrigated yield levels and unirrigated yield levels for coarse cereals is practically nothing for jowar, maize, etc. My experience for ragi and finger millet has also shown the same trend. Though the Indaf had come by the 80s and with the new varieties of HS64 varieties released by the GKVKK came resulting in astounding progress, it was not as if the crop yield was responding to large doses of irrigation, it could manage even with less irrigation. Now the gap is maximum with rice. Rain fed vs. irrigated makes a big difference for rice but not for coarse cereals. It is only for paddy and wheat that the difference between irrigated and unirrigated is 2:1. This is not to say that the new varieties are not yielding - the HS-64 gives around 12 quintals vs. the 5-6 quintals for the older varieties. But the critical issues for a poor farmer is how much fodder does the farmer get - that question is never raised because everyone is talking about grains. You will find that the traditional varieties had much more yield of fodder than the new varieties for the simple reason that the stalks were high and broader but when technification came after the green revolution, it resulted in a complete focus on cereal yield. And the method of harvesting is now fundamentally different. Earlier the maize and finger millet crops ear heads have to be cut now and the sickle is used to leave a 1-inch stubble on the ground. In the old days it used to be harvested and then threshed. Because the ear heads have become bigger, the focus is now on ear heads and so the fodder suffers over a period of time. So these are some of the ground level realities that match with the macro economic policies that we have seen over the past few years. Irrigation has served to enhance the productivity of non-coarse cereals and coarse cereals are primarily cultivated by the small and marginal farmers.