The Political Economy of Indian Agriculture

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The Political Economy of Indian Agriculture
Bhaskar Goswami Forum for Biotechnology Food
Security New Delhi bhaskargoswami_at_hotmail.com
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Agriculture in India

• 17 of Gross Domestic Product
• Employs 60 population every fourth farmer in
  the world is an Indian
• Major crops Wheat, Rice, Maize, Pulses, Millets,
  Oilseeds, Cotton, Spices, plantation crops
• Second highest food producer in the world
• Worlds highest milk producer worlds second
  highest wheat and rice producer

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The Story of Hunger
1770 1880 27 food scarcities and famines Post
1850 20m deaths due to famine 1966-67 critical
drought year required import of 11m tonnes of
food Paddock Brothers Famine 1975 by mid
seventies, at least half of India would be led to
a slaughterhouse
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March Towards Food Security

• Ist V Year Plan max focus on agri.
• US Land Grant Model for Agri. Research
• 1961 Intensive Agri. District Programme
• CIMMYT offered dwarf wheat for trials
• 1966 18,000 tonnes of dwarf wheat seeds imported
  from Mexico

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Green Revolution Wheat Rice Production
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Green Revolution Reasons for success

• Strong infrastructure for RD
• Well designed extension infrastructure
• Public investment in irrigation, power, and rural
  infrastructure
• Subsidized inputs
• Positive price environment
• Procurement machinery

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Key to Food Security Food Management

• Commission for Agriculture Costs and Prices
  (CACP) sets Minimum Support Price (MSP) for 24
  commodities and Statutory Minimum Price (SMP) for
  one
• Food Corporation of India (FCI) and other
  parastatals procure commodities
• Subsidised food supplied to poor through Public
  Distribution System (PDS)
• Buffer stock maintained to meet shortage and
  control price
• 1987 drought worst of 20th century yet no
  starvation deaths

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Fallout of Green Revolution

• Disproportionate growth
• Erosion of natural resource base
• Stagnant Yields
• Increased indebtedness
• Displacement of employment
• Loss of biodiversity
• 60 dryland farmlands bypassed

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40 Years after the Green Revolution, what is the
status of agriculture, hunger and poverty in
India?
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Hunger amidst 8.5 Growth

• one in every five Indian suffers from hunger
• 350m Indians are chronically food insecure
• 50 children are undernourished
• 12 decline in food consumption between 1990 and
  2001
• 2,814 children in Maharashtra died of
  malnutrition during Jan-July 2005
• 99 of tribal households in Rajasthan and
  Jharkhand face chronic hunger
• 500 Adivasi hh surveyed in Rajasthan none had
  access to two square meals through the year

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The crisis is deepening
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• Average agri growth during 2002-07 was 1.87
  1980s recorded 5 growth
• Annual per capita food grain production has
  declined from 207kg (1995) to 186kg (2006), which
  is the same as in 1975
• Food grain production (1990-2007) 1.2
  Population growth 1.9
• Between 1990-2003, 2.1 m hectares of agriculture
  land diverted for non-agri uses

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• Post 1991, farmers income rose by 0.28 4 in
  other sectors
• Farming households income is Rs. 2,115 per month
• 48 farmers indebted
• 40 farmers want to quit farming
• 1997 onwards, gt150,000 farmers have been driven
  to commit suicide

Agrarian Crisis
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Farmers need an assured income
Governments offer more credit
Agri-credit disbursal went up by 123 between
2003-04 and 2005-06
Rate of suicides actually went up during this
period
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Economic Reforms .. post 1991
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Pre 1991 Protected Agriculture

• Public investment in agri-infra. development
• Land ceiling and land tenure
• Agriculture RD, extension
• Price interventions and parastatals (Food
  Corporation of India, buffer stock, Public
  Distribution System etc.)
• Input subsidies and pricing
• Tariffs and quantitative restrictions
• Creation strengthening of public sector
  institutions

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Immediate Impacts of SAPs

• Between 1990-92, rural poverty increased from 33
  to 44
• Agriculture growth rate dropped

Source Agriculture Statistics at a Glance
(various issues) Note 1990-91 to 1999-2000 at
1993-94 prices 2000-01 to 2005-06 at 1999-00
prices
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Trends in the Production of Principal Crops
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Promoting Corporations Seeds

• Farmers retain, exchange and sell seeds among
  themselves
• New Policy on seed development in 1988
• 1991 Industrial Policy allowed foreign
  investments in seed sector
• Around 200 private seed companies
• Indian seed market valued at 1.3 bn 70 of
  market turnover controlled by private sector
• Trade (2006)Exports 20m Imports 30m

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Seeds Bill 2004

• Deprives farmers right to save/ exchange seeds
• Lax on compensating farmers for crop loss due to
  seed failure
• Quarantine norms relaxed
• No liabilities fixed on patents
• No control on price of seeds
• Single-window open-door policy for corporate
  control over biodiversity, including seeds

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Promoting Corporations Fertilisers

• 57 large-sized and 64 medium and small sized
  plants
• Private sector controls half of nitrogenous and
  3/4th of phosphatic fertiliser plants
• 2007-08 subsidy Rs. 309 bn 2008-09 subsidy
  estimated at Rs. 640 bn
• 62 of subsidy goes to manufacturers

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Promoting Corporations Irrigation and Power

• Water resources being privatised
• Private sector generates 13.5 of power
• Public sector power generators disinvested
• Power sector reforms driving up cost of power
  reliability and quality of rural services remain
  unchanged

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Crops Diversification

• 1990-2001 6 million ha under food grains
  diverted to produce flowers, fruits and
  vegetables farmers household income and
  nutritional security remain unchanged
• National Agriculture Technology Mission and
  Horticulture Mission benefiting input suppliers
  and commodity traders rather than farmers
• Diversification exposing farmers to price
  volatility and damaging natural resource base

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Crops Diversification Case Floriculture (Rose)

• Planting density 60,000/ ha
• Pesticide two sprays per week
• Fertilization 47 tonnes of chemical fertilisers
  and 108 tonnes of manure/ha
• Irrigation 212 acre inches/ ha (gt4 times food
  crops)
• Ultimately, the land under intensive flower
  cultivation is rendered unproductive and barren

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Flowers or Food Security?

• Foreign exchange earned from 1 ha rose
  cultivation import of only 1,256 tonnes of food
• If resources employed for 1 ha rose cultivation
  is used for food crop cultivation, it will
  produce 4,274 tonnes of food crops generate
  200,000 labour days

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Subverting Price Procurement

• Agriculture Produce Marketing Committee Act
  Essential Commodities Act amended to enable
  private companies to corner agri. produce
• Lower Support Price reduces procurement and lends
  rationale for imports
• Food stamps for Below Poverty Level (BPL)
• Take position in future market to buy for Public
  Distribution System
• Warehousing system being privatised

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Attacking Public Distribution System

• PDS changed to Targeted PDS in 1997 food grain
  off-take reduced by 14 next year 
• Per capita cereals availability through PDS
  declining since 1998-99 though production going
  up
• In 2000-01, PDS wheat price hiked by 66 rice
  by 61 for the Below Poverty Level off-take
  reduced by 32 over previous year
• Below Poverty Level allocation cut by 15 percent
  in 2005-2006

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Crop Biotechnology Experience with Bt Cotton

• Yield not significantly different from non-Bt
• Stress tolerance very low
• New pests diseases tobacco streak virus,
  bronze wilt, mealy bugs
• Yield of next crop declining
• Human health allergies, breathlessness
• Animal mortality
• Monsanto drew out Rs. 45 bn between 2002-07 from
  rural areas as technology fee

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More on Reforms

• Biodiversity Act
• Food Safety Act
• Food Processing Act
• Future trading
• Special markets for private companies
• Land share companies
• Unlimited credit for agribusiness companies

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Corporate Takeover of Agriculture