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Welcome to the May issue of FA. Global fish production from capturehas remained stable over the past two decades while fishproduction through aquaculture has progressively increased. Readmore about the status and the future prospects of this unique phenomenonin our Cover Story for this issue.

In this feature packed edition, we also talk about the importance of sugarand sugarcane in India of which india is the second largest producer in theworld. Our Spotlight section in the magazine is on a special initiative calledthe Sustainable Sugarcane Initiative which is inspired from the successfulapproach of the System of Rice Intensification (SRI) paddy cultivation.

Also on view in this issue. is an article which discusses the role of women inthe Indian agriculture sector. It is seen that rural Indian women are extensivelyinvolved in agriculture activities. However, the nature and extent of theirinvolvement differs with the variations in the agro production systems. Readmore in our Overview section.

Over the past two decades, the debate on global climate change has movedfrom scientific circles to policy makers with the world nations more seriouslythan ever exploring a range of response strategies to deal with this complexphenomenon of climate change. We have covered all aspects and challengesthat this climate change would have on the Indian agriculture scene in ourPerspective section.

Lastly, we have featured a special story on the Indian Dairy sector. India isamong the worlds largest and fastest growing markets for milk and milkproducts. The development and growth of this sector has been fascinating.Read more about the scope of this sector and the story behind how Indiacatapulted from a milk deficit nation to a milk sufficient one.

Do leave your suggestions and comments at fa.afcl@gmail.com.

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Indian Fisheries and Aquaculture:Present Status and Future Prospects ............ 6S. Ayyappan

Role of Women in Indian AgricultureSector ........................................................ 10By Padma Lakshmi

Sustainable Sugarcane Initiative (SSI) .......... 15D. Muthamizh Vendan Murugavel

Climate Sensitivity of Indian Agriculture ...... 18K.S. Kavi Kumar

Sugar Co-operatives in Maharashtra:A Political Economy Perspective .................. 22Mala Lalvani

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Indian Dairy Sector: Market Efficiencyis the Key ................................................... 27Dr. R.S. Khanna and Sharad Gupta

Institutional Changes in IndianAgriculture................................................. 31Suresh Pal, Mruthyunjaya, P. K. Joshi and Raka Saxena

The New Retirementality............................. 36By Mitch Anthony

Dont Change the Tail That Wags the Dog... 37By Santhosh Babu

Retire Young, Retire Rich............................. 38By Robert Kiyosaki

Agri News .................................................. 40

6Financing Agriculture

COVER STORY

Global fish production fromcapture has remained relativelystable over the past two decadeswhile fish production throughaquaculture has progressively increased.The Indian fisheries sector has come along way since independence and hascontributed immensely to the food basketof the country, with annual productionlevels of over six million tonnes of fishand shellfish from capture fisheries andaquaculture. India is the fourth largestproducer of fish and is playing animportant role in global fisheries.

Furthermore, with production over 3.1million metric tonnes, the countryoccupies second position in the worldfrom the inland fisheries sector. In the lastfive decades, Indian fisheries have madegreat strides, with the annual productionincreasing from 0.75 million tonnes offish and shellfish in 1950 to about 6.1million tonnes in the year 2002,indicating an increase of over eight fold.

The share of inland fisheries sector, whichwas 29 percent in 1950-51, has gone upto over 50 percent at present. Whilecapture fisheries have solely contributedproduction from the marine sector,aquaculture contribution in the inlandfisheries sector has been significant inrecent years. The production fromcapture fisheries in the last two decadeshas grown by only 72 percent i.e. from2.08 million tonnes in 1980 to 3.59million tonnes in 2000, but theaquaculture sector has shown a growthof 468 percent in the same period, i.e.0.37 million tonnes in 1980 to 2.1 milliontonnes in 2000. The country has alsoemerged as one of the majors in exports,recording a peak during the year 2000-2001, earnings Rs. 5957 crores (US$1.25billion). However, there has been adecline of 7.56 percent during 2001-2002 due to economic recession andsteep decline in prices of black tigerprawns in the international market.

Indian Fisheries and Aquaculture:Present Status and Future ProspectsBy S. Ayyappan *

7Financing Agriculture

COVER STORY

Inland FisheriesIndia is blessed with huge inland waterresources (29,000 km of rivers, 0.3million ha of estuaries, 0.19 million ha ofbackwaters and lagoons, 3.15 million haof reservoirs, 0.2 million ha of floodplainwetlands and 0.72 million ha of uplandlakes). It has been estimated that about0.8 million tonnes of inland fish iscontributed by different types of inlandopen water systems.

Though, the production break-up ofthese water bodies is not available, it isbelieved that capture fisheries productionfrom rivers and estuaries contribute onlya small share of the total inland catch.The bulk of the production comes fromreservoirs and floodplain wetlands, whichare managed on the basis of culture-based fisheries or various other forms ofenhancement. The 14 major rivers, 44medium rivers and innumerable smallrivers of the country with a combinedlength of 29,000 km provide for one ofthe richest fish faunistic resources of theworld.

While production figures from differentriverine systems are not available,estimates made for major rivers showedyield varying from 0.64 to 1.64 tonnesper km with an average of 1 tonne perkm. The average estimated yield indifferent estuaries range from 45-75 kg/ha. Reservoirs form the largest inlandfisheries resources in terms of resourcesize with 56 large reservoirs (>5000 ha),180 medium reservoirs (1000-5000 ha)

and 19,134 small reservoirs covering awater area of 1.14 million ha, 0.527million ha and 1.485 million ha,respectively, with substantial areas addedyear after year due to construction of newimpoundments created through erectionof dams over rivers, streams or any otherwater course. In India, management ofmedium and large reservoirs can beconsidered akin to enhanced capturefisheries and their fisheries largely dependon natural recruitment. On the otherhand, the fish catch of the small reservoirsdepends on stocking and managementand is termed as culture-based fisheries.Stocking in such small reservoirs is notmerely a simple matter of releasingappropriate species into the ecosystem,but an important management optionwhich needs evaluation of an array offactors, like biogenic capacity of theenvironment, the growth rate of thedesired species, fishing condition,shallowness of the reservoirs and naturalrecruitment. In general, stocking ofadvanced fingerlings (10-15 cm) ofIndian major carps at density of 400-500numbers/ha is the option suggested forsmall reservoirs. However, the averagenational production levels obtained fromthe small reservoirs of the country havea productivity of about 50 kg/ha, and islow when compared to other Asian andLatin American countries.

Efforts on scientific management byCIFRI in several small reservoirs haveshown that it is possible to improve theyield, for example 102 kg/ha in Baghla,

140 kg/ha in Bachhra, 150 kg/ha inMarkonahalli (all are in Uttar Pradesh),194 kg/ha in Aliyar, 182 kg/ha inTirumoorthly (both are in Tamilnadu),108 kg in Meenkara and 316 kg/ha inChulliar (both are in Kerala). It has beenestimated that the 1.5 million ha of smallreservoirs can produce at least 0.15million tonnes against the present levelsof less than 0.07 million tonnes. Themedium and large reservoirs can yieldanother 0.15 tonnes through properspecies and stock enhancement. Thus,greater thrust is warranted to exploit thefisheries potential of these water bodiesthrough culture-based fisheries in comingyears.

Floodplain wetlands or beels are otherpotential fishery resources in the statesof Assam, West Bengal and Bihar. Theyoffer tremendous scope for both cultureand capture fisheries. These water bodiesplay vital role for recruitment of fishstocks of the riverine system and providenursery grounds for commerciallyimportant finfishes and shellfishes. It hasbeen estimated that these beels possesspotential to yield as much as 1000-1500kg/ha/year, while the present levelremains at only 100-150 kg/ha. The richnutrients load and availability of fish foodorganisms make water bodies ideal forculture-based fisheries leading to highergrowth of stocked fish species comparedto the reservoirs. The marginal areas ofthe beels can be utilised for constructionof ponds or pens of suitable sizes forraising the required fingerlings forstocking the beels.

Considering the present threat ofincreased pollution levels and siltation ofopen water resources like rivers, estuariesand lagoons and also the over-exploitation of these resources leading tostagnation of fisheries production, thruston culture-based fisheries in reservoirsand floodplain wetlands holds the key forfuture of the inland fisheries developmentin India.

Marine FisheriesMarine fisheries have played a pivotalrole in ensuring food and nutritionalsecurity of the growing population,employment generation, enhancedincome and foreign exchange earnings.India has vast resources in terms of a8,129 km long coastline, 0.5 million sq.

8Financing Agriculture

COVER STORY

km of continental shelf and 2.02 millionsq. km of exclusive economic zone. It isonly after the establishment of CentralMarine Fisheries Research Institute in1947, that the marine fisheriesdevelopment was put on sound footing.

Major thrust areas include research onbiology of commercially importantspecies and monitoring their stocks forproper management; judiciousexploitation and conservation;conducting exploratory surveys andmapping of the productive fishinggrounds, locating new areas andresource; and carrying out environmentalstudies related to fisheries.

Marine fish production trench in majorcoastal states between 2000 and2004: In the first two Five Years Plans,emphasis on marine fishery sector wason the mechanizations of indigenouscrafts, introduction of mechanized fishingboats, improvements in fishing gears,establishment of infrastructure facilitiessuch as processing plants, ice plants, coldstorages and landing and berthingfacilities. These programmes, backed bythe discovery of rich fishing grounds ininshore waters paved the way forestablishment of Sea Food ExportsIndustries. In the next three Five-YearPlans, the above programmes werecontinued with greater emphasis onintroduction of mechanized fishing boatsand adoption of synthetic materials for

fishing gears. Research on various aspectsof marine fisheries and exploration oftheir resources was intensified. With thedeclaration of an Exclusive EconomicZone of 200 miles in 1976, theprogrammes relating to deep-sea fishingwere intensified. While in fifties andsixties, mechanized boats with trawl netsand motorized indigenous crafts wereintroduced for efficient harvests from theinshore region, in seventies, purse-seineswere introduced along the southwestcoast. These developments resulted inexpansion of fishing areas and increasein production. Improved harvestingtechnologies coupled with increasingdemand of fish for domestic and exportmarket have resulted in significantincrease of production over the last fiftyyears, i.e., from 0.53 mmt in 1951 to 3.0mmt in 2001-2002.

Gear designing was given greateremphasis for enhancing the productionfrom the mechanized vessels anddiversification of fishing activities. This ledto development of different gears,introduction which were stern trawling,outrigger trawling, mid-water trawling,purse seining and long lining.Introduction of gears like four-seam trawland bulged-belly trawl could increase thecatching efficiency by about 30 percent.Specialised gill nets were fabricated forlobster fishing. The use of non rottingsynthetic fibre in fishing gears was

another significant development. Of late,the use of mechanical fishing accessories,ancillary fishing equipment and electronictesting devices of practical value in fishingoperation have also added a newdimension for enhancing the catch perunit effort of a specific gear and craft.

An increase in fishing intensity, decliningstocks, conflict between the fishingsectors, decreasing catch rate, decreasingrecruitment, inappropriate exploitationpattern, habitat degradation and resourcedegradation have been identified to bethe major problems of coastal fisheries,presently. Several regulatory measureslike regulation of mesh size, regulationof fishing areas, seasonal closure offishing, ban of the destructive gears,promotion of marine sanctuaries,promotion of artificial reefs and searanching, effecting code of conduct forresponsible fishing have to beimplemented to ensure sustainablegrowth in this sector.

Freshwater AquacultureIndian aquaculture has shownsignificantly higher growth rates thanthose of capture fisheries in the lastdecade, with the quantity increasing from1.01 million tonnes in 1990 to 2.10million tonnes in 2000. Freshwateraquaculture has continued to form amajor share of the aquacultureproduction, with a contribution of over95 percent in terms of quantity. It is onlythe three Indian major carps, which shareas much as 1.6 million tonnes. On theother hand, shrimp forms the main

Improved harvestingtechnologies coupled

with increasingdemand of fish for

domestic and exportmarket have resultedin significant increaseof production over the

last fifty years, i.e.,from 0.53 mmt in 1951

to 3.0 mmt in 2001-2002

9Financing Agriculture

COVER STORY

component of brackish water aquaculturesector with production crossing a lakhtonne mark, recently.

Freshwater aquaculture in India has madenotable strides in recent years with agrowth trend similar to that of the world.With an annual growth rate of over 6percent during the last decade, the sectorpossesses higher growth rates than otherfood producing sectors. The sector hasevolved from the stage of a domesticactivity in the East Indian states of WestBengal and Orissa to that of an industryin recent years, with states like AndhraPradesh, Punjab, Haryana andMaharashtra taking up fish culture as atrade. With technological inputs,entrepreneurial initiatives and financialinvestments, the pond productivity hasgone up at a national level from 500-600 kg/ha/yr to over 2000 kg/ha/yr,with several farmers and entrepreneursachieving higher production levels of 6-8000/ha/yr. Carps is the mainstay ofculture practice in the country, which issupported by strong traditionalknowledge base and scientific inputs invarious aspects of management. Carpscontribute 87 percent of the totalaquaculture production. Though thecountry possesses a large number ofpotential cultivable carp species, it is onlythe three Indian major carps; catla (Catlacatla), rohu (Labeo rohita) and mrigal(Cirrhinus mrigala), that contribute alions share with production (0.546,0.567 and 0.517 million tonnes,respectively recorded during the year2000). Scientific interventions in the lastfive decades have led to the developmentof a host of carp culture technologies withvaried production potentials dependingon the type and level of inputs.

Further, other produce like catfishes,freshwater prawns and molluscs for pearlculture have also been brought into theculture systems. In addition, a range ofother non-conventional culture systems,like sewage-fed fish culture, integratedfarming systems, cage and pen culture,running water fish culture have madefreshwater aquaculture a growing activityacross the country. Being mainly organic-based, the freshwater aquaculturepractices are also able to utilise and treata number of organic wastes includingdomestic sewage, enabling eco-restoration.

Carp Breeding and SeedProductionSeed being the basic input in any culturesystems, its production has beenaccorded highest priority in terms ofbrood-stock management, establishmentof hatcheries, refinement of inducedbreeding techniques, rearing andproduction of quality seed across thecountry. The technology of inducedbreeding of carps under control conditionhas become a common practice of thefarmers today. The breakthrough ofinduced breeding through hypophysationis, undoubtedly, the most importantaspect that led to the growth offreshwater aquaculture sector. Thetechnology has made mass production ofquality seed under control conditionpossible, thereby, reducing thedependence on natural seed collection.Development of several ready-to-usesynthetic inducing agents, as alternativeto pituitary hormone, made thetechnology of induced breeding easierand more farmer friendly. Besides Indianmajor carps, the technology of breedingof Chinese grass carp and silver carp hasalso been domesticated all over thecountry. Various carp species aredomesticated to breed before and afterthe monsoon. The technology of multiplebreedingof carps has been able todemonstrate 2-3 fold higher spawnrecovery from a single female duringseason through 3-4 times breeding

within an interval of about 45 days. Thetechnological evolution of hatcherydesign and operation from initial earthenpits to double-walled hapa andsubsequently to glass-jar and circular eco-hatchery provided scope to produce andhandle mass quantities of eggs duringhatching. Carp hatcheries in the publicsector have contributed to an increase inseed production from 6,321 million fryin 1985-86 to over 18,500 million fry atpresent. Even states like Assam and WestBengal are producing seeds much beyondtheir requirement, showing the prospectsof export trade and its economicalviability. However, in the wake ofincreased emphasis on diversification ofcarp culture, greater research thrust iswarranted for commercial production ofimportant medium and minor carpspecies. Despite the domestication ofinduced breeding technology andproduction of carp seed to the tune ofover 18,500 million fry in the country,the availability of stocking materials ofdesired species and size still remains aconstraint. Raising of seed in the initialtwo stages is associated with high ratesof mortality due to several managementproblems. Packages of practices havebeen developed and standardized forraising fry and fingerlings with highergrowth and survival levels.

* Deputy Director General, Fisheries, IndianCouncil of Agriculture of Research KrishiAnusandhan Bhawan-II, Pusa, New Delhi

10Financing Agriculture

OVERVIEW

Rural Indian women are extensivelyinvolved in agricultural activities.However the nature and extent oftheir involvement differs with thevariations in agro production systems.The mode of female participation inagricultural production varies with thelandowning status of farm households.Their roles range from managers tolandless labourers. In over all farmproduction, womens averagecontribution is estimated at 55 percentto 66 percent of the total labour withpercentages, much higher in certainregions. In the Indian Himalayas a pairof bullocks works 1064 hours, a man1212 hours and a woman 3485 hours ina year on a once hectare farm, a figurethat illustrates womens significantcontribution to agricultural production.(Shiva FAO, 1991)

The impact of W.T.O rules and policiesof trade liberalisation in the agriculturesector on women is distinctive for fourreasons. Firstly, women have been theprimary seed keepers or processors. Theyhave been both the experts andproducers of food, from seed to thekitchen. W.T.O impacts womensexpertise and productive functionsthroughout the food chain. The TradeRelated Intellectual Property Rights(TRIPS) agreement impacts womensknowledge of and control over seed. TheAgreement on Agriculture impactswomens livelihood and income security,and also has secondary impacts in termsof increased violence against women. Thesanitary and phyto sanitary agreementhas a direct impact on womens expertiseand economic role in agro processing.Secondly, as globalisation shifts

agriculture to capital intensive, chemicalintensive systems, women beardisproportionate cots of bothdisplacement and health hazards.

Thirdly, Women carry the heavier workburden in food production, and becauseof gender discrimination get lowerreturns for their work. When WTOdestroys rural livelihoods, it is womenwho loose the most. When WTO rulesallow dumping which leads to decline inprices of farm products, it is womens -already low incomes, which goes downfurther.

Fourthly, their position vis-à-vis WTO isalso more vulnerable because as thelivelihoods and incomes of farmers ingeneral, and women agriculturists inparticular are eroded, they are displacedfrom productive roles, women in

Role of Women in IndianAgriculture SectorBy Padma Lakshmi *

11Financing Agriculture

OVER VIEW

agriculture and their status is furtherdevalued, while the patriarchal power ofthose who control assets and benefit fromasset transfer due to globalisation isincreased, other social processes aretriggered which result in increasedviolence against women. The violenceassociated with displacement,devaluation and disempowerment takesthe form of intensive violence, increasingincidences of rape, the epidemic offemale foeticide, and growth intrafficking of women.

Women also bear the ultimate burden offarm suicides, since they are left to lookafter their households without assets butwith the burden of indebtedness. Indiahas a geographical area of 328.73 millionhectares; of which reported area for landuse is 306.04 million hectares. The netarea cultivated is about 142.60 millionhectares i.e. about 46.6 per cent of thetotal reported area. Since nearly 50million hectares of area is sown more thanonce, the cropping intensity works outto 135.1. Forests account for about 68.97million hectares i.e. 22.5 percent of thetotal reported land area. Also nearly13.97 million hectares are cultivablewastelands and 9.91 million hectares arefallow lands. Only about 30 percent ofthe total cropped area is irrigated and theremaining area is rain fed. The availablestatistics further shows that only about66 percent of the gross cropped area isunder food crops and nearly 34 percentarea under non-food crops. Cereals andpulses account for nearly 52.93 percent

and 12.64 percent of the total arearespectively. Fruits and vegetables occupynearly 4.24 percent of area. (Haque2003)

Plantation crops accounts for insignificantproportion of total area at the macrolevel, although these are very importantcrops for certain regions, namely tea inAssam and West Bengal, Coffee in Keralaand Karnataka, Coconut, cashew nut andrubber in Kerala and Tamil Nadu. Of thetotal coconut area of 1.84 millionhectares, Kerala accounts for 51 percentfollowed by Tamil Nadu 17 percent,Karnataka 18 percent, Andhra Pradesh5.4 percent and other 9.6 percent. In thecase of cashew nut, there are about 601thousand hectares of which Keralaaccounts for 20 percent, Andhra Pradesh15 percent, Karnataka, Maharashtra andTamil Nadu 14 percent each, Orissa 11percent, Goa 8 percent, and others 4percent.

Tea covers nearly 4.34 lakh hectares ofarea in the country of which 3.33 lakhhectares are in the states of Assam andWest Bengal. Coffee is predominantlygrown in the three southern states ofKarnataka, Kerala and Tamil Nadu. Of thetotal coffee area of about 2.41 lakhhectares, Karnataka shares 1.28 lakhhectares, Kerala 66.5 thousand hectaresand Tamil Nadu 32.9 thousand hectares.Similarly rubber is the crop of southernstates. Of the total rubber area of 5.59lakh hectares, Kerala shares 4.73 lakhhectares, Karnataka 19.6 thousand

hectares and Tamil Nadu 18.7 thousandhectares. Also the contribution ofplantation crops to foreign exchangeearnings is very significant. While tea andcoffee earn sizeable foreign exchange,rubber is a valuable import substitute, forrubber-based industries.

According to population census of India2001, there are about 402.5 million ruralworkers of which 127.6 million arecultivators and 107.5 million areagricultural labourers. In other words,pure agricultural workers constitutenearly 58.4 per cent of the total ruralworkers, of which 31.7 percent areowner cultivators and 26.7 percent aremainly agricultural wage earners(Agriculture Statistics at a Glance, sourcedfrom Registrar General of India, NewDelhi 2001). The latest availableagricultural census data (Govt. of India,Agricultural Census Division, Ministry ofAgriculture 2002) also reveal that about78 percent of operational holdings in thecountry are marginal and small, havingless than 2 hectares. About 13 percentholdings have 2 to 4 hectares and 7.1per cent have 4 to 10 hectares of land.(Haque 2003)

The relatively large holdings above 10hectares number only about 1.6 percentof the total operational holdings.However, these 1.6 percent of the largeholdings occupy about 17.3 percent ofthe total area, while 78 percent ofholdings which are less than 2 hectares,operate only about 32.4 percent of thetotal area. This speaks of inequality in thedistribution of operational holdings. Alsothere is inequality of income betweenagricultural and non-agricultural workers,which is evident from the fact thatpercentage share of agriculture in currenttotal GDP is only 24.2, while thepercentage share of agricultural workforce to total work force comes to about60 percent.

The agricultural Census data clearly bearout the fact that Indian agriculture isdominated by small and marginal farms,which are basically subsistence farmers.They provide mainly for self-consumption.

However, some of these farmers have tosell their produce immediately afterharvest at low prices and buy the sameproducts later at high prices.

12Financing Agriculture

OVERVIEW

Characteristics of LabourMarket in AgricultureAccording to 55th of National SampleSurvey (NSSO, 2001), agricultural labourhouseholds constitute nearly 32.2percent of the total rural households. Theself-employed in agriculture account for32.7 percent of the total ruralhouseholds. In fact, the proportion ofagricultural labour households increasedfrom 30.3 percent in 1993-94 to 32.2percent in 1999-2000. While that ofcultivating (self-employed) householdsdeclined from 37.8 percent in 1993-94to 32.7 percent in 1999-2000. Theproportion of female-headed householdsincreased from 9.7 per cent in 199394to 10.4 percent in 1999-2000. Nearly62.6 per cent of the rural householdsbelonged to less than Rs. 470 monthlyper capita expenditure class. Nearly 4.6percent rural households reported thatnone in the family was having any work,27.7 percent reported that only one malemember was, usually working, while 27.8households indicated that one male andone female member were usuallyemployed.

Of the female households 22.8 percentreported that none of their person wasusually employed and 39.6 percentmentioned that only one female memberwas usually working. The NSSO datafurther revealed that 7.2 percent of therural households did not possess any landand 51 percent households possessed lessthan 0.4 hectare. About 19.1 percenthousehold possessed between 0.41 and1 hectare and 11.5 percent between 1.01and 2 hectare. Only 11.2 percentpossessed land above 2 hectare.

Thus by and large Indian farming isdominated by small and marginalfarmers. In fact, the proportion of ruralhouseholds not possessing any land orwhich possessed less than 0.4 hectareland was quite high in the states of Bihar,Goa, Maharashtra, Sikkim and Tamilnadu.Also the proportion of agriculture labourhouseholds was quite high in some ofthese states. It was 38 percent in Bihar,41.7 percent in Maharashtra andKarnataka and 45.2 percent in Tamilnadu.

Another important source of data isCensus of India (2001), according towhich there are nearly 127 millioncultivators, 107.5 million agriculturallabourers and 6 million other farm

workers engaged in livestock, forestryand plantations. Of the total agriculturallabourers, 38.0 per cent were female and61.9 percent male workers. Also amonglivestock, forestry and plantationworkers, 78.3 percent were male workersand 21.7 percent were female workers.About 99.2 percent of agriculturalworkers were reported to be unorganizedand unprotected.

Status of Plantation WorkersThe data compiled by Labour Bureau,Government of India from annual returnsunder the Plantation Labour Act, 1951show that nearly 10.9 lakh persons wereemployed in the plantation sector,comprising 10.2 lakh in tea, 30680 incoffee, 27302 in rubber, 3463 incardamom, 2696 in cinchona and theremaining in other plantations. At all Indialevel, 50 percent workers in tea andcoffee plantations, 34 percent workersin rubber, 62 percent workers incardamom, 38 percent workers in palmoil and 45 percent in cinchona werewomen. In the plantation sector, nearly80 percent are small holders having lessthan 20 acres each. Workers in smallerestates are by and large unorganized andtheir levels of employment are relativelylower than their counterparts in largeplantation estates. It has been known thatcoffee and rubber planters in Kerala, andKarnataka that workers in smallplantation estates receive Rs. 10 to Rs.

20 less per day as compared to thoseworking in large estates. Also they do notadequately get the benefit of minimumwages, bonus and other facilities such ashousing, medical care, maternity benefitetc.

Laws Governing LabourStandards in AgricultureThe Government of India has passed anumber of laws in order to promotelabour standards in agriculture. Theselaws are also in conformity with variousrelevant International LabourOrganization (ILO) Conventions such as:

1. Minimum Wage Fixing Machinery(Agriculture) Convention, 1969(129);

2. Equal Remuneration Convention,1951 (No. 100);

3. Discrimination (Employment andOccupation) Convention, 1958 (No.111);

4. Forced Labour Convention, 1930(No. 29);

5. Abolition of Forced LabourConvention, 1957 (105);

6. Minimum Age Convention, 1973(No. 138), (vii) Worst Form of ChildLabour Convention, 1999 (No. 182),(viii) The Safety and Health inAgriculture Convention, 2001, (No.184); and,

13Financing Agriculture

OVERVIEW

7. Plantation Convention, 1958 (No.110).

The Plantation Labour Act, 1951as Amended in 1981This is an Act to provide for the welfareof labour, and to regulate the conditionsof work, in Plantations. According to thisAct, in every plantation, effectivearrangements shall be made by theemployers to provide and maintain atconvenient places in the plantation, asufficient supply of wholesome drinkingwater to all workers, medical facilities,canteen, crèches, recreation facilities,educational facilities, housing facilitiesand annual leave with wages andmaternity benefits. In most schools, thereis a provision of free mid-day meal forthe children of those employees drawinga monthly salary of Rs. 750. Everyplantation, employing 50 or more womenworkers, also provides crèches.

However, only 20 to 25 percent of theplantation workers who are employed inlarge estates above 25 acres and whocome under the purview of the PlantationLabour Act get such benefit. About 75to 80 percent holdings in tea, coffee andrubber are small and marginal whereworkers have access to free housingfacility, free electricity and drinking waterfacilities and sometimes even medicalcare, they do not generally receive manyof the benefits indicated above.Particularly women workers do not haveaccess to maternity benefit in smallerestates based on personal interviews.

Also the wage rates of these workers areless by Rs. 10 to 20 as compared to thoseworking in larger estates where theworkers are organized. Besides, they donot get subsidized rations unlike theorganized plantation workers.

Poverty and UnemploymentAccording to various rounds of NationalSample Survey, the absolute number ofrural poor persons increased from 232million in 1987-88 to 244 million in1993-94 and then declined to 193 millionin 1999-2000. About 27 percent ruralpeople are reported to be below thepoverty line. In several states includingBihar (44.3 percent), Orissa (48.0percent) and North Eastern states, theincidence of rural poverty is higher thanthe national average (Economic Survey2001-02). The NSS data (NSSO. 50thround) further reveal that: amonglandless agricultural labourers, theincidence of poverty is as high as 71.8percent in Western Plan region of Assam,83 percent in Jharkhand (former southBihar), 78 percent in Northern Bihar, 71.9percent in Central Bihar, 67 percent inEastern Haryana, 64.2 percent inChhattisgarh, 89.6 percent in SouthWestern Madhya Pradesh, 72 to 76percent in various regions of Maharashtra(other than coastal and inland WesternMaharashtra), 61.9 percent to 83.9percent in different regions of Orissa,73.5 percent in Southern Rajasthan, 65.8percent in Northern coastal region, 73.4percent to 89.8 percent in Central,

Eastern and Southern Uttar Pradesh.

Also among self-employed cultivatinghouseholds, the poverty ratio rangesbetween 30 to 50 percent in severalregions including Assam, Bihar,Jharkhand, large parts of MadhyaPradesh and Marahashtra, Orissa,Southern Rajasthan, coastal NorthernTamil Nadu, all regions of Uttar Pradesh(other than Western UP), and EasternHimalayan regions of West Bengal. Thus,a significant population of agriculturalworkers including both self-employedand wages workers stay below thepoverty line. They have poor purchasingpower and command over goods andservices. The annual growth rate ofemployment as such has deceleratedfrom about 2.04 percent during 1983-1994 to 0.98 percent during 1994-2000.But the growth rate of agriculturalemployment has declined from 1.51percent in earlier period to - 0.34 percentduring 1994-2000.

Women in AgricultureAccording to Swaminathan, the famousagricultural scientist, some historiansbelieve that it was woman who firstdomesticated crop plants and therebyinitiated the art and science of farming.While men went out hunting in searchof food, women started gathering seedsfrom the native flora and begancultivating those of interest from thepoint of view of food, feed, fodder, fibreand fuel.

Women have played and continue to playa key role in the conservation of basiclife support systems such as land, water,flora and fauna. They have protected thehealth of the soil through organicrecycling and promoted crop securitythrough the maintenance of varietaldiversity and genetic resistance. Therefore, without the total intellectual andphysical participation of women, it willnot be possible to popularize alternativesystems of land management to shiftingcultivation, arrest gene and soil erosion,and promote the care of the soil and thehealth of economic plants and farmanimals. (Prasad & Singh 1992)

That women play a significant and crucialrole in agricultural development andallied fields including in the main cropproduction, livestock production,

14Financing Agriculture

OVERVIEW

horticulture, post harvest operations,agro/social forestry, fisheries, etc. is a factlong taken for granted but also longignored. The nature and extent ofwomens involvement in agriculture, nodoubt, varies greatly from region toregion. Even within a region, theirinvolvement varies widely amongdifferent ecological sub-zones, farmingsystems, castes, classes and stages in thefamily cycle. But regardless of thesevariations, there is hardly any activity inagricultural production, except ploughingin which women are not activelyinvolved. In some of the farm activitieslike processing and storage, womenpredominate so strongly that menworkers are numerically insignificant.(Aggarwal 2003) Studies on women inagriculture conducted in India and otherdeveloping and under developedcountries all point to the conclusion thatwomen contribute far more toagricultural production than has generallybeen acknowledged. Recognition of theircrucial role in agriculture should notobscure the fact that farm womencontinue to be concerned with theirprimary functions as wives, mothers andhomemakers.

Despite their importance to agriculturalproduction, women face severehandicaps. They are in fact, the largestgroup of landless labourers with little realsecurity in case of break-up of the familyowing to death or divorce; inheritancelaws and customs discriminate againstthem land reform and settlementprogrammes usually give sole title andhence the security needed for obtainingproduction credits to the husband.Agricultural development programmesare usually planned by men and aimedat men.

Mechanization, for example alleviates theburden of tasks that are traditionallymens responsibility, leaving womensburdens unrelieved or even increased.The excess burden of work on women(the double day. of the farm work plushouse work) also acts as a stimulus tohave many children so that they can helpout with chores from an early age.Extension workers almost exclusively aimtheir advice at mens activities and crops.In some regions, this bias may depressproduction of subsistence food crops(often womens crops) in favour of

increased production of cash crops (oftenmens crops) in favour of increasedproduction of cash crops so that familynutrition suffers.

It may not be out of place to mentionhere that considering their dualresponsibilities within and outside thehome, it would be in the fitness of thingsthat more and more in the village trainingis organised for rural farm women to suittheir convenience with due realizationthat institutional training is important inits own place.

In order that farm women get a fair dealat the hands of change agents, one ofthe remedial measures that needs to beundertaken is to induct a sizeable numberof well trained women personnel intraining and extension programmes ofagricultural development agencies at alllevels and more so at the grass-root level.

According to 1991 census the malecultivators has increased in the countryby 11.67 percent from 76.7 in 1981 to85.6 million in 1991. The femalecultivators however have increased at

much faster rate of 45.23 percent from14.8 million in 1981 to 21.5 million in1991. As shown in table 2.1, the numberof male agricultural labourer increased by31.48 percent, but that of female by36.45 percent. 74 percent of the entirefemale working force is engaged inagriculture operations. About 60 percentof agricultural operations like sowing ofseeds, transportation of sapling,winnowing, storage of grain etc arehandled exclusively by women, while inother jobs they share the work withwomen.

Apart from participation in actualcultivation, women participate in variousforms of processing and marketing ofagricultural produce (Aggarwal 2003).

In rural India, the prosperity of thehousehold depends on the prosperity ofagriculture and allied occupation in anyparticular point of time vis-à-vis the roleof women in innumerable activitiesconnected with farming, dairying,sericulture etc.

* The writer is Research Scholar A.M.U.

15Financing Agriculture

SPOTLIGHT

The importance of sugar andsugarcane in India cannot beunderestimated. It is the secondlargest industry in the agro-processingsector, next to textiles, and represents theprincipal livelihood of 35 million farmersand 50 million others who are employedin its 571 sugar-related industries. Indiais the second largest producer ofsugarcane in the world contributing19.98 percent in worlds total sugarcaneproduction with the production of 348million tonnes (as of 2008). In the year2009-10 India produced about 324million tonnes, covering 4.86 millionhectares, with the yield of 66 tonnes perhectare. India is also the second largestconsumer of sugar in the world,averaging a consumption of 15,588 TMT.India is ranked fourteenth in exports,averaging 210 TMT, and they are rankedfifth in the world for imports, averaging667 TMT. On the other side, sugarcanecultivation in India is facing a seriouschallenge of unpredictable wateravailability. There is a need to exploreevery possible approach to reduce thewater input to all crops includingsugarcane. The Sustainable SugarcaneInitiative (SSI) is one such approach thatcould reduce the inputs water, fertilizer,seed material while improvingsugarcane production significantly.

Sustainable Sugarcane Initiative (SSI) isinspired from the successful approach ofSystem of Rice Intensification (SRI)paddy cultivation. SustainableSugarcane Initiative is an approach tothe cultivation of sugarcane that canreduce inputs water, chemical fertilizers,seed material and farm space whileimproving sugarcane productionsignificantly. It also reduces cropduration and provides a longer period

Sustainable SugarcaneInitiative (SSI)Making Sugarcane Production more Profitable and Environmentally Suitable

By D. Muthamizh Vendan Murugavel *

16Financing Agriculture

SPOTLIGHT

of the cane crushing season to the sugarindustry.

This farm-based approach (as opposedto crop-based) also gives farmers optionsto grow intercrops such as pulses toimprove their income. Most importantly,SSI reduces the overall pressure on waterresources and contributes to recovery ofecosystems. It conserves soil moisture,thereby allowing for growing of dry landcrops in the same region.

Major principles and benefits ofSSISSI is a combination of cane plantinginnovations and water saving practicesthat had great potential to increaseproductivity, improve natural resourcemanagement, and assure higher incomefor farmers. Besides reducing waterrequirement, SSI has the scope of reducingseed cane cost, increasing farm incomethrough intercrops, and facilitatingmechanised cane harvesting due to widerspacing. Mechanised sugarcaneharvesting is highly labour intensive.

Raising nursery using single-buddedchips (conventionally, 2-3 budded

sets are used and normally no nurseryis prepared).

Transplanting young seedlings (25-35days old), after grading(conventionally, direct planting of 3-budded chips is done). Raising anursery and grading reduces plantmortality significantly as compared toconventional cultivation.

Maintaining wide spacing (5x2 feet)in the main field, which reduces theseed requirement by 75 percent from48,000 (16000 3-budded chips) to5000 single-budded chips per acre(conventional spacing is 1.5x2.5 ft).Wider spacing supports easy air andsunlight penetration in the cropcanopy, leading to better andhealthier cane growth. It also allowsfor easier intercultural operations.

Providing sufficient moisture andavoiding inundation of water,whereby 40 percent of water is saved(conventionally, flooding ispracticed). This is significant assugarcane consumes about 2500L ofwater per kg of sugarcane produced.

Encouraging organic methods ofnutrient management and plantprotection.

Practicing intercropping (which ispossible due to wider spacing andnon-flooding), thereby increasingeffective utilization of land, givingadditional income and reducing weedgrowth by 60 percent.

All the above practices lead to increasedlength and weight of individual canes,and at least 20-25 tillers/plant and 9-10millable canes/plant, as compared to 10-15 tillers and 4-5 millable canes inconventional cultivation.

By practicing the above measures, thefollowing benefits can be realised:

Better germination percentage;

High number of millable canes;

Reduction in the duration of crop tosome extent;

Increased water use efficiency;

Improvement in accessibility tonutrients with optimum use offertilizers;

More accessibility to air and sunlight;

Reduction in cost of cultivation;

Extra income from intercrops; and,

SSI technique was eminently suitedfor mechanizing sugarcane harvesting

17Financing Agriculture

SPOTLIGHT

A Comparison between Conventional and SSI methods ofSugarcane Cultivation

The Importance of theSustainable Sugarcane InitiativeSugarcane farming needs a lot of waterand flooding method drains preciousirrigation resources when used in largescale. While precision farming is anoption, the cost of irrigating cane fieldsspread over large tracts is out of boundsfor small and medium farmers. Besidestechnological shortcomings, farmers had

agriculture. From the point of view ofwater, sugarcane consumes about 2500L of water per kg. The SustainableSugarcane Initiative (SSI) aims to providepractical options to farmers for improvingthe productivity of land, water, andlabour reduce crop duration, providingfactories a longer crushing season andincreased employment opportunities forworkers reduce the overall pressure onwater resources and ecosystems. Itstresses a practical approach thatoriginates from farmers and civil societyto improve productivity while reducingpressures on natural resources. Itsestimated that by adopting SSI, a farmerwill be able to produce at least 20 percentmore sugarcane while reducing waterinputs by 30 percent and chemical inputsby 25 percent. This concept surely canbring substantial changes in theproduction and productivity ofsugarcane.

Though the SSI method has received anoverwhelming response from the farmersof UP, Punjab, Orissa, Karnataka, TamilNadu and Andhra Pradesh, industries andresearchers, it needs to be modified tosuite the local conditions while retainingthe main principles. Moreover, theextension functionaries should make surethe rapid spread and adoption of thismethod across the country.

Hence, it is right to say that the more-from-less sustainable agricultureapproach like SSI which can deliver higherproduction, at lower economic andecological costs including a lower waterfootprint has a vital role to play in shapingthe future of our farmers, food securityand economy.

References

Sustainable Sugarcane Initiative -Improving Sugarcane Cultivation in India- Training Manual developed by WWFIndia and ICRISAT, http://www.indiawaterportal.org.

Sustainable sugarcane initiativelaunched, The Hindu, Wednesday, Jan19, 2011

Sustainable Sugarcane Initiativelaunched for increased productivity, TheHindu, Saturday, Apr 17, 2010

to be assisted in leapfrogging toadvanced cultivation methods to meetburgeoning demands. The SSI has theanswers for all those necessities.

ConclusionProducing more crops with less water,seed, and fertilisers is currently thegreatest challenge facing the agriculturalsector, warranting a new revolution in

Input Conventional Method SSI Method

Seeds/Setts 48,000 buds (16,000 5000 buds (5000 singlethree budded setts/acre) budded chips/acre)

Nursery preparation No YesMeasures to maintain No Grading Grading is done duringuniformity among plants nurseryPlanting Direct planting of setts Transplanting of 25-35 days

in the main field old young seedlingsraised ina nursery

Spacing 1.5 to 2.5 ft between 5 ft between rowsrows

Water requirement More (flooding of field) Less (maintenance ofmoisture in the furrows)

Mortality rate amongplants High LowNo. of tillers per plant Less (10-15) More (20-25)No. of millable canesachieved per clump 4-5 9-10Accessibility to air andsunlight Low HighScope for intercrop Less More

* The writer is Assistant Professor, PG &Research Department of Commerce, GobiArts & Science College, Gobi, TamilNadu,India, E-mail: mvm_gasc@rediffmail.com

18Financing Agriculture

PERSPECTIVE

Climate Sensitivity ofIndian Agriculture

By K.S. Kavi Kumar *

Climate change impact studies on agriculture are broadly based on agronomic-economicapproach and Ricardian approach. The Ricardian approach, similar in principle to the Hedonicpricing approach of environmental valuation, has received significant attention due to itselegance and also some strong assumptions it makes. This article attempts to extend theexisting knowledge in this field by specifically addressing two important issues: (a) extent ofchange in climate sensitivity of Indian agriculture over time; and (b) importance of accountingfor spatial features in the assessment of climate sensitivity. The analysis based on four decadesof data suggests that the climate sensitivity of Indian agriculture is increasing over time,particularly in the period from mid-eighties to late nineties. This finding corroborates thegrowing evidence of weakening agricultural productivity over the similar period in India. Theresults also show presence of significant positive spatial autocorrelation, necessitating estimationof climate sensitivity while controlling for the same. While many explanations may exist forthe presence of spatial autocorrelation, this paper argued that inter-farmer communicationcould be one of the primary reasons for the spatial dependence. Field studies carried out inAndhra Pradesh and Tamil Nadu through focus group discussions provided limited evidence inthis direction.

19Financing Agriculture

PERSPECTIVE

Over the past two decades thedebate on global climatechange has moved fromscientific circles to policy circles with theworld nations more seriously than everexploring a range of response strategiesto deal with this complex phenomenonthat is threatening to have significant andfar reaching impacts on human society.The Intergovernmental Panel on ClimateChange (IPCC) in its fourth assessmentreport observed that, warming ofclimate system is now unequivocal, as isnow evident from observations ofincreases in global average air and oceantemperatures, widespread melting ofsnow and ice, and rising global sea level(Solomon et al., 2007).

Policy responses to climate changeinclude mitigation of GHGs thatcontribute to the expected changes in theEarths climate, and adaptation topotential impacts caused by the changingclimate. While the first one is largely seenas a reactive response to climate change,the second one is a proactive response.Though GHG mitigation policies havedominated the overall climate policy sofar, adaptation strategies are also beingemphasised now to form a morecomprehensive policy response. TheUnited Nations Framework Conventionon Climate Change (UNFCCC) theinternational apex body on climatechange refers to adaptation in thecontext of change in climate only. In otherwords without greenhouse gas emissionsthere is no climate change and hence noneed for adaptation. Going by this widelyaccepted interpretation, adaptation isnecessary only because mitigation ofgreenhouse gases may not completelyhalt climate change. Stern Reviewsummarises this view: adaptation iscrucial to deal with the unavoidableimpacts of climate change to which theworld is already committed (Stern,2006, emphasis added).

For both mitigation and adaptation policyformulation, one of the crucial inputsneeded is the potential impacts due toclimate change.

Climate Change and IndianAgricultureWith more than sixty percent of itspopulation dependent on climatesensitive activities such as agriculture, the

impacts of climate change on agricultureassume significant importance for India.Climate change projections made up to2100 for India, indicate an overallincrease in temperature by 2-4oCcoupled with increase in precipitation,especially during the monsoon period.Mall et al. (2006) provide an excellentreview of climate change impact studieson Indian agriculture mainly from physicalimpacts perspective. The availableevidence shows significant drop in yieldsof important cereal crops like rice andwheat under climate change conditions.However, biophysical impacts on someof the important crops like sugarcane,cotton and sunflower have not beenstudied adequately. The economicimpacts of climate change on agriculturehave been studied extensively world overand it continues to be a hotly debatedresearch problem. Two broad approacheshave been used so far in the literature toestimate the impact of climate changeon agriculture:

Agronomic-economic approach thatfocuses on structural modelling ofcrop and farmer response, combiningthe agronomic response of plantswith economic/managementdecisions of farmers. This approachis also referred as Crop Modellingapproach and Production Functionapproach;

Spatial analogue approach thatexploits observed differences in

agricultural production and climateamong different regions to estimatea climate response function. Thisapproach is referred as Ricardianapproach and is similar in spirit tohedonic pricing technique ofenvironmental valuation.

In the first approach the physical impacts(in the form of yield changes and/or areachanges estimated through cropsimulation models) are introduced intoan economic model exogenously as Hicksneutral technical changes. In the Indiancontext Kumar and Parikh (2001a)showed that under doubled carbondioxide concentration levels in the laterhalf of twenty first century the grossdomestic product would decline by 1.4to 3 percentage points under variousclimate change scenarios. Moresignificantly they also estimated increase

With more than sixtypercent of its population

dependent on climatesensitive activities such

as agriculture, theimpacts of climate

change on agricultureassume significant

importance for India

20Financing Agriculture

in the proportion of population in thebottom income groups of the society inboth rural and urban India under climatechange conditions. While this approachcan account for the so-called carbonfertilisation effects, one of the majorlimitations is its treatment of adaptation.Since the physical impacts of agricultureare to be re-estimated under eachadaptation strategy, only a limitednumber of strategies can be analysed.

In an alternative approach, calledRicardian approach, Mendelsohn et al.(1994) have attempted to link land valuesto climate through reduced-formeconometric models using cross-sectionalevidence. This approach is similar toHedonic pricing approach ofenvironmental valuation. Since thisapproach is based on the observedevidence of farmer behaviour it could inprinciple include all adaptationpossibilities. Of course, if the predictedclimate change is much larger than theobserved climatic differences across thecross-sectional units then the Ricardianapproach can not (even in principle) fullyaccount for adaptation.

While the Ricardian approach has thepotential for addressing the adaptationsatisfactorily, the issues concerning thecost of adaptation are not completelyaddressed. One of the main concerns ofthis approach is that it may confoundclimate with other unobserved factors.

Recently, Deschenes and Greenstone(2005) and Schlenker and Roberts (2008)among others, have addressed this issue.Further, the constant relative pricesassumption used in this approach couldbias the estimates (see, Cline, 1996;Darwin, 1999; Quiggin and Horowitz,1999 for a critique on this approach). ForIndia, Kumar and Parikh (2001b) andSanghi and Mendelsohn (2008) haveused a variant of this approach andshowed that a 2o 0C temperature rise andseven percent increase in rainfall wouldlead to almost 10 percent loss in farmlevel net revenue (1990 net revenue).

The regional differences are significantlylarge with northern and central Indiandistricts along with coastal districtsbearing relatively large impact.Mendelsohn et al. (2001) have comparedclimate sensitivity of the US, Brazilian andIndian agriculture using the estimatesbased on the Ricardian approach andhave argued that using the US estimatesfor assessing climate change impacts onIndian agriculture would lead to under-estimation of impacts.

The results of the two broad approachesoutlined above correspond to what couldbe termed as typical and clairvoyantfarmer, respectively. While the estimatesfrom agronomic-economic approachaccount for adaptation only in partialmanner, the Ricardian approach treatsfarmer as though she has perfect

foresight. In the Ricardian approachfarmers are assumed to identifyinstantaneously and perfectly any changein climate, evaluate all associated changesin market conditions and then modifytheir actions to maximize profits. Theseassumptions also imply that agriculturalsystem is ergodic i.e., space and timeare substitutable. Ergodic assumptionimply, for example, that skills, institutionaland financial endowments for respondingto say, drought (that are typically refinedin arid places) are assumed to be availablefor use by people in humid areas (wheresuch resources are under-developed)immediately and in essentially cost-lessmanner.

Further there is scope for inter-farmercommunication and informationdiffusion. Both these factors motivateincorporation of spatial features in theRicardian analysis. There are othermotivations for accounting for spatialautocorrelation in the Ricardian analysis.Scope for spatial autocorrelation of errorterms could lead to inefficient estimationof the coefficients. Recent evidence fromthe US suggests that either way it isimportant to account for spatialautocorrelation to get accurate estimatesof climate sensitivity of agriculture.Similarly, careful analysis of the changingnature of climate sensitivity of Indianagriculture is important to understand therole of technology in ameliorating theclimate change impacts.

Climate Change Projections forIndiaThe climate change projections for Indiaused for the analysis are those reportedin Cline (2007). From these regionalprojections, state-wise climate changepredictions are assessed by comparingthe latitude-longitude ranges of theregions with those of the states. Besidesthis India specific climate changescenario, the impacts are also assessedfor two illustrative uniform climatechange scenarios (+2oC temperaturechange along with +7 percentprecipitation change; and +3.5oCtemperature change along with +14percent precipitation change) thatembrace the aggregate changes.

Inclusion of interaction terms makes itdifficult to interpret the marginal effectsof temperature and precipitation. To gain

PERSPECTIVE

21Financing Agriculture

insight about the impact of variousclimate change scenarios and variabilityin the impacts based on climate responsefunctions that correspond to differenttime periods, the climate change impactsare estimated. The climate changeinduced impacts are measured throughchanges in net revenue triggered by thechanges in the climate variables. Theimpacts are estimated for each year atindividual district level and are thenaggregated to derive the national levelimpacts.

Evidence on Inter-farmerCommunicationAs observed in the previous sectionconsideration of spatial effects hascontributed to positive spin-offs in termsof reduced climate change impacts. Fordesigning enabling policy responses, it isimportant to explore factors contributingtowards such spatial effects.Hypothesizing that inter-farmercommunication could among otherfactors be responsible for spatial auto-correlation, an attempt has been madeto understand the scope and extent ofinformation exchange between farmersthrough focus group meetings held at sixvillages each in Tamil Nadu and AndhraPradesh. The focus group meetingsmainly explored the perceptions of thevillagers about the climate change andtheir views on strategies helpful inameliorating the climate change impacts.Among other things, special attention ispaid to the channels through whichinformation diffusion takes place.

The field level analysis showed that whilemost farmers are familiar with the termclimate change, their understanding isoften overlapping with otherphenomenon. All climate/naturalpatterns are perceived as climate changewith little and/or no distinction betweenfuture climate change and preset dayclimate concerns (that manifest in theform of climate extremes like droughts,floods and cyclones, and abnormalweather patterns like un-seasonal rainfalletc.). However, there is a consensus inmost discussions that anthropogenicactivities leading to excess pollution areoften responsible for the abnormalweather. Most farmers also considerclimate/weather concerns to be morethreatening than other risks, such as pricechanges. The reasons cited for such

perceptions include, bigger scale ofimpact that climate/weather risks maycause, and limited scope for adaptation.Such perceptions are uniformly held bysmall, medium and large farmers.

Almost all focus group meetings indicatedthat there is dearth of information.Farmers irrespective of size are in searchof information which could includeadvice on input use, pest control,agronomic practices, and soil and waterconservation practices. Among thevarious sources through whichinformation diffusion takes place, mostfocus group discussions ranked largefarmers in the neighbourhood as theprimary source. Not surprisingly, theagricultural extension services offered bythe government are not seen asappropriate source of information, mainlydue to the manner in which the extensionservices provide information. While theinformation needs are different acrossfarmers based on their scale of operationand kind of crops cultivated, theagricultural extension services oftenpackage the information in uniformmanner as though one size fits all.

Similarly, the usual information diffusionsources such as television and radio alsoappear to be less effective in reachingout, partly because these sources areoften seen as entertainment sourcesrather than information channels.Discussion in several focus groupmeetings revealed that farmers oftendepend on fertilizer and pesticide dealers

for information on new varieties and newagricultural practices. While this sourcehas appropriate self regulated checksagainst provision of wrong information,it is important to ensure that incorrectinformation does not reach the farmerseven inadvertently. Most importantlythese sources provide information in acase-by-case manner that suits mostfarmers.

New information does not often reachagricultural labourers. Given the large sizeof this group and the important role itplays in determining agriculturalproductivity, it is important to ensure thatthis group is also targeted along withfarmers in providing information onagricultural practices. Similarly, theinformation diffusion must take place toreach female farmers also alongside theirmale counterparts, which appeared to belacking presently based on the evidencefrom the focus group discussions with thefemale farmers. There is two-tierstructure for the information flow withthe male farmers receiving it first and thefemale farmers learning through theirmale counterparts. Perhaps this is due tolarger social prejudices and needsimmediate attention.

The field studies also revealed that newsources of information diffusion shouldbe explored and experimented. Given thefragmented nature of Indian agriculturallands, large scale participation ofcorporate sector in providing agriculturalextension services could be difficult, andhence other options must be explored.Among other things, the farmersfavoured participation of agriculturalcooperatives, NGOs, and dealers ofinputs and fertilizers in informationdiffusion. In this context, other countryexperiences should also be carefullystudied to identify the routes throughwhich the agricultural extension servicescould be provided to the farmers. Forinstance, in Ecuador the agriculturalextension workers operate in tandemwith the farmers through share croppingto ensure proper information diffusion.On the other hand, Chile finances thecosts of private sector firms transferringthe technology know-how andinformation on new agricultural practicesto small scale farmers.

* The writer is Assistant Professor Universityof Delhi

PERSPECTIVE

22Financing Agriculture

SPECIAL STORY

The sugar economy in many waysrepresents a microcosm of theIndian economy in which there areinter-meshed a wide range of socialgroups who play an important role in theformulation of economic policy at a widerlevel (Baru, 1990 p.2). For aneconomist, interest in the sugar economystems from the fact that it is one of themost regulated sectors in the economy.Also, pressure from millers, growers andconsumers, make formulation of sugarpolicy a challenging task for theadministrator and the government. Theintertwining of economics and politics inthe sugar economy provides an excitingterrain for research in the Public Choicetradition.

Economists have traditionally failed torecognise the political dimension of policyprescriptions. This gap between soundeconomic principles and political realityhas sought to be bridged by Public Choicetheory. Public Choice theory hascontributed significantly to understandingthe institutional setup and quantitativelyestablishing the politico-economic nexusthat prevails in society.

The proposed study attempts to take aclose look at the deeply entrenchedtradition or institution of sugar co-operatives in Maharashtra. A study ofsugar co-operatives, particularly inMaharashtra, assumes significance astheir leaders, the sugar barons, haveconstituted an important power structurein the state and the sugar co-operatives

have played a pivotal role in shaping thesocio-economic fabric of the state. It isan accepted fact that no other sector ofthe economy is as well represented ingovernment as is the sugar sector. Manyof the cane growers have occupiedimportant positions in government, withtwo having reached the position of ChiefMinister of the state.

The BeginningsThe spread of canal irrigation in the 1920sattracted migrants, especially Malis fromSaswad who were experienced withgrowing irrigated crops, to move into thecanal tracts and lease in land from local

Maratha cultivators. According toChitelen (1985) canal irrigation itselfcontributed to the differentiation process.A contrary view has been expressed byAttwood (1992) who draws attention tothe fact that much of the land that wasbeing brought under cultivation wasbeing used for the first time and not takenaway from the small peasants and societywas already a highly differentiated one.

While Attowood (1992) disagrees withChitelens view of exploitation, bothagree on the fact that the entrepreneurswho made use of canal irrigation did getricher than small peasants. The idea of acooperative was first mooted at a

Origin of the powerful sugar lobby in Maharashtra dates back to the 1950s. Post Independence, cooperativesformed an integral part of the Congress vision of rural development with local initiative. A special statuswas accorded to the sugar cooperatives and the government assumed the role of a mentor by acting as astakeholder, guarantor and regulator. Persistence of the maze of regulations instituted five decades ago,despite its stated original rationale being thwarted, suggests that it is by active design of entrenchedvested interests. The clarion call of the times is a fresh start with minimal regulations. Teething problemsand initial market failures that may occur cannot be worse than continuing the saga of government failure.

Sugar Co-operatives in Maharashtra:A Political Economy PerspectiveBy Mala Lalvani *

23Financing Agriculture

SPECIAL STORY

conference of irrigators and presided overby eminent economist Dr. D.R. Gadgil in1945. It was only by the end of 1948that the first cooperative society to beset up at Pravaranagar was registered.The resounding success of the Pravararesulted in the government taking adecision in 1954 of granting industriallicenses for sugar industry to co-operatives alone. This gave a major fillipto the growth of sugar cooperatives inMaharashtra. The decade of the 1950salone saw 14 new sugar factories beingset up in the cooperative sector. Thecontrol of sugar co-operatives soonbecame a means of acquiring politicalpower for the rich peasant class, theMarathas. The government had begunto assume the role of a mentor by actingas stakeholder, guarantor and regulator.

An important factor which contributedto the success of sugar co-operatives wasthe encouragement provided by theruling Congress party to the formationof these co-operatives. AfterIndependence in 1947, India adopted ademocratic constitution with universaladult suffrage. For the first time the vastmajority of villagers got to vote. This ledto a displacement of elite, high-casteurban politicians from state legislaturesand resulted in strengthening of thenexus between the sugar cooperativesand government. Caste affiliationsworked in favour of cooperatives and

they received a variety of financialsubsidies from the state government.

The deep rooted political nexus of sugarcooperatives that unfolds as the storyprogresses opens up a vast area ofresearch in the Public Choice tradition.Before plunging headlong into details ofthe sugar sector, we contextualise thestudy and elaborate on regulation theoryand Public Choice theory.

The Context: Regulation Theory& Public Choice FrameworkBroadly speaking, regulation theory canbe categorised into (i) Public Interesttheory and (ii) Capture theory. PublicInterest theory sees regulation as aproduct supplied in response to thedemand from the public for correctionof inefficient or inequitable markets. Thetheory of regulation that best describesthe sugar cooperatives in Maharashtra isthe Capture theory. There are a numberof variants of this theory including theMarxist and the political scientistsversion. The variant that is popular witheconomists and relevant here is thatproposed by George Stigler (1971). Itinsists that economic regulation servesthe private interests of politically effectivegroups. Economic regulation is thusviewed as product whose allocation isgoverned by the laws of supply anddemand. Stigler (1971) identifies fourmain policies which an industry may seek

(a) Cash subsidy (b) Control over entryby new rivals (c) Control on substitutesand complements and (d) Price-fixing.

The industry which seeks political powermust go to the appropriate seller that is,the political party. In turn the industrymust be prepared to pay with (a) votesand (b) resources in the form of campaigncontributions and contributed services.Further, it is a conjecture of the capturetheory that if a political party has in effecta monopoly control over the governmentmachine, it could collect most of thebenefits of regulation for itself.

In case of sugar cooperatives inMaharashtra, the more powerful farmersfound their way into governmenthierarchy and occupied offices fromwhere they were in a position to shapepolicy and indulge in pork barrel politics.

The Political Nexus of SugarCooperativesThe state of Maharashtra has onedominant caste, the Marathas, who spanthe entire state and also dominate thepolitical scene. The relative solidarity ofthe Congress party in Maharashtra andits stability is largely attributable toMaratha hegemony. UnlikeMaharashtra, none of the other statesof India have experienced regionalhegemonic dominance equivalent tothat of the Marathas (Lele, 1981). In

The decade of the1950s alone saw 14new sugar factoriesbeing set up in thecooperative sector.

The control of sugarco-operatives soonbecame a means ofacquiring politicalpower for the richpeasant class, the

Marathas

24Financing Agriculture

Maharashtra, the Marathas areestimated to constitute 40 percent of thepopulation and have control over nearly80 per cent of the positions of politicalpower. Their predominance is feltespecially in the western Maharashtraregion. Apart from proximity to the statecapital, Mumbai and an excellenttransport network, it is the power of thesugar lobby or sugar barons as they areoften referred to, that gives the westernMaharashtra region an edge over othersin state politics (Sirsikar, 1995).

The management of a sugar factory restswith a Board of Directors. There isconsiderable prestige, material gain andpatronage that comes along withDirectorship and Chairmanship of asugar cooperative. Baviskar (1980)provides a very lucid account of thestatus enjoyed by members elected tothe board. The status and power that aChairman and the Directors commandmakes them highly sought after by thepolitical parties, who offer them ticketsto contest in elections both state andlocal. These positions are therefore veryattractive and highly coveted by localleaders. Consequently, factory electionsare intensely contested. Khekale (1999)in his study of the period 1952-72 foundthat 74 percent of the Chairmen of sugarcooperatives were elected as legislatorsand MPs. Controlling big cooperatives,such as sugar factories, helps leaders torise in party and governmental hierarchyand this in turn helps them to getnominated on the Boards of variousother cooperatives especiallycooperative banks.

Thus a two-way relationship hasflowered between cooperatives andother structures of power. The sugarindustry, in turn, has been a hugecontributor to election funds duringelection campaigns. Baviskar (1968)provides ample evidence to substantiatethis. Sugar cooperatives have sometimeseven played host to election meetings ofpolitical parties and provided variousfacilities. The manpower and vehicles forelection campaigns are customarilyprovided by sugar cooperatives.

The link of the sugar cooperatives withpolitics in general and the Congress party,in particular, is evident via some statisticsprovided by Khekale (1999). He findsthat 21 Chairmen of sugar cooperativeshave held important positions in theCongress party during the 1952-1972period. The sugar cooperatives are thusclearly a Congress stronghold. On thewhole, sugar cooperatives haveconstituted a rural power structure andhave provided an important politicalrecruitment base. In the words ofBaviskar If sugar cooperatives have beeninstruments of rural development thenpolitics is the process that has sustainedthis development.

Such being the ties between sugarcooperatives and the politics, one istempted to attribute the beginning ofcooperatives itself to the political cloutthat the rich Maratha peasants enjoyed.Attwood (1993), however, cautionsagainst reading history backwards and

attributing the success of the earlycooperatives to the political power of theMarathas at the state level. He viewsthese cooperatives as experiments inwhich commitment and performance oflocal leaders were all important(Attwood, 1992, p.190). In his view, thefact that the State could pass land reformlegislation in the late 1950s and early1960s, which went against the interestof the cane growers, suggests that thecane growers lacked enough politicalpower to prevent the legislation frombeing passed. That the rich farmerssubsequently circumvented the hurdle byreallocating the land amongst familymembers, is a separate issue.

Contextually, one is inclined to go alongwith the view that the generousgovernment support and the regulatorymechanism began with benignintentions in the immediate years postIndependence. However, whendiscussing the role of the state and thesupport it provides to the sugarcane cropand to the sugar cooperatives, in section5 below we find adequate evidence tosuggest that persistence of this maze ofregulations is by design of entrenchedvested interests.

Rules of the Game TheRegulatory Role of the StateA sugar cooperative is an agro processingindustry, ridden with regulations on both,the output side, that is, sugar and on theinput side, that is, sugarcane. An

The sugarcooperatives are thus

clearly a Congressstronghold. On the

whole, sugarcooperatives haveconstituted a rural

power structure andhave provided an

important politicalrecruitment base

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25Financing Agriculture

important point to note here is that mostof these regulations were initiated in thefirst decade after Independence thefifties. But first we take a look at the rolethat the state in supporting the sugarcanecrop itself.

The Sugarcane Crop NetSubsidised?Indian agriculture is highly subsidisedthrough cheap fertilisers, free power andirrigation water in various states and thatthe system can no longer carry on withthis burden. A crop-wise estimate ofagricultural subsidies is difficult tocompute. However, some indications ofthe magnitude of concessions to

importance. A combination of threefactors that is, relatively drier climate ofwestern zone, historical factors andpolicy decisions have resulted in greaterdevelopment of the irrigation potentialin the western zone vis-à-vis the easternzone. The recommended waterapplication for sugarcane is 274 hectare-cm as compared to a mere 30 hectare-cm for rabi jowar. Sawant (1997) pointsout that in the 1980s, 50 percent to 70percent of the incremental volume ofirrigation water was diverted to thesugarcane crop alone at the expense ofother crops. Table I below compares theyield in Maharashtra vis-à-vis thenational average.

attributed to the shift to a shorterduration annual crop since there is waterscarcity and the longer duration cropfaces two dry seasons rather than one.

An added dimension of regional variationis that irrigation facilities are much betterdeveloped in western Maharashtra thanin the eastern region. Undoubtedly,western region of Maharashtra beingdrier than the eastern region implies thatit requires greater development ofirrigation facilities. Also, Attwood (1985,2005) points out that the constructionof Nira Left Bank canal in westernMaharashtra began in 1876 as faminerelief work. Thus, while bothenvironmental and historical factorsprovide some explanation for thisregional skewness in the development ofirrigation potential, the policy dimensioncannot be ignored either.

Over time the irrigation backlog ofeastern Maharashtra has been observedto worsen (Report of Indicators andBacklog Committee, 1997). The BacklogCommittee, 1997 welcomed the decisionof the state government to invest Rs.1400 crores annually upto the year 2000in the Krishna Valley Development as apositive step, but expressed its concernabout the impact on regional imbalances.The Committee pointed out that KrishnaBasin in Pune division was ahead of allother regions in all sectors of

sugarcane crop and the channels viawhich subsidies are offered can be easilydiscerned.

The tropical climate of Mahrashtranecessitates that he sugarcane crop becultivated entirely on irrigated land,hence irrigation assumes tremendous

Table I shows that the average sugarcaneyield in Maharashtra has been higherthan the national average in the mid1980s (1986/1987 to 1990/1991), buthas fallen to below the national averagein the 1990s (1991/1992 to 1997/1998). The falling yield has been

Table I: Yield of Sugarcane(metric tonnes per hect) Maharashtra India Gap

1986/1987 to 1990/1991 65.38 61.94 3.44

1991/1992 to 1997/1998 60.09 67.67 -7.58

Source: District-wise Agricultural Database for Maharashtra 1960-61 to 1997-98, EPW

Indian agriculture ishighly subsidised

through cheapfertilisers, free

power and irrigationwater in various

states and that thesystem can no longer

carry on with thisburden. A crop-wise

estimate ofagricultural

subsidies is difficultto compute

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26Financing Agriculture

development including irrigation. Henceif a big boost to irrigation was required,then stepping up of irrigation activitiesin Vidarbha and Marathwada regionswould have helped mitigate the growingregional imbalances. This worsening ofthe irrigation backlog for the easternregion of Maharashtra must therefore beattributed, in some measure, to aconscious policy decision of the stategovernment. Details on the magnitudeof irrigation backlog for the easternregion of Maharashtra are provided insection 5D.

In addition to volume-wise distortions,there is also the system of fixing waterrates which provides covert subsidies toall the sugarcane growers. Of theassessed amount, a mere 30 per cent wascollected in 2002 (World Bank, 2004).As regards the system of fixing waterrates, there is no denying that water ratesin Maharashtra are among the highest inthe country. Also, while most other statescharge for water on a per-hectare basis,thus clearly subsidising water intensivecrops like sugarcane, Maharashtra isamong the few states that has watercharges based on volumes consumed.One loophole that still remains is thateven though the operation andmaintenance (O&M) charges are basedon actual usage, the capital cost is dividedby scheme area and every beneficiarypays uniformly per hectare. Thus, farmerswho grow crops that need very littlewater like groundnut, jowar have to payheavily towards the capital costcomponent and effectively subsidisesugarcane and cotton farmers whoconsume a much larger volume.

Large scale usage of irrigation facilitiesalso implies that cane cultivators are largeconsumers of power and gainsubstantially from power subsidies thatpoliticians have often used as a tool forappeasing the rural masses. Sant andDixit (1996) pointed out that the flat ratetariffs for large LIS, used mostly forsugarcane cultivation and irrigation pumpsets (IPS) on wells resulted in much lowereffective tariff for cane growers than theircounterparts who consumed much lesselectricity.

Controls on SugarSugar falls under the EssentialCommodities Act, 1955 and hence the

government is permitted to impose a levyquota, that is, procure a certain per centof the sugar at a subsidised price to besold via the Public Distribution System(PDS) at prices lower than the freemarket price within India. The objectiveof this compulsory procurement is tosupply sugar to the lower strata of societyat a subsidised price. Levy price is a costplus price thus resulting in thegovernment paying more to the high costinefficient northern factories andeffectively imposing a hidden tax onrelatively efficient factories ofMaharashtra. The sugar policy is a matterthat falls within the purview of the centralgovernment and qualitative evidenceseems to suggest that interests of thesugar producers (many of them beinggovernment officials at the state level)have been protected. Consequently, thecentre-state relations too have played arole in shaping of policy decisionspertaining to sugar.

Government controls on the input sidethat is, sugarcane are even morestringent. Zoning and setting of the caneprice are two sets of controls (imposed

by the state government) that we discussin some detail in the two sub-sectionsthat follow.

ConclusionThe way out of this financial mess thatthe sugar cooperatives are in cannot besmall time tinkering around with theregulatory mechanism like increasing thedistance between factories to nullifyzoning or even rehabilitation packagesprovided by agencies like NABARD,which are in effect an arm of thegovernment. A gradualist approach ispassé and will not work. The clarion callof the times is to start afresh with minimalregulations. In keeping with the currentethos, a level playing field must beprovided to the private sector. Greaterscope for market forces such as tradingof sugar futures is possibly the only roadahead. Here too, teething problems arebound to exist, but market failure, evenif it does occur initially, cannot be worsethan continuing the saga of governmentfailure.

* Department of Economics, University ofMumbai

The sugar policy is a matter that falls within thepurview of the central government and qualitative

evidence seems to suggest that interests of the sugarproducers (many of them being government officials at

the state level) have been protected

SPECIAL STORY

27Financing Agriculture

INVESTIGATION

India is among the worlds largest andfastest growing markets for milk andmilk products. The development andgrowth of dairy sector in India has beenfascinating. In a period of four decades,India catapulted from a milk deficit to amilk sufficient nation. During the 1950sand 1960s, 43 percent of milk solids inthe total throughput of dairy industrywere imported. The commercial importof milk powder touched its peak in 1963-64. This made the policy makers worriedand led to the launching of OperationFlood programme in 1970 by theNational Dairy Development Board(NDDB) and was supported byTechnology Mission on DairyDevelopment in 1989.

These programmes resulted inspectacular growth of milk production from 22 million tonnes in 1970-71 to104.8 million tonnes in 2007-08 and theper capita milk availability more thandoubled from 112 grams to 252 gramsper day in the same period.

India is Cost EfficientIndias milk production today accountsfor more than 15 percent of the totalworld output and 40 percent of Asiastotal production. It continues to grow atabout 4 percent per annum far exceedingthe global average of 1-2 percent inrecent years. Also, Indias milk productioneconomy is based on conversion of agroby-products and opportunity labour.Therefore the cost of milk production inIndia is among the lowest in the world,making it globally price competitivewithout any subsidy.

The global milk output growth remainsslow. According to the FAO Food Outlook(Global Market Analysis) released in June2009, world production of milk wasestimated to be around 688 milliontonnes in 2008, about 1.7 percent higherthan the previous year. Recent milkproduction estimate for 2009 is 699million tonnes, 1.6 percent more than lastyear. This growth is below the globaltrend rate of 2 percent annually, which

prevailed in the previous decade. Milkproduction is now expected to rise by 3.5percent in Asia to 256 million tonnes.Output in developing countries mayreach 337 million tonnes, virtuallycounting for all the additional globaloutput, as milk production in developedcountries is anticipated to remain largelyunchanged. Consequently, the share ofdeveloping countries in world milkproduction is expected to rise to over 48percent, up from a 40 percent share tenyears ago and 32 percent at the start ofthe 1990s.

Complimentary RoleThe livestock sector is playing animportant role in achieving the targetedagricultural growth in India. According toestimates of the Central StatisticalOrganisation (CSO), the value of outputfrom livestock sector at current pricesduring 2007-08 was about 29 percentof the total value of output of theagriculture and allied sectors. Two-thirdsof this was contributed by the milk sectoralone. The livestock sector has beencontributing over 5 percent to the totalGDP. A target of 6-7 percent growth perannum for the livestock sector with milkgroup growing at a rate of 5 percent hasbeen set during the 11th Five Year Plan.

Indias Dairy MarketOver half of Indias total milk production

Indian Dairy Sector: MarketEfficiency is the KeyBy Dr R.S. Khanna and Sharad Gupta *

28Financing Agriculture

INVESTIGATION

is consumed in urban India. The urbanp