Farming
Meagre rainfall is only part of the problem for India’s farmers
The Economist · 04 May 2016
HIS village may be parched, but Balachandra Ambaji Payar’s banana trees are a vivid green. In the shade cast by their fronds, a few chilli plants add more colour-and income-to a region left blanched by two consecutive years of disappointing rain. Mr Payar is an advertisement for “drought-proofing”: a simple irrigation system installed last year brings water onto his land in western India from a nearby well, to be drip-fed to his crops through a perforated hose. It is just the sort of investment that rural India needs to escape problems far greater than the weather.
Some 850m Indians live in rural areas, and nearly 60% of them depend on farming for survival. For many, it is not much of a living. India has more people living in poverty than any other country-260m by the World Bank’s count-and 80% of them live in the countryside.
Farmers are poorer than urban folk the world over, but the difference in India is stark: the median annual wage for a farmer, at 19,250 rupees ($290) including the implied value of the food they consume, is barely two months’ minimum wage in Mumbai. Data from 2008 show the rural-urban wage gap at 45%, versus around 10% for China and Indonesia.
Much of that is down to low productivity: farmers in India grow 46% less rice per acre than their Chinese counterparts and 39% less wheat. Less than half of Indian farmland is irrigated. That leaves farmers at the mercy of the monsoon, which dumps the lion’s share of annual rainfall in just a few months over the summer. Normal rains this year (which early weather forecasts are predicting, albeit with a record befitting astrologists or economists) would bring respite. But a good drenching is no substitute for greater investment.
By the government’s own assessment, Indian farmers are "locked in” to low-value crops such as wheat and rice, even as increasingly affluent city types demand fruit, vegetables and meat. Making the switch to bananas and chillies is potentially lucrative: Mr Payar’s harvest will fetch 75,000 rupees, nearly four times the value of the rice and millet crop he could grow on unirrigated land, monsoon allowing. But the transition needs agricultural infrastructure such as cold storage as well as access to credit, which is not usually forthcoming for farmers like Mr Payar (the Swades Foundation, an NGO, paid most of the 36,000-rupee bill for his irrigation system).
Only a tenth of the money the government spends in rural areas goes on investments that might boost yields. Much more is squandered on subsidies that encourage farmers to grow staples while occasioning vast corruption. Other countries have embraced genetically modified seeds, but India allows them only for cotton-the sole crop to have seen yields grow rapidly in recent years. For a time high prices for agricultural commodities around the world disguised the effects of such daft policies, by boosting rural incomes, but not any more.
Non-farming income in rural areas has also suffered. A small guaranteed-employment scheme has helped relieve acute distress, but only goes so far. Other forms of employment available outside cities, notably in mining, are in the doldrums. Remittances from the Gulf are under pressure, too, as oil prices have slipped.
A quick way to enrich Indian farmers would be to turn them into city-dwellers. However hard India tries to boost rural wages, farming cannot compete with a service sector that is six times more productive. But policymakers with romantic ideas about the rural heartland have impeded the flow of migrants. In 1970 India’s urbanisation rate stood at 20%, higher than both China’s and Indonesia’s. Urbanisation has since trebled in those two countries, to around 55%; in India, it is just over 30%.
Moving to cities (or commuting on a seasonal basis) is easier than it once was thanks to improved roads and telecoms. But various government benefits that can be accessed only in their native district tie Indians to their place of origin, much as the hukou system pinions rural Chinese. Village-dwellers are also reluctant to abandon informal rural safety nets based on caste. And construction jobs, a well-trodden pathway to urbanisation, are currently hard to come by.
Another impediment is land: few owners have firm title to theirs, and so cannot sell it. Leasing it is risky, since it can be hard to reclaim from the tenant. As a result, farms in India have shrunk as the rural population has swelled: the average plot in 2010 measured just 1.16 hectares (roughly the size of a Manhattan city block), down from 1.84 hectares in 1980. Such fragmentation makes investment in machinery harder and dampens farmers’ selling power. Demography points to ever-smaller farms: much of India’s still rapid population growth comes from the countryside, points out Anirudha Dutta, an analyst.
Aware of rural distress-and facing elections in farm-heavy states-Narendra Modi, the prime minister, has pledged to help farmers. He wants agricultural incomes to double by 2022, an ambitious target as yet unsupported by detailed policies. Better crop-insurance schemes and improved ways for farmers to market their produce are evergreen ideas whose success depends on implementation. Some states are sensibly pushing ahead with land registries. Using biometric technology to ensure subsidies go to the right people should also help.
In the past, the failure of the monsoon was enough to prompt a nationwide recession. Not any more: now failed rains, even for two years running, cause only localised distress. That represents progress, but more is needed. Even doubling rural Indians’ wages would be just a start. For Indian farmers to escape poverty, there need to be fewer of them.
Some 850m Indians live in rural areas, and nearly 60% of them depend on farming for survival. For many, it is not much of a living. India has more people living in poverty than any other country-260m by the World Bank’s count-and 80% of them live in the countryside.
Farmers are poorer than urban folk the world over, but the difference in India is stark: the median annual wage for a farmer, at 19,250 rupees ($290) including the implied value of the food they consume, is barely two months’ minimum wage in Mumbai. Data from 2008 show the rural-urban wage gap at 45%, versus around 10% for China and Indonesia.
Much of that is down to low productivity: farmers in India grow 46% less rice per acre than their Chinese counterparts and 39% less wheat. Less than half of Indian farmland is irrigated. That leaves farmers at the mercy of the monsoon, which dumps the lion’s share of annual rainfall in just a few months over the summer. Normal rains this year (which early weather forecasts are predicting, albeit with a record befitting astrologists or economists) would bring respite. But a good drenching is no substitute for greater investment.
By the government’s own assessment, Indian farmers are "locked in” to low-value crops such as wheat and rice, even as increasingly affluent city types demand fruit, vegetables and meat. Making the switch to bananas and chillies is potentially lucrative: Mr Payar’s harvest will fetch 75,000 rupees, nearly four times the value of the rice and millet crop he could grow on unirrigated land, monsoon allowing. But the transition needs agricultural infrastructure such as cold storage as well as access to credit, which is not usually forthcoming for farmers like Mr Payar (the Swades Foundation, an NGO, paid most of the 36,000-rupee bill for his irrigation system).
Only a tenth of the money the government spends in rural areas goes on investments that might boost yields. Much more is squandered on subsidies that encourage farmers to grow staples while occasioning vast corruption. Other countries have embraced genetically modified seeds, but India allows them only for cotton-the sole crop to have seen yields grow rapidly in recent years. For a time high prices for agricultural commodities around the world disguised the effects of such daft policies, by boosting rural incomes, but not any more.
Non-farming income in rural areas has also suffered. A small guaranteed-employment scheme has helped relieve acute distress, but only goes so far. Other forms of employment available outside cities, notably in mining, are in the doldrums. Remittances from the Gulf are under pressure, too, as oil prices have slipped.
A quick way to enrich Indian farmers would be to turn them into city-dwellers. However hard India tries to boost rural wages, farming cannot compete with a service sector that is six times more productive. But policymakers with romantic ideas about the rural heartland have impeded the flow of migrants. In 1970 India’s urbanisation rate stood at 20%, higher than both China’s and Indonesia’s. Urbanisation has since trebled in those two countries, to around 55%; in India, it is just over 30%.
Moving to cities (or commuting on a seasonal basis) is easier than it once was thanks to improved roads and telecoms. But various government benefits that can be accessed only in their native district tie Indians to their place of origin, much as the hukou system pinions rural Chinese. Village-dwellers are also reluctant to abandon informal rural safety nets based on caste. And construction jobs, a well-trodden pathway to urbanisation, are currently hard to come by.
Another impediment is land: few owners have firm title to theirs, and so cannot sell it. Leasing it is risky, since it can be hard to reclaim from the tenant. As a result, farms in India have shrunk as the rural population has swelled: the average plot in 2010 measured just 1.16 hectares (roughly the size of a Manhattan city block), down from 1.84 hectares in 1980. Such fragmentation makes investment in machinery harder and dampens farmers’ selling power. Demography points to ever-smaller farms: much of India’s still rapid population growth comes from the countryside, points out Anirudha Dutta, an analyst.
Aware of rural distress-and facing elections in farm-heavy states-Narendra Modi, the prime minister, has pledged to help farmers. He wants agricultural incomes to double by 2022, an ambitious target as yet unsupported by detailed policies. Better crop-insurance schemes and improved ways for farmers to market their produce are evergreen ideas whose success depends on implementation. Some states are sensibly pushing ahead with land registries. Using biometric technology to ensure subsidies go to the right people should also help.
In the past, the failure of the monsoon was enough to prompt a nationwide recession. Not any more: now failed rains, even for two years running, cause only localised distress. That represents progress, but more is needed. Even doubling rural Indians’ wages would be just a start. For Indian farmers to escape poverty, there need to be fewer of them.