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« The U.S.-Colombia trade agreement: A volatile agenda on agriculture | Main | IATP announces the 2011–2013 Food and Community Fellows »

April 19, 2011

Agriculture in rural India: How will it cope with free trade?

IATP's Shefali Sharma is part of a delegation visiting rural areas in India to assess the human rights impacts of the country's trade and investment policies.You can view her previous post here.

New Delhi – Last I wrote, I was embarking on a journey into some of the most rural villages of Southern India. Over a four-day period, our team met with groups of farmers—men and women—in the State of Andhra Pradesh. We travelled from west to east across Chittoor District and then took an overnight train to the Northern district of Medak, covering hundreds of kilometers.

Our difficult task was to understand what small farmers in India grow, how much they keep for eating and how much they sell to the market. We wanted to understand if they can continue to sustain themselves and their consumption needs through growing food alone and whether they have access not just to food, but adequate nutrition all year long. 

We also wanted to understand whether a European Union–India Free Trade Agreement (FTA), currently under negotiation, would have an impact on their livelihoods. In particular, what role does dairy and poultry play for their income and food security and what would liberalizing investment with the European Union do to land access and natural resources for local farmers. Historically, the European Union has a habit of dumping both dairy products and poultry parts in developing countries, decimating small-scale dairy and poultry producers in the process. For example, Ghana’s poultry sector was wiped out when frozen poultry parts flooded Ghanian markets and the EU-India FTA is likely to include an “asset”-based definition of investment, including both “movable and immovable property.”

Photo 1 In the village of Yalakallu, we met both with small producers and landless agricultural wage workers (all photos here by Harneet Singh). Often the small farmers were also wage laborers because they did not have income all year from growing food and were forced to work for daily wages as income. A small farmer in the Indian context means ownership of as little as .5 to 5 acres of land. The farmers with whom we met owned on average only one to three acres of land. The bulk of their growing sustains food consumption for their families and any surpluses are sold to the local market. Water, however, is an acute problem in the village and most of the agriculture is rainfed. Increasingly erratic weather means heavy rains at unwanted times and drought in other parts of the growing season. These farmers have two growing seasons. They grow crops like rice, finger millet and vegetables in the rainy season (July to October), and grow lentils like red gram and green gram in the dry season (November to May or June). Some are also growing tomatoes and cabbage to sell to wholesale retailers, but because the prices of tomatoes had recently crashed, many of the tomato growers said they would be watching their tomatoes wither in the fields this year. 

Photo 3 For these farmers, dairy plays an important role because they receive payments every two weeks from cows and buffalo they raise on the farm while feeding them with crop residues from their own fields. Most of the farmers we talked with owned one or two cows that deliver 2–4 litres of milk a day. But a system of small traders delivers this milk to the local dairy. For decades, India has invested in developing a cooperative dairy sector that has been increasingly privatized over the past decade. Cheap imports of skim milk powder from Europe to make cheap reconstituted milk would certainly impact these small farmers.

Photo 2 It was immediately evident that their ability to withstand even a little risk was very small. Some farmers we talked with have tried ventures like small poultry operations (from 1000 to 5000 chicks) to supply to domestic chains, but when the chicks die or get diseases, the company they sell to can abruptly terminate the contract. These risky business arrangements can involve loans and indebtedness—a common feature amongst all of these farmers. Rising food prices haven't necessarily helped these farmers yet because the wholesalers and retailers have retained most of those gains. In other parts of the same district, farmers with up to five acres of land are contracting with domestic broiler chicken firms. They are raising up to 5000 chicks, taking out loans to do the initial investment in setting up these farms. At the end of the year, they earn about 100,000 Indian rupees—spending 50,000 INR on loan repayment, keeping the rest for themselves. The profit margins are low to minimal and debts pass over from year to year. Water for the chickens competes with water for their farms.

Our visit to the next neighborhood in Yalakallu was with landless Dalits (the lowest caste in India’s extremely hierarchical caste system). The women and men depend on wage labor and forest produce for feeding their families. Thanks to India’s public food distribution system, they are able to procure rice and sometimes lentils from government-subsidized ration shops at prices as low as 2 rupees per kilon but rising food prices mean their income brings less and less food. During these times, they compromise on food security—eating rice or finger millet with a watery juice of tamarind. In better times, their diet is supplemented with leafy vegetables and lentils, a key source of protein in these villages.

Owning livestock is difficult. Without land, farmers cannot supplement their income and nutrition through dairy or goats, though many of them keep raise poultry, feeding them with kitchen waste, and local chicken varieties are much hardier than chickens produced for the broiler industry.

It quickly became evident that these small farmers and landless laborers are facing obstacles when it comes to accessing land. Urbanization, real estate developers and industrial operations are increasingly fencing these people out of grazing land. Access to land is critical. Those who own land, even a small plot, can feed their families through most of the year, and have a much better chance at nutrition and healthier lives than their counterparts who live on wage labor alone.

The EU and India’s investment provisions will mean more demand for land and natural resources as EU investors look to extract minerals in India and set up mechanized processing plants. This has already been the case with Indian companies taking over land in the countryside. It also means greater competition for scarce water and electricity.    

We heard numerous stories over the last few days about the tradeoffs and choices these small food growers and agricultural laborers are making, even now. More difficult choices may not be far off.

Ben Lilliston

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