A Game of Incentives: The Case of the Three Farm Acts

Editor: Paavi Kulshreshth
December 21, 2020

More than two months have passed since the three farm bills – (i) Farmer’s Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020; (ii) The Farmer (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020; and (iii) The Essential Commodities (Amendment) Bill, 2020 – turned into acts. While some have deemed the policy shift as agriculture’s 1991 moment, others have dismissed it as anti-farmer or pro-corporate. Sustained farmer protests against the Centre, witnessed primarily in Punjab and Haryana, have gone as far as to demand that the Acts be repealed altogether. However, not all farmers have responded to the policy shift alike. While Punjab and Haryana farmers participated in the ‘Delhi Chalo’ agitation, the Shetkari Saghtana – a farmers’ union from Maharashtra – rallied in support of the Acts.1 To put things into perspective, below are some common arguments for and against the farm acts. 

For the Acts

  • The acts provide greater freedom and choice to the farmers on where and to whom they can sell their produce.
  • They will improve agri-market competition and hence ensure better prices for farmers. 
  • They will attract private investment in warehousing, thereby improving the supply and value chain.

Against the Acts

  • The reforms will bypass the APMC mandis and the government will slowly stop public procurement (replacing PDS with direct cash transfers). This will also do away with MSP. 
  • Outside the APMC mandis, farmers will be cheated by private buyers and they will not get a fair price. 
  • Big corporates might exploit farmers through dubious contracts and take away their land. 

As is evident, there are good arguments on both sides. However, it is interesting to note that arguments floating against the Acts lean towards implementation, whereas arguments that speak for the Acts take on a principle standpoint. Freedom, competition, and aligned incentives are some of the economic principles which the Acts intend to reinforce in the agriculture sector. While implementation concerns regarding these principles are inevitable given implementation failures of the past (demonetisation, GST, Adhaar, etc); for the sake of analysis, it is better to delink the policy reform from implementation and look at these two aspects separately before we join them back again. To arrive at a shared understanding of both opportunities and challenges that may emerge from the central acts, the arguments and the counterarguments must speak to one another. Prior to any analysis, however, understanding the purpose of APMC mandis, MSP, and public procurement is crucial.

What is the Purpose of APMC Mandis?

The history of mandis takes us back to Sir Chhotu Ram, a renowned political leader from pre-independence era Punjab.2 Back in those days, the sale of produce happened directly on the farm where the farmer met the trader. The farmer had no way of knowing if the price offered by the local trader was fair or not. To curb exploitation of farmers, Sir Chhotu Ram played an instrumental role in getting the Punjab Agricultural Produce Markets Act passed in 1939, which allowed for the formation of market yards or mandis in notified areas. These mandis, in turn, allowed for price discovery. Farmers would bring in their produce, understand the supply pattern, and witness the actual demand for their produce by the traders. The price of the produce was fixed through a transparent open-cry auction. Thus, these mandis (at least in theory) allowed for price discovery and realisation.

The reality of the mandis although was quite different. They neither helped in price discovery, nor did they enable fair and better prices for farmers. Today, the APMCs have a similar tale to tell. The state-run mandis are far from perfect with cartels of traders and commission agents working their way around regulations.

What is the Purpose of MSP and Public Procurement?

The central purpose of price support, when it was introduced in the 1960s, was to spur production and adoption of new technologies under the Green Revolution. A support price would mean little without assured procurement. Hence, the Food Corporation of India (FCI) was set up to procure grains at MSP and manage the Public Distribution System (PDS). MSP and public procurement have since achieved twin goals of an assured price for farmers and an affordable price for consumers. Farmers could, however, sell their produce to other buyers or traders if they got a higher price. Today, the costs of MSP and public procurement far outweigh its benefits. Only 6% of all agricultural households have benefitted from MSP.3 Of the 22 crops for which MSP is announced every season, only two – rice and wheat – are procured consistently at MSP; predominantly from the states of Punjab and Haryana.4 MSP distorts market signals and incentivizes farmers to only grow crops that qualify for a support price, as opposed to those demanded by consumers. It disincentivizes crop diversification as an assured market price for certain crops hinders risk taking ability of the farmer. The farmer is entirely dependent on the government’s announcement of MSP every season and ignores the larger, changing market signals. In a state like Punjab, with an alarmingly receding water table, growing a water-gruelling crop like rice is clearly unsustainable.5 In the years to come, this will result in many farmers making distress exits. Hence, it is fair to say, MSP has made farmers more vulnerable than secure.

Figure 1: State-wise procurement of rice and wheat. Punjab and Haryana are among the highest producers. Source: Agriculture Statistics at a glance 2019
Figure 1: State-wise procurement of rice and wheat. Punjab and Haryana are among the highest producers. Source: Agriculture Statistics at a glance 20196

Public procurement, especially open-ended procurement, is a huge fiscal burden on the government. The government procurement agency, FCI, has tripled its debt in the last 5 years. It borrows primarily from the National Small Savings Fund (NSSF), which constitutes postal deposits and social security schemes like public provident fund, senior citizens’ savings scheme, etc.7 Reasserting operational inefficiency, the FCI has also consistently maintained 2-2.5 times the buffer stock limit in the period 2013-2019.8 One must not bite off more than one can chew seems befitting as the government tries to breakout of a position where it can neither guarantee MSP nor procurement.

Figure 2: FCI Stocks as a percentage of buffer norms. Source: Financial Express
Figure 2: FCI Stocks as a percentage of buffer norms. Source: Financial Express8

How do the Arguments on the Farm Acts Fare?

From a principle standpoint, liberalizing agriculture has been long due. Farming is one of the riskiest yet least profitable businesses. The Essential Commodities Act has restricted any form of investment in storage infrastructure through arbitrary stock limits, leaving the farmer fearful and confused. The new Essential Commodities (Amendment) Act addresses these shortfalls and allows for such limits only in certain extraordinary conditions. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act legalizes selling of produce outside the notified APMC yards without market fee and the purchase of produce without a license. Inter-state transactions are allowed. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act gives the legal power to private entities to enter contracts with farmers directly before the start of production. The counterargument that ‘just because contract farming is allowed, it doesn’t mean a noble corporate will be willing to buy from the farmers at a higher price,’ is a compelling yet invalid one. No reform is readymade. Within a federal structure like that of India’s, implementation of any reform involves a lot of coordination from multiple stakeholders. Hence, whether a corporate is ready to buy from the farmers at a higher price depends on its incentives and the ease of doing business. Consequently, the idea of contract farming itself cannot be countered this way.

Game-Changing for the Ecosystem

Incentivising desired actions of various actors with a checks and balances mechanism is the purpose of sound public policy. In this regard, the three Acts have essentially changed the rules of the game. Hence, these reforms must be judged not only on whether they help the farmers but also on the incentives they create for different players in the agri-market ecosystem. 

A valid concern today would be that of transportation; even if farmers can sell anywhere, would they be able to? It is only by creating the possibility to sell anywhere, we send a signal to corporates and startups to address the new challenge innovatively. Similarly, efficient storage solutions would be sought after by traders. FPOs would need to be strengthened and given visibility. Agri-tech companies will play a crucial role in every aspect, from input assistance to processing and marketing. Corporates that wish to enter contract farming may have certain demands regarding the quality of the produce and monitoring of crops. This would create new opportunities for agri-tech companies. What was once unthinkable would now become doable. 

Presently, the entire ecosystem needs to overcome the inertia generated from the controversial nature of these reforms. This will depend greatly on how states adopt and implement the Acts. States must critically look at the winners and losers, and draft measures to balance both sides. Although no interest group has displayed public support for the Acts yet, it is up to the state governments to meet with FPOs, agri-tech businesses, and retail chains to initiate discussions on how to yield long-term benefits from the reforms.

In the end, implementation is everything. Hence, the urgent action at the moment is for states to strategically invite investments, create an environment where the farmers are able to trust private players, and one where private players are allowed to operate without stigma. If the state governments do not take on the role of the facilitator, these reforms are likely to turn into a wasted opportunity.

The views expressed in the post are those of the author and in no way reflect those of the ISPP Policy Review or the Indian School of Public Policy. Images via open source.

References:

  1. Phadke, M. (2020, October 9). Not all farmers are against Modi’s new farm laws, this group in Maharashtra is celebrating. The Print. https://theprint.in/statedraft/not-all-farmers-are-against-modis-new-farm-laws-this-group-in-maharashtra-is-celebrating/519382/
  1. Damodaran, H. (2020, September 27). The men behind APMC, MSP and Procurement. The Indian Express. https://indianexpress.com/article/opinion/columns/the-men-behind-apmc-msp-and-procurement-6617277/
  1. Shanta Kumar Committee. (2015, January). Reorienting the Role and Restructuring of Food Corporation of India. Food Corporation of India, Govt. of India. https://fci.gov.in/app2/webroot/upload/News/Report%20of%20the%20High%20Level%20Committee%20on%20Reorienting%20the%20Role%20and%20Restructuring%20of%20FCI_English.pdf
  1. Development Monitoring and Evaluation Office. (2016, January). Evaluation Study on Efficacy of MSP on Farmers. NITI Aayog. http://niti.gov.in/writereaddata/files/writereaddata/files/document_publication/MSP-report.pdf
  1. Bajwa, H. (2020, January 23). Punjab sounds alarm as water table recedes fast in 109 administrative blocks. The New Indian Express. https://www.newindianexpress.com/nation/2020/jan/23/punjab-sounds-alarm-as-water-table-recedes-fast-in-109-administrative-blocks-2093203.html
  1. Ministry of Agriculture and Farmers Welfare. (2020, March). Agricultural Statistics at a Glance 2019. Directorate of Economics and Statistics, Government of India. https://eands.dacnet.nic.in/PDF/At%20a%20Glance%202019%20Eng.pdf
  1. Nair, R. (2019, October 7). In 5 years of Modi rule, Food Corporation of India’s debt tripled to Rs 2.65 lakh crore. The Print. https://theprint.in/economy/in-5-years-of-modi-rule-food-corporation-of-indias-debt-tripled-to-rs-2-65-lakh-crore/301887/
  1. Financial Express. (2019, May 6). Height of inefficiency! Govt’s foodgrain stocks 2.7 times the buffer norm. Financial Express. https://www.financialexpress.com/economy/height-of-inefficiency-govts-foodgrain-stocks-2-7-times-the-buffer-norm-highest-in-six-years/1568992/

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Swarna
Swarna
1 year ago

Very nice article to judge on pros and cons of the act

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In the 1860s, England was facing an acute shortage of coal. Some experts contended that improving technology would reduce coal consumption. But contrary to this, technological improvements that increased the efficiency of coal led to the increased consumption of coal in a wide range of industries. English Economist William Stanley Jevons argued that technological progress could not be relied upon to reduce resource consumption. Maharashtra is facing a similar issue in 2020 with water.

The Paradox of water

In 2014, the then Chief Minister, Devendra Fadnavis, launched a flagship project to make rural Maharashtra drought-free. The program aimed to make 5000 villages free of water scarcity every year. Nearly 52% of the state’s geographical area is prone to drought, either naturally or due to poor rainfall. The project targeted strengthening and streamlining existing water resources like canals, bunds, and ponds by arresting maximum run-off rainwater during the monsoon. The key aim of this project, Jalyukta Shivar Abhiyan, was to establish the belief in a farmer that “every drop of rainwater is owned by me and it should percolate on my land”. Despite the efforts made by the State Government and several NGOs working in the sector, the groundwater level has continued to decrease in 245 Talukas since 2014-15.

Despite a lot of work and spending more than 9000 crores on the supply-side of water, villages are still facing drought-like scenarios. This is mainly due to unprecedented rates of extraction, the sudden availability of abundant water leading to use of more water and erratic rainfall. 

This is a classic example of Jevon’s Paradox. The fault lies not with the farmers but with the policy’s design and implementation. Jevon’s paradox is a widespread phenomenon that most of us have experienced at some point or the other. For example, when we get a salary increment, we end up saving the same amount or sometimes even less than before.

Indian laws treat water as private property. It is often attached to the land. As a result, only a privileged few have access to groundwater. There is a limit to harvesting water in any location.  With only 23% irrigated land, Maharashtra is heavily dependent on the monsoon. Due to climate change, rainfall is also becoming erratic. Despite this, the areas under sugarcane plantations, a water-intensive crop, are increasing every year. If this continues, we will see a huge crop failure and mass migration in the coming years.

Farm pond after rains. Credits: Narendra Kulkarni

Understanding the Water Bank

To address this the focus needs to shift from the supply-side to the demand-side of water. Implementation of water budget plans can help to deal with this challenge. The preparation of village water charts, water budget, aquifer mapping and their management was proposed back in the Maharashtra Groundwater Act, 2009. 

Water budgeting is similar to balancing a bank account. In simple terms, the water budget is a process of calculating water requirements for overall different needs (domestic, irrigation, etc.) against the total water available from different sources (eg: rainfall, groundwater).

Managing water is similar to managing finances. First, similar to knowing how banks and money work, villagers need to know how aquifers and groundwater work. To understand this a 3D model of topography and aquifer map can be made available for all villages. This map can be used to convince villagers to look at groundwater as a common good.

Secondly, managing finances requires information about the inflow and outflow of money. In the same way, villagers need to measure rainfall, water level and its use. In order to achieve this, villagers should be trained in making rain gauges and measuring and maintaining the rainfall record. There is also a dire need to spread awareness about the water requirements of different crops. Water availability and water requirement of different crops will help villagers plan their crop cycles to maximise profits giving first preference to drinking water.

Finally, like a bank manager, we need to develop local leadership who will act as watershed managers. These managers need to be educated about the benefits of the water budgeting process and have the capacity to have systematic, well-planned discussions with all stakeholders to make water budgets implementable.

With climate change looming around the corner, the government needs to relook at the water crisis at the earliest. A good start would be implementing the Maharashtra Groundwater Act and incentivising water-efficient crops.  We need to realise that if this crisis continues and the water banks fail, no one will be able to bail us out, as in the 2008 financial crisis.

References

WoTR. (2020b, March). Water Stewardship and Water Budgeng: A Pathway to manage the water available in a me of growing water scarcity in rain fed Maharashtra. https://wotr.org/. Retrieved March 31, 2022, from https://wotr-website-publications.s3.ap-south-1.amazonaws.com/Policy_Brief_WSI_2_Mar_2020.pdf 

WoTR. (2019). Water Budgeting Tool for improving water governance at local level. https://wotr.org/. Retrieved March 31, 2022, from https://wotr-website-publications.s3.ap-south-1.amazonaws.com/Water_Budgeting_Brochure_English.pdf 

Paani Foundation. (2016, June 1). Water Budgeting [Video]. YouTube. https://www.youtube.com/watch?v=svGirbOuWhQ 

Conflict over scarce natural resources has been documented as an important source of armed struggle1. Billon2states, “the idea that wars are associated with resources is probably as old as war itself”. Climate change and the associated reduction in freshwater availability, worsening soil productivity, increase in weather volatility and heightened atmospheric warming are expected to aggravate the resource degradation that is already  underway3. The agricultural sector is likely to be extremely vulnerable to these changes through the impacts on agricultural yields, crop quality, and thereby, farm incomes4. However, the impact of climate change on productivity is not isolated to the agricultural sector. Recent literature also indicates a significant impact of (largely) temperature on productivity in the manufacturing sector too5,6. We focus on agriculture because in the  Indian context, agriculture and allied sectors (such as plantation, forestry, fishing, hunting etc.) alone employ nearly 58% of the workforce7. There is now a large literature in economics that examines how climate change induces violent conflict as well as protests by exacerbating competition over  scarce natural resources which affects economic growth, livelihoods, commodity prices, and political stability,8,9,10,11,12,13. Given the importance of the agricultural sector in India, this presents a serious governance challenge.   

In this article, we present a brief summary of the occurrences of environment and agriculture related conflicts in India using the Armed Conflict  Location and Event Data (ACLED). The ACLED is a rich source of information on different types of conflicts including protest events for many  countries around the world. It collects information on different types of events which include violent and non-violent conflicts, and peaceful protests  on issues as diverse as strategic developments, territorial conflicts, state-based violence, attacks on civilians, religious and ethnic/caste-based conflicts  as well as events which are centred around the issues of environment and agriculture. Of course, several event categories have significant overlap in  terms of the reasons for such conflict. A detailed event description is provided corresponding to each event along with the geographical location and  timing. For India, ACLED has recorded over 57000 events spanning across 592 districts starting from 2016 with weekly updates. We focus on the  time period from 2016-2019 and analyse the event descriptions of each observation to create a subset of events that are induced by environment or  agriculture related causes.  

According to our analysis, environmental conflict events in India can broadly be attributed to causes concerning environmental pollution and  degradation, extreme weather, use of common property resources such as land and water bodies, wildlife encroachment as well as issues related to  sanitation and disease. Of these, events concerning the use of water bodies such as rivers for irrigation and impacts of extreme weather events on  crop loss are directly related to agriculture. We further observe that all agricultural conflict events are closely linked to agricultural risks and the economic system’s ability to mitigate them. Agricultural risks result in uncertainty in farm incomes arising due to production risks (i.e., the low yields due to weather events, pest infestations etc.) and price risks (i.e., low prices due to uncertainty in the input and output markets). Conflicts (including  protests and demonstrations) concerning agricultural issues are largely on account of the demand for functional risk management tools by farmers  which include: 

1. Demand for subsidized institutional credit delivery and farm loan waivers to stabilize income in case of output and/or price shocks. 

2. Demand for timely release of crop insurance payments in case of low yields due to weather variations, pest infestation, animal attacks, etc. 

3. Demand for remunerative prices (mostly MSP) to provide protection from crop price volatility.  

4. Demand for water release from dams and rivers for irrigation in an effort to reduce dependence on rainfall and minimize the output risks due  to rainfall vagaries. 

Environmental/Agricultural Conflict Trends: 

Expectedly, over time we see a sharp rise in the absolute frequency of both environmental and agricultural conflict events in India. However, the  percentage of environmental and agricultural conflict events as a proportion of total conflict events, has consistently been ~12% and ~9%  respectively. On the other hand, the proportion of agricultural conflict events as a fraction of total environmental conflict events rose from ~42% in  2016 to ~47% in 2019. This is indicative of the increasing relative importance of agricultural conflict events within the larger set of environmental  conflict events. 

Figure 1: Data Source: ACLED 

Agriculture Related Conflict Events & Policy Tools for Risk Management:  

There are three main policy tools for farm-level risk mitigation in India: credit, insurance and minimum support price (MSP). While credit and  insurance aid in consumption smoothing in case of crop loss, MSP serves to stabilize income in case of a fall in prices. Credit can aid farm-level risk  management in two stages. Ex-ante, in case of no shock, it can facilitate: (a) adoption of climate resilient inputs and techniques (for e.g., purchase of  power and water for irrigation to reduce dependence on rainfall, purchase of seeds of more climate resilient crops etc.), and (b) increase in farm mechanization to reduce output risks. Ex-post, in case of a shock, credit and, importantly, insurance can fulfil immediate cash needs for input  stabilization and consumption smoothing14. However, historically, access to these risk mitigation tools is highly skewed in favour of richer, wealthier,  more educated farmers belonging to forward castes,15,16,17,18,19,20. This access inequality is a major cause for agriculture related conflict.   

We observe a positive correlation between the demand for agricultural risk management and agricultural conflict events, i.e., areas which are more  risk-prone and therefore have a greater demand for agricultural risk management, also have higher incidence of agriculture related conflicts. On  average, states with higher credit disbursal per agricultural household also have a higher proportion of agricultural conflicts by ~2.7 percent (Figure 2). Similarly, on average, states with higher insurance amounts disbursed per covered agricultural household, have a higher relative incidence of agriculture  related conflicts by ~5.7 percent (Figure 3).

Figure 2: Data Source: Directorate of Economics & Statistics, Ministry of Agriculture and Farmers’ Welfare (MoAFW), Government of India and ACLED 
Figure 3: Data Source: MoAFW, Government of India and ACLED 

These findings reflect the critical role that agricultural risks play in agricultural conflict incidence. As the frequency and extremity of adverse weather  events such as droughts and floods are likely to increase substantially due to climate change, it is important to develop effective and affordable risk  management tools which are also accessible to all sections of the farming community. In the absence of accessible climate adaptation strategies which  include (but are not limited to) efficient functioning of the system of farm credit and agricultural insurance; not only do we stand the risk of crop loss  and income loss for the farming community, but also the heightened risk of conflicts stemming from loss of livelihoods for farmers and declining  food security. 

Appendix21,22,23

StatePercentage of Agricultural Conflict EventsAgricultural Credit Disbursed (in INR crore)Number of Operational Holdings (OH) (in ‘000)Credit Disbursed/OH (in ‘000)Credit Disbursal Category (High/Low)*Insurance Claims (INR)Number of FarmersInsurance Amount Paid/Farmer InsuredInsurance Claims Categories (High/Low)**
Andhra Pradesh 5.19 92868.62 8524 108.95 High 9437700000 1778000 5308.04 High
Gujarat 8.63 54276.7 5321 102.00 High 12672200000 1980000 6400.10 High
Haryana 8.71 49481.07 1628 303.94 High 2969000000 1336000 2222.31 High
Karnataka 12.31 78082.72 8681 89.95 High 20668200000 2947000 7013.30 High
Kerala 2.69 67738.76 7583 89.33 High 437300000 77000 5679.22 High
Rajasthan 11.50 74303.86 7655 97.07 High 19173700000 9355000 2049.57 High
Tamil Nadu 7.76 132144.57 7938 166.47 High 36386600000 1463000 24871.22 High
Himachal Pradesh 5.38 6116.15 997 61.35 High 451800000 380000 1188.95 Low
Uttarakhand 1.62 6505.43 881 73.84 High 274700000 261000 1052.49 Low
Madhya Pradesh 12.47 56149.06 10003 56.13 Low 20438800000 7461000 2739.42 High
Odisha 7.46 21264.96 4866 43.70 Low 4327400000 1820000 2377.69 High
Bihar 1.52 26184.58 16413 15.95 Low 3478500000 2714000 1281.69 Low
Chhattisgarh 2.10 12237.42 4011 30.51 Low 1599700000 1549000 1032.73 Low
Jharkhand 0.97 4379.99 2803 15.63 Low 310900000 879000 353.70 Low
Maharashtra 7.75 81383.84 15285 53.24 Low 23187800000 11884000 1951.18 Low
Tripura 0.97 1513.13 573 26.41 Low 7100000 12000 591.67 Low
Uttar Pradesh 4.22 81584.01 23822 34.25 Low 5745800000 7289000 788.28 Low
West Bengal 0.41 34895.72 7243 48.18 Low 4216900000 4133000 1020.30 Low
*: Credit Disbursal/ Agricultural HH > Median implies Category = HIGH | Credit Disbursal/ Agricultural HH < Median implies Category = LOW **: Insurance Amount Paid/Covered HH > Median implies Category = HIGH | Insurance Amount Paid/Covered HH < Median implies Category  = LOW

The views expressed in the post are those of the author and in no way reflect those of the ISPP Policy Review or the Indian School of Public Policy. Images via open source.

References: 

[1]: Gleditsch, Nils Petter. 1998. ” Armed Conflict and The Environment: A Critique of the Literature.” Journal of Peace Research, Vol. 35, No. 3  381- 400. 

[2]: Billon, Philippe Le. 2012. “Digging into “Resource War” Beliefs.” Human Geography, Vol. 5, No. 2 1-14. 

[3]: Raleigh, Clionadh, and Henrik Urdal. 2007. “Climate change, environmental degradation and armed conflict.” Political Geography, Vol. 26 674- 694. 

[4]: Altieri, Miguel A., and Clara I. Nicholls. 2017. “The adaptation and mitigation potential of traditional agriculture in a changing climate.” Climatic  Change, Vol. 40 33-45. 

[5]: Adhvaryu, Achutya, Namrata Kala, and Anant Nyshadham. 2020. “The Light and the Heat: Productivity Co-Benefits of Energy-Saving  Technology”. Review of Economics and Statistics, Vol. 102, Issue 4 779-792. 

[6]: Somanathan, E., Rohini Somanathan, Anant Sudharshan, and Meenu Tewari. ” The Impact of Temperature on Productivity and Labor Supply:  Evidence from Indian Manufacturing”. Journal of Political Economy, forthcoming. 

[7]: National Statistical Office. 2020. Periodic Labour Force Survey (July 2018 – June 2019). New Delhi: Ministry of Statistics and Programme  Implementation. http://mospi.nic.in/sites/default/files/publication_reports/Annual_Report_PLFS_2018_19_HL.pdf.&nbsp;

[8]: Dell, Melissa, Benjamin F. Jones, and Benjamin A. Olken. 2012. “Temperature Shocks and Economic Growth: Evidence from the Last Half  Century”. American Economic Journal: Macroeconomics, Vol. 4, No. 3, 66-95. 

[9]: Hsiang, Solomon M., Marshall Burke, and Edward Miguel. 2013. “Quantifying the Influence of Climate on Human Conflict”. Science, Vol. 341,  Issue 6151, 1235367. 

[10]: Dell, Melissa, Benjamin F. Jones, and Benjamin A. Olken. 2014. “What Do We Learn from the Weather? The New Climate-Economy  Literature”. Journal of Economic Literature, Vol. 52, No. 3, 740-798. 

[11]: Maystadt, Jean-Francois, and Olivier Ecker. 2014. “Extreme Weather and Civil War: Does Drought Fuel Conflict in Somalia through Livestock  Price Shocks?”. American Journal of Agricultural Economics, Vol. 96, Issue 4 1157-1182. 

[12]: Harari, Mariaflavia, and Eliana La Ferrara. 2018. “Conflict, Climate and Cells: a Disaggregated Analysis”. Review of Economics and Statistics,  Vol. 100, Issue 4 594-608.

[13]: McGuirk, Eoin, F., and Nathan Nunn. 2021. “Transhumant Pastoralism, Climate Change and Conflict in Africa”. Working Paper, Harvard  University. 

[14]: Food & Agriculture Organization (FAO). 2008. Managing Risk in Farming. (Farm Extension Guide, Volume 3), Rome, 2008: FAO 

[15]: Kumar, Anjani, Dhiraj K. Singh, and Prabhat Kumar. 2007. “Performance of Rural Credit and Factors Affecting the Choice of Credit Sources.”  Indian Journal of Agricultural Economics, Vol. 62, No. 3 297-313. 

[16]: Kumar, Anjani, K. M. Singh, and Shradhajali Sinha. 2010. “Institutional Credit to Agriculture Sector in India: Status, Performance and  Determinants.” Agricultural Economics Research Review, Vol. 23, July-December 253-264. 

[17]: Kumar, Anjani, R.K.P Singh, Shiv Jee, Subhash Chand, Gaurav Tripathi, and Sunil Saroj. 2015. “Dynamics of Access to Rural Credit in India:  Patterns and Determinants.” Agricultural Economics Research Review, Vol 28 151-166. 

[18]: Shukla, Sumedha, and Gaurav Arora. 2020. “No hand to lend.” Down To Earth, September 16th-30th: 50-54.  https://emagzine.downtoearth.org.in/books/ncdm/#p=1 

[19]: NABARD. 2018. NABARD All India Rural Financial Inclusion Survey 2016-17. New Delhi: National Bank for Agricultural and Rural  Development (NABARD). https://www.nabard.org/auth/writereaddata/tender/1608180417NABARD-Repo-16_Web_P.pdf

[20]: Kumar, Sunil Mitra. 2013. “Does Access to Formal Agricultural Credit Depend on Caste?” World Development, Vol. 43, No. 3 315-328.

Data Sources: 

[21]: Agricultural Census Division. 2016. Agriculture Census (2015-16). Census, New Delhi: Department of Agriculture and Farmers’ Welfare,  Ministry of Agriculture and Farmers’ Welfare, Government of India. https://agcensus.nic.in/document/agcen1516/T1_ac_2015_16.pdf 

[22]: Directorate of Economics & Statistics, Ministry of Agriculture and Farmers’ Welfare. 2017. Pocket Book of Agricultural Statistics. Statistical  Handbook, New Delhi: Ministry of Agriculture and Farmers’ Welfare, Government of India.  https://agricoop.nic.in/sites/default/files/pocketbook_0.pdf

[23]: Ministry of Agriculture and Farmers’ Welfare. 2016. PMFBY State Wise Business Statistics . Accessed April 4th, 2021.  https://pmfby.gov.in/stateWiseDataPage.

Paspalum scrobiculatum and Panicum sumatrense may seem like strange names. However, they are stark reminders of the failure of the Indian state in safeguarding the interests of the disadvantaged. Paspalum scrobiculatum and Panicum sumatrense, locally known as kodo and kutki respectively, reflect the shift in traditional dietary habits due to superficial concepts of development.

Kodo and kutki are millet varieties that belong to the same family of crops. These millets are drought-tolerant crops and can even survive in conditions where the soil is of marginal quality. Dehusking kodo millet is a tough task as they contain seven inedible layers that need to be removed prior to consumption.  The nutritional content of the millet, however, exceeds that of both rice and wheat. They are a rich source of protein and fibre. With 66.6% carbohydrates and 353 kcal per 100g, these millets have the potential to efficiently tackle malnutrition and stunting among children. But why are they important from a policy perspective?

Let us meet Tulasha Bai, from Ghata village of Dindori district in Madhya Pradesh, who is an 85-year-old tribal woman. She belongs to the Baiga tribe, one of the most prominent tribes in Madhya Pradesh. She says, “We used kodo-kutki to treat fever and build immunity. It kept all Baiga fit, healthy and warm”. She remembers kodo and kutki cultivation as a glorious thing of the past, one that holds little value for the younger generation. Bai says, “Ab ke bache chawal aur gehu khate hai, kodu nahi, na khate hai na ugate hai‘ (Today’s generation only eats rice and wheat, they do not consume Kodu nor cultivate it).” According to Neglected and Underutilized Species Communities data, the production of these millets in the districts of Dindori and Mandla has declined by more than 50% in the last 20 years.

Kodo-kutki millets are an important part of culture for both Baiga and Gond tribes, which are spread across Dindori and Mandla districts of Madhya Pradesh. This article will take you through the complex web of administrational approaches to the development of kodo-kutki; and the impact the cultivation of these crops has on the lives of the concerned tribes through anecdotal evidence. This evidence is an outcome of on-ground experience.

Web of MSP

A decrease in locally grown millets in Dindori and Mandla is directly related to the Public Distribution System (PDS). In order to understand this relationship between public procurement of rice and wheat and the production of kodo and kutki, we must first take a more comprehensive look at local experience. Harilal Kushram, a resident of Mungela village, mentions, “After PDS has become accessible and Minimum Support Price (MSP) is provided, we have shifted our cropping patterns to grow paddy and wheat. These crops have a readily available market which does not exist for kodo-kutki.” The problem that arises in incentivizing farmers to produce traditional crops are two-fold and often correlated. One, the introduction of higher MSP for rice and wheat has decreased the incentive of farmers to seek risk by growing other crops. Two, due to an underdeveloped market for kodo and kutki millets, rice and wheat production exploits additional resources like water in an already scarce belt. Lack of adequate evaluation of the topography of the area and incentivization of foreign crops unfit for the region has disrupted the natural chain of traditional agriculture in the area.

The change in growth patterns along the Madhya Pradesh tribal belt has directly impacted the lives of all its residents. The shift in diet patterns, from high protein-fibre millets to rice and wheat, has had an adverse health impact. Voicing his concerns, Ramesh Kumar from Mohti village says, “Kodo and kutki helped us in increasing our life expectancy. My grandmother lived up to the age of 93.” However, in the past decade, there has been a shift in crop growing pattern. The 80-year-old Samro Bai, from Mungela village, claims that her “children and grandchildren have become weak. They fall sick frequently.” She says, “We used to work 10-12 hours in the field but now people are unable to work even for 8 hours. They have become lazy. No one eats kodo and kutki which keep our body healthy. Everyone is eating rice.”

An interesting question here is that if rapid changes are causing harm to the community and the environment by exposing arid soil to fertilizers and extensive extraction of groundwater, how has this issue been addressed?

Interventions disguised in the cloak of development

In a bid to promote kodo and kutki as cash crops due to their high nutritional value, state governments and social development organizations devised an intervention to empower rural women. The intervention was proposed by the Mid-Day Meal (MDM) department of Madhya Pradesh government in 2013. It was interlinked with the Mid-Day Meal (MDM) Scheme and aimed at improving child nutrition in the area by using kodo-kutki to make sweet bars as breakfast for school children. Although the intentions leading up to the scheme were noble, it led to huge losses to the tribals that grew kodo and kutki.

Since there was no regulatory support provided to the tribal community, removing the seven layers of each grain was simply left to the villagers. Seed cleaning machines, which generally cost around two to three lakhs, can also be used for dehusking kodo and kutki. Hence, the district administration placed one seed cleaning machine for the purpose. Self-Help Groups (SHGs) in the area were given the responsibility of processing kodo into sweet bars and supplying them to the Anganwadis. So far so good. New incentives were introduced with support from the government. However,  it is essential to understand that the Mid Day Meal scheme’s supply chain was running under the state government. Whereas the maintenance and functioning of the seed cleaning machines were placed under the National Rural Livelihoods Mission for the production of sweet bars. This created problems in terms of implementation, coordination, and accountability.

With the increase in demand and access to only one machine, some women began dehusking manually, leading to incomplete removal of layers from the food grains. This resulted in food poisoning among the children of one of the Anganwadi centres. Post this incident, the entire order for sweet bars was cancelled in the middle of the crop cultivation season. The tribe suffered a huge loss as the entire process was bifurcated among departments leading to dilution of accountability.

Since words like ‘local employment generation’ and ‘rural empowerment’ find repeated mentions in policy documents, different departments kept introducing new policies to bring about development. Another district specific intervention was introduced under the Aajeevika scheme. The tribal community was asked to collect as many quintals of kodo and kutki as they could. The district office for Aajeevika promised to develop secure markets and connect the supply chain with the wholesale procurement company. However, this target remained unachieved, leaving 48 quintals of kodo, 52 quintals of kutki, and a huge burden to the farmers. The food grains were left in the village organization’s office for five to six months without any official visit to the storage facility or conveyance of any information to the tribes. Due to the lack of clean and sufficient storage facilities, adequate support from the government, and additional cost of guarding the crop against animals; the tribe lost crop bargaining power and sold large chunks of their produce at steep prices to private middlemen. Knowing that the Baiga tribe have undergone significant change in their eating habits, the private contractors made the most of the situation. The tribals were exploited as one kilogram of kodu or kutki was exchanged with one kilogram of rice or wheat. The middlemen procured rice and wheat at a cheap price from ration shops and sold kodo and kutki grains at Rs. 120 per kg in the market. The tribal community failed to understand the lopsided negotiation which led to a loss of Rs. 87,000.

Upon inquiring, it was noticed that the department responsible for liasoning did not have sufficient capacity to formalize the contract and had to give up the intervention. This exploitation could have been avoided if government departments maintained coordination. Even though the agricultural department and local administration met their targets of distributing seeds and fertilizers to farmers and bringing about policy change to improve farmer’s income respectively, their activities opened new doors of exploitation. The example of kodo and kutki illustrates the nature of development that often comes at the expense of disadvantaged communities who do not possess political agency.

The seeds were not enough. The Mid-day Meal Scheme was not enough. The subsidised water and electricity were not enough. Promising words like ‘local employment’ and ‘empowerment’ were not enough. But all these interventions together were enough to damage the trust and expectations of an entire tribe to invest in the cultivation of  kodo and kutki.

The views expressed in the post are those of the author and in no way reflect those of the ISPP Policy Review or the Indian School of Public Policy. Images via open source.