‘Is the pain worth it?’: 50 days after demonetisation, rural South India has a few questions

On November 9, life suddenly came to a standstill in Chikka Tirupathi, Bagalur and Hosur. As in the rest of India, the first day of demonetisation in these towns abutting the Karnataka-Tamil Nadu border was marked by problems in conducting day-to-day trading for small businesses and a frenzied hunt for Rs 100 notes for families.

The response to the government action was mixed on that first day. As the cash crunch sank in, small traders figured out that their businesses would take a hit until they replaced their Rs 500 and Rs 1,000 notes. Slightly larger enterprises, such as Jivita who runs a tailoring shop in Bagalur in Karnataka, were more optimistic. “We have enough money for rotation [working capital] for a week,” she said.

On the whole, it was a day of uncertainty. Notebandi was a sweeping decision. People weren’t sure how long it would take to exchange their old cash and for the situation to return to normal. At a branch of the Indian Bank in Bagalur, a bank official was calm. “We will open tomorrow morning,” he said. “People can come with their passbooks and exchange their notes.”

On December 28, Scroll.in travelled the 30 km stretch between Chikka Tirupathi and Hosur one more time. How were people we spoke to on Day One doing on Day 50?

That is it. The last story of 2016. It has been a good year. Intense and packed with learning. Now to see what 2017 is like.

Happy new year, too. 🙂

An update from Patna’s Maroofganj mandi

ten days into #notebandi, patna’s Maroofganj mandi had frozen.

As demonetisation enters its second week, traders in Patna’s Maroofganj mandi are seeing something unprecedented.

In the last seven days, the supply of new stocks in this wholesale market, which supplies cooking oil, spices, rice, wheat and pulses to shopkeepers across Patna, has plummeted. The supply of cooking oil, for instance, is down by 80%.

Talk to traders selling spices, grains or pulses and you hear similar numbers. “Do you see how quiet this market is?” said an accountant at a rice shop. “Till 10 days ago, you would not have been able to walk down this street.”

In the same period, orders from shopkeepers have fallen steeply as well. Most of them cannot buy as much stock as before, said Abhijit Kumar, who runs a wholesale shop for spices, because they have only Rs 500 and Rs 1,000 notes – both derecognised as legal tender by the government.

The strange thing is: despite the contraction in both supply and demand, commodity prices are stable.

30 days later, around the 10th of December, i went back to the mandi seeking an update on how it is doing. Here is what we found.

Dilip Kumar Singh said the situation at the mandi was the result of some traders travelling to Gaya, Muzaffarpur and beyond to take advantage of low prices in parts of the hinterland. However, the traders this reporter met denied this. Instead, they flagged other concerns.

Sanjib Kesari, a wholesaler, said business had improved and more customers were now coming to the mandi. Prices, too, were moving – cooking oil, for instance, had risen Rs 3-Rs 4 in the last 20 or so days. But, the situation was nowhere near normal.

Wholesalers’ volumes remain modest. According to them, two factors are at work…

Ground report: In Bihar, murmurs of protest break the sullen silence against demonetisation

Banka was the last stop before returning to Patna in this reporter’s travels from North Bihar to South Bihar, to get a sense of how notebandi was impacting the structures of everyday life.

The journey had started with Raxaul, on the India-Nepal border, on November 18, exactly 10 days after notebandi was announced. Heading south, stopping at Bettiah, Gopalganj and Darbhanga and Gaya before reaching Bhagalpur, the common finding along the road was predictable.

As in other parts of the country, economic activity had fallen steeply in every town – be it Raxaul, Bettiah, Patna or elsewhere. In each of them, cash was in short supply, people were struggling to find work. Farm prices had collapsed in parts of the state. In other places, vegetables were being rerouted to bigger markets where there was still some purchasing power. Migrants had returned from the towns where they had been working.

Given this litany of hurt, what was less easy to understand was the popular reaction. As in the rest of India, despite grave difficulties, people had stayed calm. In the weeks gone by, several hypotheses had been advanced to explain this. Did people support notebandi despite difficulties? Did they think, as some people in a village near Gaya said, that notebandi would result in lower inflation and reduce inequality?

In that village, support for notebandi had stemmed from anger about greater inequity over land ownership. One zamindar owned 1,200 acres – which he had stopped giving out to his fellow villagers for sharecropping. The result? Every household in the village eked out a living by either working as labour in Gaya or migrating outside Bihar to work in brick kilns even as the land in their village lay fallow.

That explanation, interesting as it was, did not explain the calm in Bihar’s towns and cities.

And so, when we asked the people of Banka why they were silent, we got some fascinating answers — each far more convincing than the condescending bilge trotted out by pundits sitting far, far away.

Money is trickling into the banks of Bihar – but is not being distributed evenly

A month after Prime Minister Narendra Modi announced the scrapping of Rs 500 and Rs 1,000 notes on November 8, cash availability is starkly uneven across Bihar.

In relatively affluent parts of the capital city of Patna, the long queues outside ATMs seen in the first week of notebandi, when the government invalidated 86% of the currency in circulation, creating a massive cash crunch, are history. In poorer parts of the city, however, one can still see 50-odd people lined up outside ATMs at most times. Travel outside the capital and this pattern repeats itself.

In bigger towns, residents and bank managers said the cash flow has improved. In North Bihar’s Darbhanga, Ramakant Mishra, manager of a Punjab National Bank branch in Qila Ghat, brings out cheques encashed by his customers on November 30, the day this reporter visited his branch. Most cheques ranged between Rs 10,000 to Rs 24,000…

…However, venture deeper into the Gaya district and you will find that cash is just as hard to come by as it was in the days immediately after the demonetisation was announced.

Demonetisation: In a hamlet in Bihar, income and expenditure is down, but hopes are up

The last 30 days have not been easy for the people of Bhindu Paimar.

The standard demonetisation narrative has played out in this tola (hamlet) in Karjara panchayat in Gaya, Bihar, about 20 km from Gaya city, on the road that leads to the ancient Buddhist university of Nalanda.

Earnings have fallen. Most people in the village work as daily-wage workers in Gaya, earning anywhere between Rs 225 and Rs 250 a day.

Before demonetisation, we used to get work 20 days in a month, said Bhim Kumar, a young man in the village. However, the demand for labourers has dried up in the town since November 8 when the demonetisation announcement was made. At the same time, the local grameen bank is not letting people withdraw more than Rs 2,000 a week. “We are borrowing from here and there to make ends meet,” said Kumar.

Talk to others in the village – like Lallan Paswan, who has a small shop selling household provisions right next to the highway – and you hear a similar narrative. The monthly turnover at his shop is down by half. His monthly income has dropped from Rs 5,000 to Rs 2,500.

Despite these difficulties, support for demonetisation is high in this village, which is what this reporter also saw while travelling southwards from Raxaul, on the India-Nepal border, towards South Bihar. In Raxaul, Bettiah, Gopalganj, Darbhanga, Patna and now Gaya, public opinion has split over demonetisation.

This split is not easy to understand. Not everyone hurt by demonetisation opposes it. Similarly, not everyone relatively insulated from its worst fallouts supports it. In short, there are complex reactions to demonetisation.

The demonetisation effect on border town Raxaul: Income loss, dependence on Nepalese currency

My second field trip in Bihar took me from Patna to Raxaul in the far north. A couple of days there, and then I began trickling southwards. Bettiah. Gopalganj and then Darbhanga. And then Patna again. I will head further south tomorrow — towards Gaya — before turning northeast towards Nalanda and then straight east for Bhagalpur. The task of trying to understand how Bihar is doing continues to flummox and bewilder. Along the way, I am also trying to understand how DeMonetisation is affecting the people of Bihar. This was the first dispatch from the north. On its impacts at Raxaul, and how public opinion is split over “notebandi”.

Cauliflower sells for Rs one a kilo in Bihar as demonetisation depresses demand

At first glance, it looks like any other day at the mandi in Bettiah.

Trucks stand next to the concrete arch that leads into the fruit and vegetable market in this small town in northern Bihar. Inside the mandi samiti, as the precinct is called, hawkers sit with baskets bursting with vegetables. The shops seem well-stocked.

But the abnormality shows up when you ask traders and hawkers about the impact of the government’s decision to demonetise Rs 500 and Rs 1,000 notes. Vegetable prices have collapsed, they say.

Cauliflower or phool gobhi, said Mahfooz Alam, a wholesaler at the mandi, was selling for Rs 12 a kilo just before the announcement on November 8. “It is now selling for one or two rupees.”

The prices began to fall within 2-3 days of the Prime Minister’s announcement on November 8, said Muhammad Islam, a fruit trader.

Baingan (aubergine) fell from Rs 15 per kilo to Rs 2-Rs 3. Patta gobhi (lettuce) has slumped from Rs 15 per kilo to Rs 5. And saag (spinach) has dropped from Rs 10 to Rs 2.50 per kilo.

These are jaw-dropping falls. What explains them?

Demonetisation has left India’s food markets frozen – and the future looks tense

As demonetisation enters its second week, traders in Patna’s Maroofganj mandi are seeing something unprecedented.

In the last seven days, the supply of new stocks in this wholesale market, which supplies cooking oil, spices, rice, wheat and pulses to shopkeepers across Patna, has plummeted. The supply of cooking oil, for instance, is down by 80%. Talk to traders selling spices, grains or pulses and you hear similar numbers. “Do you see how quiet this market is?” said an accountant at a rice shop. “Till 10 days ago, you would not have been able to walk down this street.”

In the same period, orders from shopkeepers have fallen steeply as well. Most of them cannot buy as much stock as before, said Abhijit Kumar, who runs a wholesale shop for spices, because they have only Rs 500 and Rs 1,000 notes – both derecognised as legal tender by the government.

The strange thing is: despite the contraction in both supply and demand, commodity prices are stable.

‘All these notes suddenly have no value:’

this field report on Day One of demonetisation.

In the borderlands of Chikka Tirupathi and Hosur, the first day of the demonetisation of Rs 500 and Rs 1,000 notes by the Indian government was marked by problems in day-to-day trading for small businesses and a frenzied hunt for Rs 100 notes for families.

Shankar, who runs Ishwar Digital Studio at Chikka Tirupathi, a temple town about 20 km east of Bengaluru, saw much lower business at his photo studio on Wednesday. On an ordinary day, the photographer, who shoots everything from stills to video for functions, earns between Rs 2,000 to Rs 3,000. On Wednesday, he earned just Rs 100. “People do not have change,” he said.

The story across the border in Tamil Nadu was the same. In the industrial cluster at Hosur, Ahsan Basha was sitting idle in his auto rickshaw near a bus stand when Scroll.in spoke to him. Earlier in the day, he had given Rs 800 back as change to a passenger who gave him a Rs 1,000 note for a Rs 200 fare. He had no more change – and so, no more business.

In the 22-km drive from Chikka Tirupathi to Hosur, this is a narrative this reporter heard often – from Anand, a flower-seller in a market in Hosur and from those running a motley set of businesses – petrol pumps to hardware stores and auto rickshaws.

These workers at Amritsar’s grain market are smiling only for the camera

The anaj mandi at Amritsar will not forget 2015 easily.

For the first time, the state’s long-grained basmati rice, famous for its fragrance, is selling cheaper than the humble parimal variety procured by the Indian government for its public distribution programme. Just two years ago, the variety favoured by local farmers, labelled ‘1121’, fetched about Rs 4,200 a quintal. This year, it is selling at Rs 1,700.

Should India import onions?

Once again, India is hyperventilating over onions.
In Delhi, say press reports, prices of the bulb have spiked by 25% between July and August. Similar spikes are being reported from elsewhere in the country.
In response, blame games are underway. NAFED, a central government agency that procures agricultural produce, has accused the Delhi government of ignoring its missives in April, June and July about an imminent rise in onion prices.
Also underway are counter-measures to cool down onion prices. The Delhi government has decided to sell onions at subsidised rates. The central government has decided to import 10,000 tons of onions from Afghanistan, Pakistan and Egypt.
These responses are resulting in bemusement amongst food policy experts.

See the full story, here. Also see this earlier story for ET on onions.

The Chandasi Coal Mandi

Today’s ET carries a story on Chandasi – also spelt as Chandausi. It is a mandi — like the agri markets of India — but one dealing in coal. It is a fascinating place. Its architecture is similar to that of a farm mandi even though the commodities the two trade in are so different. It corrects a state failure — inability to supply coal to small businesses — but does so by sourcing illegal coal. Which makes it a benign institution. But it is also malign. The mandi is mired in local mafias, coal syndicates and what have you. And so, while the illegal enterprises supplying coal to the mandi make pots of money, the labour, the buyers, some of the traders, lead marginal existences.

The story in the paper, here. A longer version of the story, up on my ET blog, Anomalocaris.

where the trucks from jharia stood.

near the trucks from jharia. across the road, behind these trucks, stood trucks from ramgarh.

parmeshwar patil,  commission agent at the mandi. business is down. big traders extend credit. we cannot. a similar narrative as what one hears in farm mandis.

parmeshwar patil, commission agent at the mandi. business is down. big traders extend credit. we cannot. a similar narrative as what one hears in farm mandis.

7 in the morning. trucks coming in for the auction at 'punjab kanta', the point in chandasi where the auction happens

7 in the morning. trucks coming in for the auction clustering around ‘punjab kanta’, the point in chandasi where the selling/buying happens

buddhiram. works 20 days a month at chandasi as labour. the pay is dismal. the 'mate' (labour contractor) deducts a lot even though he does no work.

buddhiram. works 20 days a month at chandasi as labour. it takes about 7 hours to load a 20 tonne truck. the pay is about rs 800 per truck. a sum that needs to be split between all the workers. however, the ‘mate’ (labour contractor) takes about rs 230 out of that 800. the rest is what is left for the workers — say 3 per truck. it was a long chat. we started talking about chandasi. and then, the chat switched to the changes in his life which resulted in him coming to chandasi as labour, the grim state of the school where his children go, and more.

if the small traders were suffering, so were the workers.

life in a coal mandi. walk down chandasi and you see people loading, unloading, sitting around, bathing to get the coal off, trucks lurching down rutted roads…

chandasi's version of the resource curse.

life in india’s largest coal mandi. we treat the informal economy like shit.

the mandi at chandasi. the space between the highway and the village houses 700-800 depots, small yards with coal owned by relatively large traders.

between the highway and the village stand 700-800 depots. small yards owned by relatively large traders — the smaller ones have been all but pushed out as the coal business became a volumes play.

preparing to move coal from one truck to another.

preparing to move coal from one truck to another.

as in farm mandis, the coal mandi also categorises the coal it receives into different categories -- by origin, by quality, by size of the coal pieces, etc. buyers, in that sense, get coal tailored to their needs. this is quite different from the coal india approach where the only customisation is per grade/calorific value.

as in farm mandis, the coal mandi also categorises the coal it receives into different categories — by origin, by quality, by size of the coal pieces, etc. buyers, in that sense, get coal tailored to their needs. this is quite different from the coal india approach where the only customisation is per grade/calorific value.

the obligatory cycle photo

the obligatory cycle photo

another view of chandasi.

another view of chandasi.

also see these, my photos from the field while reporting on coalgate.

why onion prices will singe you again and again

This January, the competition regulator sent an independent report to the ministry of agriculture on why onion prices spiked abruptly in 2010, a pattern that is playing out again today, with prices ruling at Rs 60-80 a kg for the last two months.

This 86-page report, one of the clearest descriptions of how India’s agricultural markets function, made some stinging observations: traders colluding and acting like a cartel, the unequal relationship between traders and farmers and exports not being calibrated to domestic demand, all being perpetuated by loopholes in the rules.

While this report, titled ‘Competitive Assessment of Onion Markets in India’, studies a crisis that happeend three years ago, it warns of why, unless systemic change is not effected, the spike in onion prices will keep happening in the years to come, especially at this time of the year.

This report—commissioned by Geeta Gouri, member, Competition Commission of India, and prepared by researchers at Bangalore’s Institute for Social and Economic Change (ISEC)—has remained in the ministry’s cold storage. “There has been no response from the ministry at all,” rues Gouri.

a quick and dirty story on why, every so often, onion prices spike so abruptly. i need to get into more detail on all this.

More observations from Tihi et al

a small update from me. when the previous post was written, i was in the middle of the itc project — living in two villages, studying the impact this agribusiness was having on village india. that project is over now. i am back in starvation gully looking for a job. needless to say, the village stint was magnificient. cannot tell you how much i learnt. (note to regular readers. yes, all three of you. give me a shout whenever you are in delhi. we will get a beer. i will get my laptop along and show you the village snaps, tell you about the people i met, the friends i made, the new confusions in my brain…).

in the meantime, i thought i would paste some of my village notes on the blog. take a look. this is a fairly random list of jottings. but might make for an interesting read.

****

a pastiche of memories

a government intervention to empower lower classes – rotating the post of village headman among marginalised communities, women and then the general category – had fallen to the law of unintended consequences. the first reservation sarpanch was meant to be an adivasi (tribal). in tihi, consensus was that he had been “guided” by moolchand seth (mukesh sen).

reconstructing how the elections worked, however, throws up more nuanced conclusions. the adivasi who stood for elections was the brother of narmada prasad, the village chowkidar. i suspect it is partly because as chowkidar, narmada prasad gets to know the government’s policies and plans for the village before any one else. and, as a govt servant, he has developed the ability to spot the advantages lying within these more than the others. on hearing about the new law, he got his brother to nominate himself. and, since there were no caps on gender, nominated his wife as well. both of them stood from the congress (narmada prasad is a ‘congressi’).

and then, another women from the adivasi basti, kamla bi, nominated herselves as well. or, as is more likely, got nominated as well. around this time, narmada prasad withdrew his wife’s application. “a woman can barely sit with the menfolk and talk about what the village wants anyway.” (narmada prasad) with that, the elections became a contest between a woman and a man. and the village, predictably, voted for the man.

by the time the next elections, this time for a woman sarpanch, came around, the village bjp unit had gotten its act together. the bjp elders met leeladhar chowdhury, told him that he must contest, and so, he nominated his wife (leeladhar chowdhury). similarly, moolchand seth nominated his wife. the former won. since then, she has not been seen in public. it is the sarpanchpati who takes all the decisions. it is a shame. life is tough for the womenfolk of the village. girls get married at 15. despite the existence of a water tank, there are no pipes to bring that water to the homes. and now, despite having a woman sarpanch, nothing had changed for them. a real shame. because the village will get another woman sarpanch only another 20 years later

***

there is the complicated arithmetic that precedes sowing. and i cannot do better that quote david mosse on this question. “every season presents a complex scenario in which households have to feed themselves and earn income, meet fodder needs and maintain the fertility of the soil. they have to judge the likelihood of rain, the availability of credit, the capital of social obligations yielding labour and support on which they can draw, and in the light of this choose the combination of crops to grow and how to fertilise the soil. each field involves a complex ecological and social reckoning not easily put into words.” (from cultivating development)

***

if you have read my previous post on tihi, you will know that the village was facing a huge water crisis. in tubewell capitalism, navroz dubash talks about a gujarati village that evolved its own groundwater market. in this village, large farmers jointly invested in diesel pumps, and began using this infrastructure to partly irrigate their own fields, and partly to supply water to smaller farmers in return for a part of their yield. it was not an egalitarian system. for one, the partnerships were always between dominant caste farmers. they could bring cash and land to the table. the lowers could not.

for the same reason, the lower castes could not float a similar partnership of their own. and so, a new dependancy got created. imagine the consequences. if there is a water shortage, the partnering farmers might have to choose among customers – which might be along caste lines, or along crop lines (the more valuable one gets the water). not supplying water to the lower castes can eventually force them to sell land and become labour, or migrate. reading about it. i could not help wondering how the water situation in tihi would evolve. the cost of accessing groundwater is certainly climbing steeply. (dubash, navroz k. tubewell capitalism: groundwater development and agrarian change in gujarat. 2002. oxford university press).

***

one evening in january, shortly after moving into the village, i walked down the new highway looking for schoolteacher amrit lal patel amongst his fields. i could not find him, but was hailed by four men sitting on the two metre high, twenty metre wide and kilometres-long waste of compacted soil that was the bombay-agra highway taking shape. it is an evening i can call up in my mind without much trouble. those were early days in research mode. and this interloper in the village was a subject of some curiosity and anxiety. why was i in tihi? what would i tell the company? how would the company make use of all this information? at my end, i was slowly coming to grips with the realities of agriculture in tihi.

that evening, i asked rayees, chintaman chowdhury, ashok bairagi and ashok maheshwari about soya. how much money did someone with, say, five acres make on the oilseed? and now, sitting in this delhi room, far away from tihi, i look at my notes and again feel like i am lightyears away – in terms of kilometres, in terms of human development indices. five acres will yield 20-25 sacks of soya. five acres need 2 bags of seeds (rs 3,000), 3 bags of fertilizer (rs 1,500), pesticide (rs 1,500), labour for weeding (rs 1,500), labour for sowing (rs 1,500), labour for harvesting (rs 2,000), labour for threshing, at rs 50 per bag (rs 1,000). add all that up and you get rs 12,000. at rs 1500 for every sack and 25 sacks, the farmer will make rs 37,500. take out the costs. and you are left with 25,000. or, rs 5,000 per acre.

let us problematise this further. one. tihi is a two crop village. no more than 10-15% farmers plant a third crop. and that too, given the acute shortage of water by then, on a few bighas. two. most farmers plant wheat as their second crop. its yields range between 18-20 sacks per acre. each sack fetches between rs 1,100-1,200. that, in a best case scenario, is gross income per acre of rs 24,000. costs range between rs 12,000-14,000. so, say, a net income of rs 12,000 per acre. add earnings from soya to this, and you have farmers making rs 17,000 per acre per year. three, in tihi, 25 farmers have less than one acre. 75 farmers have between 1-2 acres. another 180 have between 2-5 acres. 20 have between 5-7 acres. just 5-7 farmers have over 7 acres of land. it doesn’t paint a very affluent picture. and four. all that is without factoring risk in.

marginal existence appeared to be the objective reality at tihi. take prakash ‘dewana’ chowdhury (he acquired that nickname because he used to dance like amitabh bachchan in that film. looking at his tired, lined face now, it was hard to imagine anything of the kind). one of the smaller farmers in tihi, dewana has three bighas. three bighas spread over six parts of the village. imagining what that means for him in terms of irrigation was daunting. given that electricity is released to farmers at night, he spends his nights walking from one field to the next, checking if they are being watered properly.

for all that work, his annual income from agriculture works out to rs 60,000. now, every month, he spends rs 400 on gas. 4,800. 300 on electricity. 3,600. 2,000 on hh goods. 24,000. then, there are annual expenses. pump maintenance is 10,000. agri-inputs cost about 10,000. the electricity bill is 3,500 for the one season in which he uses his pump. 4,800 + 3,600 + 24,000 + 10,000 + 10,000 + 3,500. 55,700. that left him with rs 4,300 for the year.

to make his ends meet, he supplements agricultural income by working at pithampur between april and october (till the soya harvest comes in). he makes rs 90 a day, readying bus chassis so that bodies can be bolted onto them. he was working very hard, pulling rs 1,500 in overtime every month, and so making rs 4,200 a month for 6 months in a year. that is another rs 25,200 a year for him. or rs 29,000 for the year.

or take lakshminarayan sharma at deokhajuri. i met him one evening when i was sitting in the village’s chowdhury mohalla. near where we sat, a bore was being drilled, a handpump was being engaged by women and kids, another couple of farmers sitting outside the house across the courtyard, some more people walking up the path to the square. pastoral idyllicism. and i was there, listening to the elders’ stories of the village in ye olde days. which is when sharmaji joined us. a sharecropper, that evening, he spoke about the economics of his agriculture, but left some questions unanswered. and so, some days later, i went over in the morning and buttonholed him.

he takes 10 bigha of land on rent. the rates are rs 3,000 for gehri (land where water will stands). and rs 3,350/3,500 for padua (where it doesn’t). his costs? say, rs 33,000 for land. tilling the land with rented tractors, at the rate of rs 1,000 for every tilling (rs 3000). seeds (rs 5,000). fertilizers (rs 2,000). weedicides and pesticides (rs 2,000). harvesting with manual labour (rs 3,500). all that works out to a total cost of rs 15,500.

and now, look at the yield side. soya yields in deokhajuri were ranging between 1.5-3 quintals per bigha. a smaller farmer, he was unable to invest as much as his larger counterparts, and so his yield was closer to 2 quintals per bigha. about 20 sacks. which nets him about rs 25,000. after settling his dues, he is left with rs 10,000 as net income post kharif. which brings us to crop two. tilling, thrice (rs 3,000). seeds (rs 5,500). fertiliser (rs 2,500). harvesting (rs 3,000). total costs, rs 14,000. he will get eight sacks of wheat off every bigha of land. so, 80 sacks. which, he said, works to about rs 80,000. from here, he will take out the cost of the field. so, that is rs 33,000. followed by the rs 14,000 incurred as expenditure for the rabi. not to mention the cost of transporting his harvest to the mandi. rs 2,000. which leaves him with rs 31,000. that and the 10,000 left over from soya are his earnings for the year. rs 41,000.

observations. by this calculation, a farmer with his own 10 bighas would make one lakh a year. at deokhajuri, 10-12 farmers had between 50-60 bighas. another 50 had between 30-50 bighas. thirty farmers had between 20-30 bighas. over 200 had between 10-20 bighas. and, finally, about 25-30 farmers had less than ten bighas. on the whole, the village appeared to be more affluent than tihi. but, even here, there are problems. the soil at deokhajuri gets water-logged, turns swampy all too easily. most years, both crops do not work out. if it rains too well, the fields get waterlogged and the soya rots in the fields. if it doesn’t rain well, the dam doesn’t fill and the rabi crop parches in the field. that is the reason why landholdings in this region are larger than at tihi. tihi gets two crops a year off its land. deokhajuri, depending on the rains, can all too easily slump to just one crop in the year. rs 41,000 was something of a best case scenario for sharmaji.

at tihi, i would stand on the rooftop of the house where i stayed and survey the houses clustering tightly all around. 300-odd families. about 25-30 houses made entirely of cement. the rest? the usual amalgam of brick walls and asbestos roofs. of the pucca houses, some belonged to the large farmers. the rest belonged to either those who had diversified beyond agriculture (teaching, transport…) or had no land to begin with (like the barber family i stayed with). the rest, all people with land, are leading lives of quiet poverty.

this poverty is qualitatively new. while the jajmani system denied people opportunity, it also protected them from vulnerability. today, even as farmers enjoy far greater freedom than before, the commercialisation of the agrarian economy has seen traditional cohesiveness erode. at tihi, as that dependency of the lower castes upon the higher castes reduced, the latter narrowed their zone of concern as well. it is now limited only to those dependent on them. maybe just their family. maybe just the clan.

***

reflections on cohesiveness. in a paper called “the closed community and its friends”, pitt-rivers discusses the mechanisms that governed this traditional cohesiveness of communities. he starts by making a distinction between open and closed societies, and proceeds to identify the factors affecting the degree of closure or openness in a peasant community. he finds “two parametric conditions to be necessary for the continued existence of a largely closed community. one, members must have habitual personal contact, which implies living in the same place. and two, members must share a homogeneity of culture and values. given these two conditions, the other repeatedly noted characteristics of the closed peasant community would seem to follow: the emphasis on strict cultural conformity as an absolute prerequisite to community acceptance: the intense degree of ingroup solidarity and identification vis:a:vis the others, the marked tendency towards egalitarianism, particularly on the ideological level, but to some degree on the socio-economic as well… in his paper, set in europe, he sees most of this changing now. formerly closed peasant communities are “opening up,” owing to improved transport, communications, and the like, with the result that allegiances are coming to be defined not only not only, or even mainly, in terms of local attachment, but occupationally, politically, religiously or whatever. the distinctiveness and homogeneity of the culture of the closed community is engulfed by generalised homogeneity of the national culture, and the “we-villagers-against-the-world’ pattern of social solidarity dissolves into local factionalism: traditionalists against modernists, agriculturalists against non-agriculturalists, young against old.”

***

one of my strongest memories from this period is an evening spent at the fields of amrit lal patel. it was april. i would soon be leaving the village. and this would be the last of several chats we had had at patel sir’s fields in the evening, sitting on the furrows, first eating roasted grams and then, when the gram harvest ended and the potato season began, potatoes roasted in small fires originally lit to stay warm. that evening, we were sitting under the tree that stands to the west of his fields, our feet dangling over the water channel, chatting about tihi, its urbanisation, my ruralification. at some point during that conversation, i forget precisely when, he said, “yeh ek achcha gaon huva karta tha.” i don’t know how to convey what i felt at that moment. ‘shocking’, ‘sad’ and ‘poignant’, all sound too literary, too fake. but, imagine, the schoolteacher was one of the few farmers hellbent on not selling his land. and now, he was referring to the village in the past tense!

***

how do people survive if agri incomes will be so low? create jobs in industry, the answer goes. tihi does have a lot of people like dewana working in the local industrial cluster of pithampur. but the jobs here were grim. reminded me of upton sinclair’s the jungle. about five years ago, to clamp down on unions, industry here switched to contract labour. since then, the resulting structure of employment has lacked any social security, offered hardly any long term prospects, and like most unprotected industrial jobs, affected the health of the workers.

one day, while travelling from indore to tihi, i found myself sitting next to a labour supervisor at pithampur. am reproducing my notes from that conversation. read it. it will help understand what a depeasantised life can be like. he works in a company that makes inspection equipment for maruti udyog. equipment that goes to the company’s service stations and such. before coming out here about ten years ago, he used to work on the family farm near jabalpur. six brothers. seven acres. seems he had asked his brother for travelling money. got rebuffed. and that is when he decided to leave farming and come over to pithampur. he is on a good wicket at the cluster. like most people who began working here ten or so years ago, he was hired by the company. said he was quite happy with the move. the salary has increased. gets benefits et al.

his job involves supervising the contract labour that works in his company. his company hires about 400-500 workers on contract. all of them come from one contractor who has 1,000-1,200 people on his rolls. half of them work at pithampur. the other half at dewas. the company pays these guys @ rs 135 a day. of which the contractor pays them rs 120, and keeps the rs 15. that is rs 15,000-18,000 a day!

of the contract labour in his company, about 150 are below 20/22 years. another 200/250 will be between 22-30 years. another 40/50 are over thirty. no one over 40 is employed in the factory. wages fall as years mount. one starts working at rs 4,000. and the contract to work with the company gets renewed every six or so months. this is to ensure that the worker has no legal claim on the company. they work for some years, then get replaced by someone younger, and so join the pools of the slightly older, all milling around for a jobs in a town that wants young bodies. and so, the next job they get will be at a slightly lower pay. say, rs 3,500 or so. it is a vicious process. what happens is that youngsters work for a couple of years, figure they are doing well, get married (around 20 or 22, if tihi is anything to go by), have a couple of kids and, just around the time they are thinking of putting the kids in school, they hit 28 or so, and get progressively bumped down the salary ladder.

it is not hard to imagine the prospect of bribery here. desperate men bribing the contractor’s men to get onto a list of workers identified for a company.

the lives of the migrant labour are not easy either. companies routinely charge rs 800 or so for the boarding/food they provide. either that, or most of these guys take a sharing room in the cluster. that way, they can save on travel money. the downside of that is health. like all industrial towns, pithampur is badly polluted. the gentleman i was talking to had lived in pithampur. that took a toll on his health. he developed breathing trouble. initially, he would flee to his village every six months for a break. he doesn’t do that any longer. instead, he has taken a house in bhesalai (a village about 10 km off pithampur) and commutes every day. don’t think the migrant workers, trying to send some money home, see that as an option.”

***

among the youth in the village where i lived, pithampur has created a call-centre like dynamic. kids in the school look at their seniors working at pithampur, their faded jeans and jackets, their mobile phones, and want to be like them. they were looking down on agriculture, unable to accept the hard work it demanded, the meagre earnings it yielded. the cluster, on the other hand, offered a steady income; better yet, a steady income that was higher than what their fathers made and seemed good enough to afford the good things in life; and all this after working just eight hours a day. (amrit lal patel).

three out of four kids, i would be told by one of the older students in the schook, do not want to be in agri. the elders were less thrilled with pithampur. and it showed in how they insisted on regarding themselves despite their partially depeasantised lives. villagers, at least those with a little bit of land, insisted on thinking of themselves are primarily farmers. industry work was seen as something that they did only on a parttime basis. who wants to be known as a mazdoor? sharif mohammed would ask me.

***

one weekend, i tagged along with a dear friend to attend a gram sabha. she was working with an ngo specialising on natural resource management in a tribal district of madhya pradesh. in this gram sabha, she hoped to convince the villagers to let her ngo partner wth them. this was under the aegis of the national rural employment guarentee scheme. it is being used by villagers, by ngos like the one my friend works for, to build ponds, rainwater hervesting structures et al in villages.

a few observations were made during the four hours that the sabha lasted. it began slow. initially, there were 10 men. and four old women who seemed to just sit in. they made no contribution. slept thru the bit. or looked bored. that was the first thought. had the gram sabha been considered important, wouldn’t everyone have turned up on time, instead of straggling in slowly? later, another explanation would emerge.

i found the notion of a gram sabhas itself to be very intriguing. the idea is that it will be a purely village level body. it will create proposals and put them up to the panchayat which will then deliberate on these. not just let the panchayat decide policies and so on. this is a problematic idea. the fact that all you need is a quorum in a gram sabha to pass a plan means that the system can be manipulated. what if the dominant caste troops in, creates a quorum and passes a plan which suggests that a pond be built in a location favourable to them? and then puts it upto the panchayat?

the panches, then, will have to adjudicate. if they are the elite as well, or beholden to them, the plan will go thru. that is one unresolved question for me. the other thing is the samitis. the idea here seems that every village will create these specialised samitis. with stakeholders getting together to model the village’s development strategy. these will then be put up before the gram sabha, which will then approve and put up to the panchayat. and you know. i still do not get it. the panchayat is democratically elected. why would it not take these decisions directly? maybe there is some justification when the panchayat is overseeing more than one village. but what about the other cases? what value does the gram sabha add?

anyway, process stuff. my friend introduced her ngo at the sabha. saying that it could help the villagers with good agri practices, better crop varieties, gobar gas, smokeless chulhas, irrigation and so on. right at the beginning of the process, sahu, the most voluble of the villagers, and the one who seemed to be speaking for the rest, had suggested that one intervention could be the village checkdam.

built on the course of a stream, it was leaching water, proving useless to the villagers. previous attempts to fix this dam, while costing rs 11 lakh, had not delivered. and this needed to be fixed. that said, this dam is situated to one side of the village fields. later enquiry would suggest that most villagers did not have their fields in this part of the village, but further upstream. that a chkdam built there would be more beneficial. and that mr sahu was one of the villagers, one of 10-15 farmers who has his fields near the current site. this was evident from the map. but the suggestion was initially accepted prima facie.

look at the forces and compulsions at work here. an ngo trying to sell itself to the villagers. for it needs their approval before it can come in and work. all sorts of organisational and personal imperatives hinge on getting that approval. that might mean that the ngo will be willing to work with anyone who can get it that permission. even the local elite. and, if there was indeed elite capture on water, that might explain why the rest of the villagers were sitting quiet. or were insisting that the intervention needed in this village practising rainfed agriculture was not a pond, but tarring the local dirt track. was that because they felt any intervention on water runs the risk of only benefitting a few. and so, are trying to suggest stuff which will necessarily benefit the whole village. a sort of weapons of the weak moment here.

but, on the whole, there was a fairly good interaction. at least sahu and a couple others and the ngo team were talking like equals. that changed once the state government-dfid bureaucrats dropped in to attend the gram sabha as well. they came in late. became aggressive when the delay was mentioned. began lecturing the villagers on their need to have an agenda for the meeting. on how they should stop relying on the govt for everything. that the villagers should plant palas on the bunds between their fields. on how they should create a central pool of cash, rs 10 or so per family, and lend that out to whoever needs cash. that will reduce dependance on the moneylenders and so on.

coming from a development practitioner, that is a shocking view of village life! who sees a village as a unified entity? also, what makes these guys come down to the village and so freely dole out ignorant homilies and recipes on how to improve the village? and all this from a team so ignorant they had to ask the villagers about the population of that hamlet. what is the pathology of all this? why are the govt guys getting away with all this preaching? why are they preaching anyway? how do they view the villagers in this part of the country? like idiot children? it would be fascinating to sit with the government guys and try and understand their view of their job. what it is that they think they do? and why they think that the current mode of working is the way to do it? also, if it is a job that they enjoy? cannot be easy, having to move around in the hinterland. is that something which fills them with resentment? for his part, sahu is being very polite, qualifying his comments self deprecatingly now, not wanting to upset the boffins. a diff dynamic from what he had with the ngo-folks.

the whole thing made one feel very hopeless about development. look at the actors. the govt, the ngos and now, the corporate sector, each primarily accountable internally. not to the community they claim to be serving. instead, one could go so far so as to say that they might be regarding the local community as the entity that stymies the efforts of the govt, the ngos and the corporates to improve their lot. can development work like this?

***

the next day, i had a chat with dinesh barmaiya, who runs a handicrafts shop outside kanha tiger reserve. among the things he mentioned was the annual calendar of the baigas. it begins with mahua collection three months before the rains. that lasts for a month. this is followed by tendu collection for two months. the money is good here. one person can collect 5,000 leaves if working all day. this will fetch them about a hundred or two hundred rupees. that lasts for two months.

and then, when the rains come, all that stops. and they switch to agri. that goes on for four months. what they grow are coarse cereals. a function of the bad soil here. very rocky. and so, no soya or anything. no one has tried it. don’t think it can work on such soil. outputs are low. i forget the number but recall them saying that there is very little to take to the market. that said, there is some surplus which is kept home and liquidated as and when needed. even so, the surplus is rarely great. especially since they also have to keep some home for special functions and so on.

and then, at the end of the agri cycle, the villagers seem to leave their homes in large numbers, as many as 75 or every hundred, and leave for mazdoori somewhere. a few lucky ones get work close to their village. the rest migrate to nearby towns and so on. a lot seem to go towards the mining belt.

a development chronology of tihi

since the 12th of january, i have been living in tihi, a village of 300-odd households in the central indian state of madhya pradesh (more specifically, in malwa). six years ago, itc-ibd, an indian agribusiness, set up an ict kiosk in the house of one of the larger farmers in this village, began using that to transmit market (and itc-ibd) prices into the village, began competing with traditional agri-produce buying structures. the task at hand is to gauge the impact that the kiosk has had – economic, social…

needless to say, that is not what this post is about — it will take me ages to figure out the impact, and the factors explaining that. instead, this latest sporadic offering to the blogging gods will focus on the agrarian history of tihi. it is the incidental outcome of some time I spent chatting with village elders, trying to understand what this hamlet was like in the days gone by. later, during a trip to delhi, i corroborated what they told me about crop prices and wage levels, famines and epidemics, forests and water levels, with the old district gazetteers.

note: the data derived from the gazetteers is marked with a ‘D’. the rest comes from the interviews with the elders.

note: you will have to excuse the sheer randomness of the first three entries. while putting this chronology together, i was mainly interested in developments that appeared to impact agriculture in this region.

0900. rajputs enter and found new principalities in malwa and nimar. till now, malwa inhabited by tribals — bhils, gonds and korkus (D)

1690. the maratha invasion. they replace the mughal empire. (D)

1766. malhar rao dies. by now, his holkar dynasty controls the malwa tablelands. (D)

1811. under the usual succession squabbles and misgovernance, holkar empire begins to fall apart. attacks on malwa villages – sometimes from neighbouring rajput and bhil kingdoms, sometimes by holkar nobility looking for extra cash, villages themselves attack neighbouring villages…(D)

1818. the treaty of mandsaur. indore state becomes – what is the word – a british protectorate? (D)

1877-1878. distress years (D)

1886-87. famine (D)

1891. price of jowar. 28 seers for a rupee (D) (one seer = 933.10 grams).

1895. 29 inches of rain instead of the usual 39.5 (D)

1896. 26 inches of rain (D)

1897. 30 inches of rain. (D)

1898. 39 inches of rain. (D)

1899. 10 inches of rain. (D)

1899. management of the state moves from the holkars to the british resident. the land revenue system stays much the same as what the marathas used — in terms of soil classification, in terms of levies… (if you are interested in this sort of thing, google ‘peasants and imperial rule’ by neil charlesworth. am reading this right now. and might read andre wink’s ‘land and sovereignity in india: agrarian society and politics during the eighteenth century maratha svarajya’, after the charlesworth. suggestions on other books to read on this issue of agriculture during colonial and precolonial times will be gratefully received. one good thing about living in a village is the sheer amount of reading time one gets.)

1899-1900. the great famine. population in the district comes down from 1,099,990 (1891) to 850,690 (1901). given the very poor rain, both rabi and kharif crop fail that year. prices rise 100-300% over the average in the preceding five years. only 37% of land revenue is realised that year. (D)

1901. price of jowar. 17 seers for a rupee. between now and 1918, prices more or less kept rising. (D)

1903. plague (this might not have afflicted the whole district at the same time. cycling, instead, though different parts of the district over the next few years) (D)

1904. plague (D)

1905. plague (D)

1905. plague. frost kills most of poppy, wheat and gram. (D)

1906. plague. prices rise. (D)

1906-07. agricultural wages rise 25%. (D)

1907-1908. famine. around this period, jowar prices partly rose due to export of the grain to other places where crops had failed. (D)

1908. this is the year when the gazetteer was released. at this time, indore was the largest town in the district with a popn of 86,686. population of the seven next biggest towns in the district ranged between 8,273 and 4,639. of the 3,379 towns and villages in the district, 3,114 have a population below 500. every household, on an average, 47 members. the district is predominantly hindu (79%), bhil (11%) and muslim (8%). among these, the bhils are mostly found in the southern reaches of the district. agriculture is the largest source of employment (142,705). the state employs 24,698 people. personal service employs another 25,516. general labour accounts for 107,559. and those without any occupation (mendicants et al) number 20,428. within agriculture, 96,959 were tenant cultivators, 42,613 worked as field labour, 1,168 were landlords. (D)

more on agriculture. it cost anywhere between rs 300-500 to dig a well. it cost between rs 4-7 to irrigate one bigha (about half an acre) of land. cost of agri-labour? 3 anna and five paisa a day (men) and 2 anna and three paisa a day (women). this was up 50 percent from 20 years ago. in part due to the famines which created a labour shortfall. i should also add that 16 annas constitute one rupee, 100 paisas make for one rupee. a woman or boy who sat in the field to chase away birds and deers that came to graze on the crop would be paid rs 4-5 a month. that said, wages in kind were common in the villages. the 1908 gazetteer mentions weeding. this called for 8/10 people per bigha, who might be paid in kind — 2.5 seers of jowar for a day’s work. similarly, carpenters might be paid 20-50 seers of maize or jowar for every plough. that would be given to them after the kharif harvest. they might similarly get a part of the rabi crop. potters and barbers were paid similarly, though at lower rates.

other numbers. one cultivator with two bullocks could farm 25 bigha/12 acre of kharif. or 16-20 bigha/10 acre of rabi. The average landlord farmed 85 acres. the average cultivator held 12 acres. i am not very clear about the taxation system so far. here is what I aggregated from the gazetteers re the taxes levied. road cess (3 pies/rupees), sardeshmukhi (7% of assessed yield), jasti kharch (rs 2 per plough of land). then, there were other cesses — for weighing, ground rent, cesses on specific castes like balais and chamars. two things, now. one, this is the new system that the british brought in to replace the old ijaradar system. which is described as very exploitative by the gazette. and two, from what the village elders tell me, the lagaeen was so high the villagers were left with nothing once they paid their taxes.

i am yet to understand why a farmer with 12 acres could be left so destitute. the steady switching between famines and epidemics would have forced the cultivators into hugely indebted existences. but i still need to figure out the economics of agriculture in this period.

1908. about 80-90 years ago, the kaali bukhar came, said the village elder who lives near the shiv temple. so many died that it was hard to find enough people to cremate the dead. the gazetteers refer to virulent plague and famine in 1909. the same?

1911-1921. the decade would see poor rains. outbreaks of plague, cholera and influenza (D)

1912-13. prices rose. (D)

1913-1914. agricultural wages now stand at 4 anna, 9 paisa (D) 1917. plague. (D)

1918. influenza. 18.5 inches of rains (D)

1918-1919. influenza. (D)

1919. agricultural wages. 8 anna, 9 paisa. (D)

1920. agricultural wages. 8 anna, 9 paisa. (D)

1920. poor rain. impact shows in prices. wheat 6.5 seers/rupee. rice 3.5 seers/rupee. gram 6 seers/rupee. jowar. 11 seers/rupee (D)

1921. influenza. wheat 6.25 seers/rupee. rice 3.5 seers/rupee. gram 7 seers/rupee. jowar. 9 seers/rupee. (D)

1921-1931. a good set of years for mhow tehsil (which is where tihi falls). normal, natural growth. that said, prices stayed high for the first five years in this period as the abnormal conditions created by WW1 took time to vanish. (D)

1925. low rain. prices of wheat, jowar and gram rise (D)

1928. land rate. 6 bighas for rs 100.

1931-41. another good decade for mhow tehsil. prices come down, partly due to an expansion in farming area. in 1931, wheat 12.5 seers/rupee. rice 6 seers/rupee. gram 12.5 seers/rupee. jowar 24 seers/rupee. by 1941, however, wheat 10.25 seers/rupee. rice 5.5 seers/rupee. gram 14.5 seers/rupee. and jowar 18 seers/rupee. this seems to link to world war two. 1939 prices had been lower than 1931 prices. wheat 13.25 seers/rupee. rice 8.25 seers/rupee. gram 15 seers/rupee. jowar 19.75 seers/rupee (D)

1938-39… agricultural wages. ploughing: 3 annas, 0 paisa (men); sowing: 2 annas, 11 paisa (men); 2 annas, 5 paisa (women). weeding: 2 annas, 2 paisa (men), 2 annas, 1 paisa (women). harvesting: 3 annas, 4 paisa (men); 3 annas, 2 paisa (women).

1941-1951. between the bengal famine and the second world war, malwa stays under strain. the government enters procurement and distribution, makes it mandatory for farmers to sell only to it. cracks down on hoarding. the gazetteer says that, on the whole, prices did not go as ballistic as they had during the first world war. but they seem to have.

1941-1951. at tihi, lagaan is now rs 2 for every bigha, and the villagers are unable to pay even that. labour is 25p/man/day. one of the elders I spoke to got married back then after taking a Rs 60 loan, and it takes him two years to clear that. i ask why incomes were so low, why people with land had to do wage work, and am told they would plant jowar and cash crops during the rains. if it rained too heavily, the whole crop would be lost. they would plant wheat in the post-rain months, but that was risky too. by the end of the wheat cycle, water would be low. and there was no telling what the yield could be. as low as one sack per bigha.

1942. Wheat 9.5 seers/rupee. Jowar 15.25 seers/rupee. Rice 4.75 seers/rupee. Gram 12.25 seers/rupee. (D)

1943. Wheat 5 seers/rupee. Jowar 7.25 seers/rupee. Rice 2.25 seers/rupee. Gram 5.25 seers/rupee (D)

1944. Wheat 4.25 seers/rupee. Jowar 5.75 seers/rupee. Rice 1.25 seers/rupee. Gram 4.75 seers/rupee (D)

1944. very heavy rain in mhow tehsil. 159% of the usual amount. (D)

1945. Wheat 4.25 seers/rupee. Jowar 5.75 seers/rupee. Rice 1.25 seers/rupee. Gram 5.75 seers/rupee (D)

1947. independence.

1947. village school opens. wage labour climbs to 50p a day for a man. 25p for a woman

1948. starvation deaths in the village.

1949-50. agricultural wages. ploughing: 15 annas, 7 paisa (men). sowing: 12 annas, 7 paisa (men), 10 annas, 6 paisa (women); weeding: 8 annas, 6 paisa (men), 8 annas, 6 paisa (women); harvesting: 15 annas, 6 paisa (men), 15 annas, 1 paisa (women) (D)

1951. Wheat 0.39 seers/rupee. Jowar 0.24 seers/rupee. Rice 0.88 seers/rupee (D)

1955. Wheat 0.36 seers/rupee. Jowar 0.17 seers/rupee. Rice 0.55 seers/rupee (D)

1956. population indices. birthrate: 32.83, death rate: 12.52;

1961, birth rate: 15.68, death rate: 3.27, infant mortality: 20.47:

1966, birth rate: 22.81, death rate: 8.86, infant mortality: 114.01;

1969, birth rate: 25.58, death rate: 9.75, infant mortality: 96.02 (D)

1940-1960. the village population actually falls during this period due to disease. but, by and large, hovers around 500 people.

1960. plague

1961. birth rate: 15.68, death rate: 3.27, infant mortality: 20.47 (D)

1963-1964. between 1950-51 and now, the double cropped area in mhow tehsil doubles. am not sure why. at the same time, the area under jowar falls from 2 lakh hectares in 1950-51 to 0.7 lakh hectares in 63-64. wheat and tuar were coming in. this decline in sowing area is also attributed to excessive rain at the time of sowing. (D)

1963-64. cost of digging a well. rs 3-4,000 (D)

1966. birth rate: 22.81, death rate: 8.86, infant mortality: 114.01 (D)

1963-68. agricultural wage rates in the village. estimates range between Rs 1.50-2 a day

1968. cost of digging a well. rs 5,000

1969. birth rate: 25.58, death rate: 9.75, infant mortality: 96.02 (D)

1970. the population begins to finally grow.

1970. milk finally climbs to rs 1 a litre. had been as low as 16 litres to a rupee in the pre-independence times.

Around 1971. electrification and the green revolution enter tihi. till then, the village had been growing jowar and malwi ghehu (a local wheat variety). the first during rains. the other after that. and some cash crops like chillis, cotton and sugarcane.

Around 1971. with electricity, groundwater pumps come in. so far, this region has seen dryland agriculture, practised mainly during and just after the rains. partly due to lack of public investment in irrigation. but now, thanks to the pumps, dependance on the raingods falls. farming becomes a year-long activity. not much change, though, in affluence levels

1971-84. after bank nationalisation, bank credit becomes easier for the farmers. which they use to dig wells, install pumps, etc. productivity rises. whole village benefits.

Around 1980. between 1960-80, the state had been one of the worst performers in terms of agricultural growth. things change now. it seems that even the green revolution crops came into villages in a big way from 80s onwards. soya comes in. initially, its first few crops bomb in the market, and have to be used as cattle feed. in the next ten years, however, things will change. this is the period, amrit lal patel, school teacher in the village, tells me, when the differences between big and small farmers, in terms of affluence, begins to show.

1983. the first tarred road connecting tihi and the world outside comes up (in this case, to mhow). before it came up, most people were dependant on the work they got within the village itself. and so, the dependance on the higher castes.

around 1984: soya market takes off

1986. cost of digging a well: rs 14,000

1988. one of the major streams flowing through the village’s fields, perennial till now, begins drying up sooner and sooner. this is partly the consequence of some of the farmers sticking water pumps in the field, and using that to irrigate fields.

1988. to bring development to a backward zone, the MP government announces that an industrial township will be set up at pithampur. the tribals living there are kicked out. industry is given incentives. the impact pithampur has on tihi, a mere five kilometres away, is inestimable. it begins by offering rs 7 a day as wage labour. at this time, the village is offering rs five. wage labourers turn towards industry. landed elite in the village respond by moving wages up to rs 10.

around this time, another momentous transition is underway. the lower castes begin leaving their traditional, caste-defined occupations for agriculture. they encroach forest land (which accounts, at that time, for 25 percent of village land) and begin farming there. i am told this is due to better medical facilities. death rate fell. infant mortality, so high at one time that no more than 1 or 2 kids out of a brood of 12 would survive, reduces. as families swell, traditional occupation, built around patronage and great dependance on the elite, can no longer support the lower castes’ families. (note: after the pumps came in, the jajmani system would have begun ending as well. the larger farmers would have had more cash than before, and, ergo, reduced appetite for what the cobbler and the nai and the darzi made. these groups would have had to diversify. Interesting link, eh. This connection between groundwater and caste-defined livelihoods)

around 1988… the bania families start leaving tihi to go live in indore…

after 1990… banks begin withdrawing from rural credit…

1993. adivasis and dalits get 30X30 ft plots to build houses on village commons. around the same time, power cuts begin.

1998. a road between pithampur and indore comes up. indore is now an hour away by bus. pithampur is even closer.

1998. a decline in the annual rainfall that the village gets is palpable. also, post panchayati-raj, political parties get more interested in wooing farmers. the bjp, which has hitherto focused on traders, moves in. one of the local big farmers, the father of the itc sanchalak, is already working for the congress.

around 2002. the government gives a part of the village commons away to the lower castes. some of them take to agriculture. the higher castes in the village bristle, encroach remaining forest/common land. this creates a problem. with the commons gone, grazing grounds in the village reduce drastically. number of households keeping cattle crashes from 225 or thereabouts to 20. only farmers so large they can afford to leave land fallow for cattle can now afford cattle.

2002. echoupal, as the ICT kiosk is better known, enters the village

2003. electricity subsidy removed

2003. water level is now down to 300ft.

2003-04. english medium schools in mhow begin sending a bus to pick up kids from tihi. interest in english education is picking up. till then, all kids went to the village school, which teaches english only from the sixth grade.

2005. the village splits between the congress and the bjp. i hear several explanations for this break – a fight over a local temple pandit, a fight over whether a local community called gusai should be boycotted or not. this is not, however, a caste divide. the dominant caste in the village, khati, is present in both the political camps. Affluence, however, might be a contributing factor. the richest farmer in the village, the seniormost congress functionary in the village, is adding land, beginning to diversify beyond agriculture, and becoming very rich indeed

2006. the village learns that a proposed national highway, a four-laner connecting bombay and agra, will brush by tihi. so close that it will cut the village off from its fields lying to the northwest. the government buys land from the farmers at the rate of rs 1.2 lakh a bigha.

2008. by now, pithampur is offering rs 120 a day for contract work. and rs 60-70 for daily work. with the landed elite at tihi offering rs 50-60, they cannot get people to work in their fields. labour now goes to pithampur. at harvest time, big farmers are forced to get labour from nimar and jhabua. seen like that, pithampur’s impact on the village has been huge. in the old days, the lower castes would come asking for work, asking for surplus food. a dependance that helped support the caste system. but now, the lowers have shrugged that dependance off. some of this change shows up in statements by the elite that the village is not united any longer. or that the notion of being respectful to elders is (maryada) is gone now. which is bollocks.

that said, untouchability is not completely dead. the dalits can now drink from the same wells as the others. but. still. cannot. get. into. temples. fucking amazing. this change in the caste dynamic is the first of three social changes i have spotted so far in the village. the other two are the political split, and rising inequality.

there are other changes. the benefits from the green revolution are winding down. the economics of agriculture are back under strain. i do some ballpark calculations with a farmer and end up with the dismal conclusion that a farmer growing soya on one acre will make no more than rs 4,000 at the end of a 4 month growing cycle. that is rs 1,000 a month! and, mind you, soya is planted during the rains. succeeding crops call for larger electricity bills as the farmers pull water up from lower and lower. indeed, water can now only be found below 400ft in most parts of the village. some parts have gone as low as 700 ft.

there are other environmental clouds on the horizon. as the local forests thinned and vanished, rainfall continues to decrease. pollution from pithampur has reached groundwater in nearby villages. time might be running out for tihi as well.

the last big change comes due to the proposed highway. tihi is admirably sited. an hour away from indore, 20 or so minutes away from pithampur, a national highway and a proposed railway track coming up right next to it. land prices soar. a bigha of land now commands rs 20-25 lakh. some small farmers do the smart thing. sell their plots here. and buy larger plots elsewhere. others do the more predictable thing. sell the land. buy a car. buy bikes. lead the good life. among the village kids, there is growing disinterest about a life in agriculture. three out of four, i am told, want to avoid agri. it is pithampur, with its 8-10 hours of work, its rs 2,400-3,000 every month, that attracts them.

Fixing India’s Mandis

note: this is the first article i wrote on agriculture. years later, after the village stay at tihi, i read this story again and found it embarrassingly technocratic in its outlook. anyway, do take a look.

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Jawaharlal Nehru had once described agriculture as “India’s greatest living industry”. Yet, 60 years after Independence, the country is slowly coming to grips with the effects of having neglected agriculture all these years. Addressing a recent seminar on agriculture, Prime Minister Manmohan Singh said the situation was alarming. The Tenth Five-Year Plan (2002-07) had assumed that Indian agricultural production would grow by 4 per cent every year. “But the reality is that in the first three years of the Plan, we have not been able to ensure even 1.5 per cent rate of growth,” he said.

As Singh and his top team see it, if India has to grow by 7-8 per cent every year, agriculture has to grow faster. After all, despite all the industrial development and India’s high-tech image, the economy remains overwhelmingly agrarian.

Unlike the West, where agriculture provides just 3 per cent of the jobs, two out of three Indians earn their livelihood directly or indirectly from agriculture. The situation on the ground is alarming. Around 10 per cent of India’s farming households are landless. Another 67 per cent own less than one hectare of land each. Eleven per cent have 1-2 hectares of land. Yields have been stagnant. Irrigation facilities remain inadequate. Mechanisation is low. So is the use of farm inputs.

Fixing all this is not easy. But in the last one year, Manmohan Singh’s government has put comprehensive reform of Indian agriculture on top of its agenda. Managing such a systemic change on such a huge scale is daunting. Especially when agriculture is a state subject.

The changes are far too many and far too complex to be addressed in one go. So in the pages that follow, we have picked out a few issues and attempted to understand what is being done.

One big factor hobbling Indian farmers is the 7,000-strong mandi system — the large agricultural produce markets that have aggregated and dispatched grains, fruits, vegetables and the rest from farms to towns for ages now. A big effort is on to develop an alternative mechanism that will connect farmers more efficiently to markets. Competition, it is hoped, will discipline the old mandi system and also give farmers their due share.

But mere efficiency won’t help. Today, most Indian farmers don’t think enough about what the market wants before they choose their crop. The government is, therefore, trying to also bring in a new market orientation. Its new National Horticulture Mission — and its focus on high value agriculture — is part of this drive. Opening up foreign direct investment in retail could also allow big retailers to deal directly with the farms.

All these big shifts require huge investments in building hard and soft infrastructure — something that the government alone is in no position to bear. The Prime Minister has already talked about replacing publicly funded R&D in agriculture and rural infrastructure with a new private participation model. But the private sector will not step in till the larger environment itself is conducive for it to function smoothly. That is why a more favourable environment is being created — largely through an overhaul of several antiquated laws.

Today, there is renewed optimism among private sector firms. In the next two to three years, most people reckon a lot of these changes will begin to fall into place. And it could once again kick-start a new cycle of investment and growth in “India’s greatest living industry”.

But first, let us get a clearer sense of what’s changing — and why.

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Fixing the mandi

The next time you sit down for dinner, take a look at what is  on your plate. There will probably be some rice or rotis, dal, a couple of vegetables, curd, paneer or a meat dish. There might even be some fruits. Even a couple of decades ago, the plate would have looked different. Indians today are eating lesser cereals, and more vegetables, fruits, meat, eggs, fish and milk. New food habits are one of the many factors forcing dramatic changes across the Indian agricultural landscape.

Some of the changes would have certainly caught your eye. Every once in a while, the newspapers have carried stray bits of news, announcing the recast of important laws governing the sector, the rise in commodities trading volumes, the setting up of new warehouses, and the growing share of organized food retail. What is the reason for these changes?

Interestingly, unlike during the Green Revolution, the government won’t be the main driver of the change. Says Nachiket Mor, executive director, ICICI Bank: “There is no master plan shaping all the work being done in this area.” Instead, government will be the enabler and the catalyst. And a motley group of private companies, cooperatives, NGOs and farmers will learn to work together for their own self-interest to gradually revamp Indian agriculture.

What Is Changing?

Two years ago ICICI deputed P.H. Ravikumar to set up the National Commodity and Derivatives Exchange (NCDEX). The Indian farmer, he says, carries a huge load of risk on his shoulders. He plants his crops not knowing what the harvest will be like, or how much it will fetch in the market. Many things can go wrong between sowing and harvesting. His is a nervous existence, at best.

A large white server hums a floor below Ravikumar’s office in Mumbai’s Bandra-Kurla Complex. About the size of a refrigerator, it is the heart of his company. It is connected to 6,000 trading terminals in 400 Indian towns. Today, 36 commodities — 33 of them agricultural — are traded every day in this exchange. That translates into a daily turnover of around Rs 2,300 crore.

So far, most of this turnover comes from companies and speculators. The companies want to hedge what they buy. Day traders and speculators bet on how much a commodity like wheat might cost three months later. They look at the spot price, the cost of warehousing the produce, followed by cost of the capital, and accordingly trade on futures of these products.

In the long run, that server below Ravikumar’s office will cut farmers’ risk. The first thing it will do is improve the way farmers decide what to grow, says Ravikumar. Now, they decide that on the basis of last year’s prices. If a particular crop gets good prices one year, everyone sows it the next year. The result: at harvest time, there is a glut in the market and prices crash.

Commodity futures serve as a better barometer for consumer demand when sowing time comes. Here is how it will work. Let us say that the mandi offers the farmer Rs 650 for a quintal of wheat, while the exchange suggests that prices will climb to 750 in three months. The farmer decides to wait. To hedge his risk, he picks up a future, committing to sell at this price three months down the line. Right now, however, there aren’t many farmers looking at the exchanges. Says Madan Sabnavis, chief economist of NCDEX: “The actual presence of the farmers (in the exchange) is very low. We only have a few large farmers.”

Some months ago, NCDEX ran a small experiment with the cotton farmers of Gujarat. It told them about the benefits of hedging forward. The farmers were not interested. “What if prices rise?” they had asked. The answer to their question lies in options.

This is how it works. In the earlier example, the farmer picks up an option on the future he holds. Three months later, if prices in the mandi are still at Rs 650, he will sell. On the other hand, if spot prices move up to Rs 850, he can decide not to go ahead with the sale, pay his disappointed buyer a small penalty, and take his stock to the mandi.

In fact, that is how the exchanges will fix the mandis; not by competing for procurement, but by helping farmers time their visits to the mandi better. In the meantime, as A. Hari Prasad, managing director and CEO of National Collateral Management Services (NCMSL), says, futures and options will keep the farmer safe if prices drop suddenly. The futures lock him into a price — ensuring his safety even if the market tanks. The options leave him free to gain if prices surge elsewhere.

Right now, says Sabnavis, NCDEX is holding seminars for traders in large towns, and telling its brokers in smaller towns to do the same. Yet there are more barriers. For example, people who want to trade have to pay Rs 30 lakh to become members of the exchange.

Small farmers cannot afford that. They will have to become clients of existing members. Also the minimum trade has to be 10 tonnes. To fix both problems, NCDEX is trying to reach out through cooperatives, banks and NGOs. “We need someone who can aggregate, and explain the finer details like margining,” says Sabnavis.

Awareness is not the only hurdle. According to Mor, the core question is reach. How does one get the prices across to Indian farmers? Today, there are 10,000-odd information kiosks in the country. “Even if each of them reaches out to five villages each, that is 50,000 villages. But India has over 600,000 villages. Even if we ignore the very small villages, we will still be left with about 4 lakh villages. The kiosk infrastructure will have to increase eight to nine times to give an adequate reach,” he says.

Also, before anything can be traded, it has to be graded and valued. But there is no grading infrastructure in the country. “For screen-based trading to work, we cannot have independent assessments of quality. We need standardized quality parameters,” says C.H. Hanumantha Rao, the chairman of Hyderabad’s Centre for Economic and Social Studies. Mandis follow a very subjective practice. The auctioneer will just look at a handful of grain from every farmer’s harvest, and set a base price. Another issue is the cost of warehousing. Farmers often need the money from their harvests immediately to finance their next crop.

Cut to Hardoi, a small town in central Uttar Pradesh. Here, in wheat country, Gyanesh Guptaji is busy solving both those problems. He works for NCMSL. The company, an offshoot of NCDEX, is setting up warehouses across India. Guptaji says these will be “open to any farmer who wants to hold his produce after the harvest instead of selling it immediately. Prices always fall just after the harvest. He can sell when prices improve”.

When the produce arrives at the warehouse, it will be graded into one of three categories: premium, standard or discounted. All the details are captured in an account that can be traded. If a farmer needs money urgently, he says, the company can give as much as 75 per cent of the value of the crop as a loan. The stock lying graded, packed and valued in the warehouse will easily serve as the collateral.

Right now, he says, the company can make this payment in a week’s time. But over time, as the banks and other parts of the jigsaw fall into place, farmers will get their money immediately. Today, NCMSL has about 100 warehouses across the country. It is planning to scale that up to a 1,000 by 2007.

In another two years Ravikumar says: “There will be an NCDEX-accredited warehouse after every 40 km.” Guptaji himself is in charge of Uttar Pradesh. He tours the state, talks to warehouse owners and persuades them to sign up with NCMSL. So far, he has selected five warehouses in Hardoi and its neighbouring districts of Shandila, Shahjahanpur and Kanpur, and sent the applications to the head office in Mumbai.

Nothing like this has ever been done before, says Guptaji. But he is sure farmers will come because they are dissatisfied with the trade. The argument that farmers should hold their produce till prices improve is intuitive. Such derivatives have existed in the traditional channel as well. A large trader might agree in advance to buy from smaller ones. The minimum support price is nothing but an option.

A Collaborative Approach

Radha Singh, secretary, department of agriculture and cooperation in the ministry of agriculture, has a tough job on her hands. She runs the department at a time when the consensus in the government is veering to the view that the public sector cannot manage Indian agriculture on its own.

Hints of how that will pan out can be seen in the National Horticulture Mission that her ministry set up last year. India, she says, grows about 146 million-150 million tonnes of fruits, vegetables, flowers, nuts and spices. The government wants to raise that to 360 million tonnes by 2011.

This is an opportunity for the poorest farmers. Says the father of India’s green revolution, M.S. Swaminathan: “High value agriculture is deeply important if you want to make any kind of meaningful dent on the poverty numbers of India.” That shift will not happen unless the linkages between farms and markets are in place.

So far, the onus for creating these linkages has rested with a Gurgaon-headquartered institution called the National Horticulture Board. It has an awful track record. In the last five years, it has managed to help (with a 20 per cent subsidy) 2,997 farmers who wanted to move to horticulture. Remember, India has 110 million farmers. Then, in the last six years, the mission has supported (with a 25 per cent subsidy) 1,354 cold storages. And has spent all of Rs 11.91 crore on 1,200 training and development projects.

So far, says Swaminathan, none of the government’s agriculture missions have fared well. While these are supposed to look at the entire chain from seeds to the market, they always interpret their role much more narrowly. Even the present NHB, he says, is more subsidy- than quality-oriented.

The government itself is disappointed with the NHB, says Singh. She plans to convert it into a technical support unit that will evaluate states’ proposals on horticulture, and so on.

From now on, the push to horticulture will come from many directions. The government has started using local NGOs to ready farmers for horticulture. Capacity building is essential, says Swaminathan. When Korea was moving into high value agriculture, he says, it set up farmer schools and methodically trained half a million farmers every year.

This support system had been in place during the Green Revolution. Back then, the government gave price incentives to farmers. That gave them social security, and the confidence to take a chance. As the Prime Minister said in a speech this year: “There is a problem as the move from a subsistence economy to an economy which uses more of commercial inputs and is dependent on selling its output in the market, risks are bound to increase.

Says Pravesh Sharma, a special senior adviser for the World Food Programme: “Back in the 1970s, after realizing that Maharashtra’s small holdings meant it could not become a cereal-producing state, Sharad Pawar pushed it into horticulture.” He covered all farmers switching to horticulture under the state’s employment guarantee scheme.

Replicating that across the country will call for huge investments. As will the investments in the supply chain, which will be needed to transport the fruits and vegetables swiftly to the market. This time, the government will not make those investments. Too much money is needed, says Singh. The government’s budgets will just be a drop in the ocean. Instead, she says: “I would like to see all the investments coming from the private sector. We can make catalytic investments, at best.”

The Tide That Lifts All Boats

That is easier said that done. The first lot of companies that entered the Indian agricultural scene got badly burnt. Take Satnam Overseas. Some years ago, the export house tried to buy basmati rice directly from farmers. In the first year, it offered Rs 1,350 for every quintal. Unfortunately grain prices stayed low, opening at Rs 1,150 and never moving above Rs 1,250. Satnam ended up overpaying.

When it tried again, says Sanjiva Rishi, general manager (brand and market development), it tried to mimic mandi prices by offering farmers the previous day’s closing price. But that year, prices were climbing fast, and the farmers refused to honour their contract. The company could not buy even 1 per cent of what it had hoped to.

All companies that entered Indian agriculture have horror tales to tell — of facing a competition that paid no taxes, of farmers who tore up contracts, of working under a policy that appeared to penalise large players, a market that was not willing to pay a large premium for quality. The Essential Commodities Act forbade companies from carting produce from one state to another. Thanks to the Agricultural Produce Marketing Committee (APMC) Act, farmers could sell only at the mandis. The Food Adulteration Act had banned entire categories of products, like blended rice.

“When India was suffering from food scarcity, it made sense to ensure that people wouldn’t build storage facilities that might lead to hoarding,” says Vijay Sardana of Centre for International Trade in Agriculture and Agro-based Industries. But now, these regulations make no sense. They just prevent the creation of a level playing field for companies. Admits Singh: “After the mid-1980s, the context for agriculture should have changed. But nothing was done.”

Since the beginning of this decade, the government has been taking a relook at a number of laws in this segment. Take the draft APMC Act. It frees farmers from having to sell only through the mandis. There are two options available. One, they can enter into contracts with companies. The draft has mooted the appointment of a local arbitrator to decide on any disputes between a company and the farmer. Then, it has suggested a new route — direct marketing. Farmers can sell directly from their farms, but after the harvest. This is a distinction that has been lost on companies so far. Contract farming, as the Satnam Overseas experiment shows, doesn’t work very well for crops where prices can see-saw wildly. Then, a new Integrated Food Law, which will allow a new range of products, has been placed before the Cabinet. Says Sardana: “Companies had been lobbying for this ever since the post-WTO imports began entering India.”

The Centre has also rethought the Cold Storage Act and the Essential Commodities Act, which now lets companies move farm produce across states. The Contract Regulation Act, 1952, has been overhauled to allow options. But it is unclear whether the stock or forward market regulators should regulate options. Having said that, the mandis are formidable competition. Creaky or not, they do control agricultural trade in the country. They enjoy enormous clout.

Try this, so far, only Karnataka and Maharashtra have ratified the new APMC Act. The rest, dependant on their mandi cesses, are dragging their feet. For its part, the Centre has borrowed a lesson from the World Bank and is linking future aid to agriculture reform. Similarly, the Integrated Food Law is shuttling between ministries.

The big impetus could also come from organised retail. In the West, supply chains were modernised after the food retailers grew up — they consolidated orders and brought in scale. Today, in India, food retail is slowly starting to scale up. The process should speed up even more once FDI is allowed in retail.

It will also accelerate the movement towards quality. “The promotion of quality is something that the private sector has to drive. But for that, you need large buyers, so that the industry sees the point in grading its stuff because there is demand for it,” says NCMSL’s Prasad. When that happens, the big question is: will there be enough farmers who can supply?

Cut to Jayant Bansal at Ambala. He works for an NGO called Rashtriya Kisan Sangathan. Over the past few months, it has pulled 1,500 farmers together into a local cooperative. In the long run, it wants to help them migrate from staples towards high-value crops. It is now training them in horticulture. This, however, is not a transition that the farmers are eager to make.

They are baulking at the thought of getting into higher-value agriculture unless the NGO can undertake selling what they grow. So Bansal and his team are getting into unfamiliar waters. They are trying to find buyers. He has been talking to corporations like Pepsi, which now wants the NGO to grow and process tomatoes.

This is a win-win. The farmers need a buyer. Pepsi cannot talk directly to 1,500 farmers; the transaction costs will be too high. Then, the farmers might ignore the deal the moment prices go up. But they cannot do that with the NGO, as they are dependent on it for input loans, future deals, and so on.

The stage has been set. Most of these changes should bring about a level playing field — for the farmers and the private sector — over the next 2-3 years. The possibilities are immense. The exchanges will bring about a convergence in prices as the traders learn that if they quote too low a price, farmers will calculate their prices backwards from the futures, subtract the cost of warehousing, and then decide to sell or hold.

As the agricultural supply chain gets restructured, the traditional intermediaries will have to change their roles, comments Brahmanand Hegde, deputy general manager, ICICI Bank. At the same time, we will see the rise of new intermediaries — the warehouses and the exchanges are just that. A whole array of agriculture-based companies are missing in India today. We will see new companies come up — in trading, food processing, commodity warehousing, grading, logistics and retail.

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Whither the small farmer?

However, the piece that seems to be missing from all the action in the agricultural sector, so far, is the small farmer. All the work that is currently being done will help only those farmers who have a marketable surplus. What about the small farmers who constitute 78 per cent of India’s farmers?

Take Shiv Prasad, who owns 2 bighas of land in Lalbalpur, near Hardoi in Uttar Pradesh. When BW met him, he and his family — wife and two small kids — were harvesting their wheat. The harvest has not been good. It had been shaping up well but, right at the end, unseasonal rains resulted in a sudden cooling. The grains are smaller. Last year he had got eight bags of wheat from the land. This year, it will fill just five sacks. “It might just last us till the next harvest,” he said. “But it will be close for the last month or two.”

The government is betting on horticulture to help such farmers. Its logic: a farmer who switches to a growing a vegetable or a fruit will earn more. But small farmers are hesitant to make the shift. If anything goes wrong, they fear, they will not even have anything to eat. Most ask for allied businesses in dairy or poultry instead. Says Mor: “Organisations like SEWA and Amul have successfully aggregated large groups of producers. However, such movements and mechanisms are not present everywhere. We would need to fill those gaps.” Earlier attempts like the small farmer agri-business consortiums have also not gone anywhere. It’s a worry.

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Plans B, C and D

Do we need alternatives to agri-businesses? They will invest in areas where returns are highest. This is an economic rule that governs all companies. For example, Pepsi buys grain from Punjab, Haryana and Madhya Pradesh; but not from Uttar Pradesh. Due to the land holdings, its transaction costs would shoot up. But the result of that is skewed development. Then, cartels can form as readily among agri-businesses as in mandis — all you need for cartels to form is great buyer clout.

One options is cooperatives. They will boost the bargaining clout of farmers. In areas where the private sector hasn’t entered, they can market the produce. But so far, few cooperatives have really worked. Also, can they compete with a private sector enterprise? The latter will have deeper pockets and, perhaps, be more efficient as well. Another way, says Sharma, would be to get a government body to aggregate farmers, and then represent them before private companies.