Answers to the 34-million question
India’s agriculture labour market is in a state of flux. Going by the National Sample Survey Office’s (NSSO’S) periodic surveys, 34 million workers left the sector between 2004-05 and 2011-12. This is the first time in India’s living memory that the sector is reporting a decline in labour participation. It is a worrying situation because agriculture still employs close to half of India’s workforce and accounts for 64 percent of rural employment. The dip in the agriculture labour force has been acute in India’s key grain-producing states like Uttar Pradesh and Madhya Pradesh. To make matters worse, the labour shortage is impacting the country’s five staple crops: rice, wheat, sugarcane, groundnut and cotton.
Such is the impact of the shortage that labourers are now earning more than the farmers. This is due to the significant rise in agriculture labour wage. According to an analysis by the International Crops Research Institute for Semi-arid Tropics (ICRISAT), the daily nominal wage rate of various agricultural activities, such as ploughing, sowing and transplanting, increased 3.6 to 4.2 times during 2004 and 2014. According to the Department of Agriculture and Cooperation, the cultivation cost of major crops such as paddy and wheat has been increasing at an annual rate of 10 percent due to the rise in labour cost that now accounts for up to 50 percent of total production cost of crops like paddy.
So, why are labourers moving out of agriculture at this time? For many, it is a simple play out of the change in Indian economy where people have better-paying livelihood alternatives in non-farm sectors such as construction and service sectors. According to ICRISAT, though the value of GDP from agriculture and allied activities has increased by 142 percent during the last decade, and by 121 percent during the past five years alone, its share in GDP has been declining due to the rise in other sectors. The share of agriculture in the GDP has declined from 20.7 percent in 2001-02 to 12.9 percent in 2013-14. Some also say the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) that guarantees manual jobs and offer significantly high wage rate is the reason labourers are quitting the farm sector. But several surveys done by both government and non-government agencies show that MGNREGA could hardly have lead to the abandonment of the agriculture sector to such an extent; at an average the employment scheme offers just 31 days of work a year. However, the employment programme did increase the wage rate for agriculture labourers. At the same time, the dip in the overall agricultural workforce has not been matching.
Estimates by consultancy agency KPMG, using the erstwhile Planning Commission’s data, suggest another 23 million more will quit agriculture in the next five years. It is clear that the current situation is both a threat and an opportunity for India’s agriculture sector. The threat is overwhelming: scarcity of labour and increasing wage bill might make agriculture unviable. The opportunity is that the much talked about extension of agriculture mechanisation can happen now. Farmers are now being forced to find new ways to reduce their dependency on manual labour. Innovations are happening on several fronts: individual farmers are embracing new technologies, governments are earmarking sizeable funds for farm mechanisation, agritechnology companies are making use of this opportunity to quickly supply machines suitable for India, and research institutions are propagating crops that require less labour.
The good news is that the consolidated efforts of different interest groups are working. According to the Indian Council of Agriculture Research, farmers are already reaping benefits worth Rs 100,000 crore through various attempts to minimise their labour cost. The message is clear: it is a curious case for deep probing.
Innovation to overcome shortage
One thing is common between Chhattisgarh farmer Rahul Chawda and the state paramilitary forces fighting the Maoists. Both use drones for their job. At his farm, situated some 30 km from state capital Raipur, Chawda looks attentively at a monitor as he controls a drone that is spraying pesticide. The 42-year-old farmer from Hardi village says he was forced to embrace the technology because of the acute labour crisis.
“To look after 12 hectares (ha) of land at this time of labour crisis is no less than an emergency,” he says. The farmer in one of the country’s poorest states started feeling the pinch some five years ago when he could not get enough workers despite willing to pay higher than the going rate. “Things became so bad three years ago that I thought of quitting farming,” he says.
Talking about the labour crisis, Raipur-based agricultural scientist Sanket Thakur says many small and marginal farmers have already quit because of labour shortage in the state. “Even middle and big farmers are leaving the traditional farming system and leasing their land to small farmers for cash crops or are trying new innovations,” he adds.
Even Chawda tried several things before settling for drones. He was originally a seed producer, but that required changing crops every four months. “I then planted banana trees in nearly half of my farm and started losing revenue because seed production is more lucrative.” He even employed 30-35 permanent labourers from Odisha, but that was not enough because his farm required at least 60 labourers. “Finally, I decided to use technology,” he says.
Chawda says his decision is helping in more ways than one. Drones help him in early detection of pest attacks, which has increased his production and lowered the use of pesticides. “Most pests attack crops from 5 pm till morning, so we spray in the evening when the pests come out to have food. This is more effective. We now spray after every 15 days, which earlier had to be done every week,” he says. Chawda also rents out drones for marriage photography.
Ask him about the biggest advantage of drones and he says it has substantially brought down his production cost. “Wages of labourers account for 50 percent of the total production cost. This was not even 25 percent a decade ago. The drone takes 15 minutes to spray pesticide in one acre (0.4 ha) which used to involve two labourers for a whole day. This means a saving of Rs 500 per day ,” he says. The farmer also saves on the wages of another eight to 10 labourers who were earlier employed to oversee the farm. Chawda, who owns four drones, is now developing sensors that can detect fungus attack on crops.
While Chawda met the challenge on his own; farmers in Odisha have found strength in staying together. According to the 2014-15 Odisha economic survey, the state has 11,648 farmers’ clubs. Launched in 2005 by the National Agricultural and Rural Development Bank (NABARD), the Farmers’ Club Programme aims at increasing the income of farmers “through technology, good agricultural practices, and proper use of credit and marketing skills”.
The village level clubs are set up by rural branches of banks, non-profits and Krishi Vigyan Kendras. Every club has two office bearers—chief coordinator and assitant coordinator—who are elected by the members on a democratic basis for a term of two years. The office bearers convene and arrange meetings with experts, maintain books of accounts, and maintain proper liaisoning with banks. Under the programme, NABARD provides the financial support to the clubs for the first three years. The bank sponsoring the club may provide the support for another two years, if necessary.
The success of the clubs can be seen at Balasore district which has over 1,000 farmers’ clubs to fight labour shortage. “The mechanisation in Balasore started purely in response to the deepening labour crisis,” says J B Mohanty, chairperson of Balasore non-profit FORWARD (Favourable Organisation for Rural Welfare and Regional Development). NABARD has assigned FORWARD the role of promoting scientific and integrated farming in the region. The non-profit has also taken up a project to educate 1,200 farmers in Khaira block of Balasore district. Within a couple of years, 5,000 farmers adopted different farm technologies. “The groups have not only brought down the cost, but also revived a sense of community feeling,” says Mohanty.
The state government has also pitched in by providing subsidies on farm equipment. In 2013, Odisha adopted the State Agriculture Policy that gives huge subsidies to farmers who go for mechanisation. “Odisha has a very high provision of funds to popularise farm mechanisation. The state plan alone provides Rs 240 crore as subsidies for farm mechanisation, which is probably the highest among all the states,” says P K Paikray, Odisha’s joint director of agriculture and engineering. The state’s total subsidy budget, including the Union share, is around Rs 300 crore.
Besides farmers’ groups, individual farmers are also renting their equipment in the district. “Small farmers are now hiring tractors and use other machines for their farms,” says Mohanty. Forty-year-old Sisir Kumar Panda is one such farmer whose equipment is used by 200 small farmers. “In 2010, I bought my first tractor. As and when I faced labourer shortage, I found a substitute in machines. Now, I have two tractors, one power tiller, one transplanter, three combined harvesters, one earth remover and two power spray machines,” says the farmer from Balasore’s Tentuliapada village.
Panda says the district first faced labour shortage in early 2000. “In 1990s, I remember visiting our farm with my dad to supervise the labourers. By early 2000, my father, brother and I started working on the farm along with some labourers during peak season,” recalls Panda. By mid-2000s, the situation became so bad that farmers started buying farm equipment to reduce their dependency on labourers.
The turning point, according to the farmers, came in 2008 when the state government launched the Rs 2 per kg rice scheme for the 5.6 million below-poverty-line families in the state. “It is normally seen that when the minimum food requirement of a family is secured, its members explore new livelihood options for higher income. So government welfare schemes such as providing cheap rice and other necessary commodities through public distribution system could be the reason behind the disappearance of the labour force,” says S K Tripathy, head of agricultural economics department in Orissa University of Agriculture Technology (OUAT). The situation worsened with the industrialisation in the state. “The state economy has been experiencing a sectoral shift from agriculture towards industry and services sectors in recent decade,” says the 2014-15 state Economic Survey report.
(This is a the first of a two-part series. Views expressed are personal)