Source: Agriculture Census
The agriculture census-2011 gives us a concrete picture of the size-pattern of operational- landholding in India. The census divides the operational-land holdings in 5 categories of marginal, small, semi-medium, medium, large landowner. The figure available clearly points towards the division of the size of operational-landholding that has taken place in India from the time of first agriculture-census 1971 to 2011. Figure 1 illustrates this point. The large farmers owning more than 10 ha (hectare) accounted for only 0.7% of the total agricultural-landholding in India, compared to 4%(approx.) in 1971. There has been a phenomenal rise of Marginal farmers in India, there share in total agricultural landholding being 50%(approx.) in 1971, which has increased to 67%(approx.) in 2011. As the above figure makes it clear there has been growth of small and marginal farmers in India and the large and medium farmers have decreased in numbers, implying that the size of landholding in India has followed a secularly downwards trend. This exercise demonstrates that the agricultural-sector is scattered, unorganized and has undergone drastic fragmentation throughout the studied period-1970-71 to 2010-11 for which data is available.
0 10 20 30 40 50 60 70 80
1970-71 1976-77 1980-81 1985-86 1900-91 1995-96 2000-01 2005-06 2010-11
Figure 1. Rise of the Marginal Holding Farmers
Size-pattern of Landholding Marginal(<1 ha) Small(1-2 ha) Semi-medium(2-4 ha) Medium(4-10 ha) Large(>10 ha)
Sharma (1994) notes that at the time of independence semi-feudal relations-Zamindari, Mahalwari, Ryotwari etc. in the agriculture sector were prevalent as a consequence of which the rural masses were impoverished and agricultural production stagnated. He notes that the extent of concentration in land owned by households remained almost unchanged throughout the period 1953-54 to 1982, though regional inequalities in concentration of ownership of land were prevalent. If the data is looked at from the point of view of different hierarchies of landownership a decline in the landownership of top 1 per cent,5 per cent and 10 per cent is observed across states, which in turn came to be owned by the middle 40-80 percent and 50-80 per cent of the household. The area owned by bottom 40 per cent remained the same in majority of the states. During 1970’s a fairly noticeable increase in the proportion of landless households was visible in the economy in majority of the states. There was a simultaneous decline in the large holdings farmers and rise in the operational holding of the sub-marginal holding (0.01 -0.99 acre), but the area owned by sub- marginal farmers remained low. Sharma (1994) brings an important relation to the fore in our understanding of landholding operated and landholding owned, though the sub-marginal farmers operated area increased their area owned didn’t witnessed a similar increase, the area owned and operated by the middle farmer increased while that owned and operated by large farmer witnessed a declined, the extent of landlessness in the period 1953-54 to 1982 also increased. All these changes in the structure of land operated and owned had widespread implications in the growth of agriculture which witnessed a decline both in relation to its previous year performance and with respect to industrial and service sector of the economy.
Rawal(2008) in the paper “Ownership Holdings of Land in Rural India: Putting the Record Straight” conjectures that the 48th (1992) and 59th (2003-04) round of NSSO underestimates the extent of landlessness in India, from the unit level data available in these surveys he estimates that approximately 40 per cent of households in rural India do not own any land, and the gini- coefficient of land ownership has increased from 0.73 in 1992 to 0.76 in 2003-04, implying that inequality in land ownership of land has increased over this time-period. Further, in the states where green revolution was a success, i.e., in the eastern states of UP, Haryana, Punjab the land is owned by few rich farmers, and the majority didn’t own any land. In the agriculturally advanced states of Andhra Pradesh, Tamil Nadu where Land reforms were never undertaken, large chunks of lands were owned by the large farmer. In the states where Land reforms were undertaken for e.g. Kerala, West Bengal, Tripura land was more evenly distributed.
The NSS 70th round on “Household Ownership and Operational Holdings in India”, in its report 571(70/18.1/1) states that the total area owned has fallen from 119.6 mha(million hectares) in 1971-72 to around 92.4 mha in 2013, a fall of approximately 23 per cent, a decline of 14 per cent was observed in the period 2003 to 2013, the average area owned per household plunked by more than half since 1971-72 from 1.53 ha in 1971-72 to 0.59 ha in 2013 (figures including landless households), surprisingly the percentage of landless household also came down from 9.60 ha in 1971-72 to 7.41 ha, implying that either the household left the agricultural occupation or they came to possess smaller pieces of land due to land reforms, hence the foreseen decline in average area owned per household. The NSS Land holding surveys (LHS) clarify this point, as the highest percent of households are reported as marginal households showing an increase in percentage distribution of households from 53(approx.) percent in 1971-72 to 75.41 percent in 2013. In the percentage distribution of area owned it is the semi-medium and medium category of household that maintain its record of moderate growth with substantial share, 22 per cent and 19 percent (approx.) respectively in area owned, in 2013, in sync with Sharma’s (1994) observation since 1952. It is the marginal category which accounted for maximum growth and maximum share of 29.75 percent in 2013, in the percentage area owned, highlighting the sub-division of land in smaller plots. The percentage of large and medium holding farmers in the period 1971-72 to 2013 in area owned came down from 54 per cent to 25 per cent respectively. The inequality in land ownership is reflected in the fact that in 2013, 75 per cent of marginal category household owned 30 per cent (approx.) of land, while 2.17 per cent of medium and large category households owned 24.64 percent of total agriculture land.
The studies and data mentioned above gives us an idea of the fragmented growth in holdings, skewed growth of agriculture, and the factors responsible for the present state of distress in the agriculture sector over the time period 1953-54 to 2011. If land reforms were undertaken in the Indian economy as a whole, India might have a unionized, collected agriculture sector, with lesser dependence on state and greater equality in holding and operation of land. But the lack of political will, socio-political factors didn’t let these developments in agriculture sector take place. This sector experienced unequal spatial growth and the class division within this sector increased, leading to its fluctuating growth and fragmented development. The agrarian question was never
resolved in India, the state supported agriculture and industry with increasing and decreasing degree of focus in successive five year plans due to its scarce resource base as mentioned earlier.
Interlinkages between corporate and Agriculture sector
The growth of manufacturing over time has of course been accompanied by changes in the composition of its own production – and a relative decline in the importance of the industries which were significantly dependent for their inputs on the agricultural sector and had dominated the industrial scene throughout the colonial period. However, while the share of industries relatively more dependent on agriculture for inputs declined within the manufacturing sector, even they grew faster than agriculture. Moreover, it is not textile and textile products (where there is also the effect of increased use of synthetics) but food and beverage products which increased in relative importance. Thus, the value added in the registered segment of food, beverages and tobacco was 3.8 per cent of agricultural GDP in 2012-13 while in 1950-51 it was just 1.35 per cent. The corresponding figures for textiles were 3.3 and 3.6 per cent respectively. As Figure 2 derived from input-output tables shows, food, beverages and tobacco products account for a much larger share in the use of agricultural inputs in the manufacturing sector – taking up between 13% (approx. in 2001) to somewhere in the vicinity of 18% of all agricultural output.
Source: WIOD database, November 2016 release
On the other side, industries providing inputs and capital goods for agriculture increased in importance even as Indian agriculture also changed and used industrial products more intensively.
Thus, the inter-linkages between agriculture and manufacturing – the importance of manufacturing as a user of inputs produced by the agricultural sector and the use of manufactured inputs in agriculture – have also remained strong.
The periodic publication of NAS input-output tables by the CSO and the WIOD- world input output data – help in constructing a limited picture of trends over time in the linkages between agriculture and industry. The NAS input-output data reveals that 13.54% of agricultural output was used as input in the manufacturing sector in 1993-94, which increased to 19.43% by 2007-08.
The WIOD data shows that in 2000, 18.95 per cent of crop production, 26.71 per cent of forestry and logging and 15.21 per cent of fishing output were absorbed as inputs in the manufacturing sector. By 2014, the corresponding figures were 21.67, 29.88 and 18.63 per cent respectively.
0.00 5.00 10.00 15.00 20.00 25.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Figure 2. Agricultural Output used as Input in Manufacturing of Food & Textiles/ Total Agricultural
Output
Agriculture o/p used as i/p in manuf of food, beverages and tobacco products /Total agriculture crop-o/p--- showing importance of agri o/p for manuf in total crop agri o/p
Agriculture crop output used as i/p in manu of textiles/ total Agriculture crop o/p
The input-output table available from the study of Krishna Singh and M.R. Saluja in the NCAER working paper-WP111 “Input-output table for India-2013-14”, based on the supply and use table (SUT) of the new GDP series, suggests that the inter-linkages between agriculture and manufacturing may be even greater than what is indicated above. According to their estimates, agricultural output used by manufacturing as input stood at 36.55%, of total agricultural output in 2013-14.
The wide variation in the levels between NCAER data and NAS/WIOD is due to a part of agricultural output treated as going into private final consumption expenditure (PFCE) in the latter is, in the NCAER data, counted as intermediate input into manufacturing which then produces the items going into PFCE. This is made clear by table 15. As we can note from it, the distribution of agricultural output between the part going to final consumption and that towards intermediate consumption is more biased towards the latter in the NCAER calculations. Thus, the NCAER data takes into account that many agricultural products go through at least some manufacturing process before they are actually consumed.
Table 15 Share in Agricultural Output
Of:
WIOD NCAER
2014 2013-14
PFCE 55.58 46.67%
Intermediate Consumption 40.11 54.18%
Source: NAS and NCAER IO table data & concordance sheets.
If we, turn our attention towards the inputs supplies by manufacturing sector to agriculture, the story again is of strengthening ties between agriculture and manufacturing sector, the NCAER input-output table of 2013-14, reveals that out of total inputs used in agriculture, 34.49% are from manufacturing sector. The corresponding figure from NAS data was 20%(approx.) in 1993-94 and stands at 17%(approx.) in 2007-08. While the WIOD reveals that in 2000, 14%(approx.) of the
manufacturing output was used as input in Agricultural sector, this figure increases to 15%(approx.) in 2014, reflecting the gradual modernization of agricultural sector. The WIOD table also reveals that use of chemicals products as an input in agriculture has increased from approximately 7% in 2000 to 7.5% in 2014. Highlighting greater dependence of agriculture on manufactured products from the industrial sector.
Differences in calculation and methodology notwithstanding, the fact is that the production interlinkages between the agriculture and industrial sector have remained strong.
Conclusion
A lack of affirmative action, rigid and unchanging laws in the face of loopholes in Laws relating to Agriculture leading to creation of newer avenues for corporates investment and profits without a change or perhaps worsening of the fortunes of farmer is leading to agriculture sector being detrimental to the health of farmer.
Fertilizers, insecticides, seeds and other inputs has experienced a phenomenal increase in their price and on the output side farmers face a market in which they are reduced to a tenant on their own farm via the loopholes in contract farming, commercial farming, APMLA, APLCFS , etc. , leading to farmer essentially losing control over what to produce, how to produce at what price to sell etc. A glimpse of the crisis can be seen by NCRB data (National Crime Records Bureau) which shows that from 1995 to 2015 there have been more than 3 lakh farmer committing suicides after which the state stopped releasing these figures. Sukhpal Singh(2018) notes that there is exclusion of small holders from Contract Farming and even APLCFSA-2018 does not recommend using group contract: a mechanism to provide economies of scale to the 86% of small and marginal holders of India. There has been an Increase in reverse tenancy: where small and marginal farmers rent their land to the medium and large landholders. Other studies point out that Indian agriculture has experienced a feminization of the crisis where women farmer are not even recognized as farmers due to non-holding of titles to land, even when 60% of the farming work is done by women. P. Sainath (2018) studies that the APMC commission Agents- who works as a link between farmers and buyers, acts as input dealers, money lenders, thereby increasing
intermediaries and control in the market and on farmers produce. Debt burden gets worse down the scale, its heaviest among small and marginal farmers, with 86% of farmer and 80% of agricultural labor household in debt.
Corporate influence in the economy has grown not only in terms of control over business assets, market and profit share but also in terms of growing influence over the state’s economic policies.
In other word business concentration and economic concentration both increased, growth of the former can be noted from our analysis in Section II, where we highlight the increasing concentration in the market-share of Agri-manufacturing industries. The business concentration can be noted by the increasing dominance in Agri-output and Agri-input market by only few large players. The economic concentration can be noted by corporate lobbying for state’s support to facilitate their expansion in the economy - agricultural has figured in that process, as highlighted in Section I, both because of the deepening linkages between manufacturing and agriculture as shown in section III. Thus, in several ways, the value generation process in the agricultural sector and corporate profits have got linked in a way and in a context that tends to make for greater capital penetration of the agricultural sector.
Corporate penetration in Indian agriculture has increased as is evident by growth of food processing industries and increasing dependence of agriculture on inputs like chemicals, fertilizer
& pesticides. However, both Agri-input and Agri-output market is characterized by oligopolistic and oligpsonistic tendencies, in concurrence with the international market trend of concentration and consolidation. In a globalized world, where trade boundaries are obliterating geographical boundaries, greater competition, lower prices of commodities, food security are expected. What we note is that centrifugal forces are in operation in the headwinds of globalized world. The rise in concentration in the Agri-input market hasn’t meant that more and more R&D is happening to provide efficient and affordable Agri-inputs to the farmers. Corporate penetration in the Agri- output market has not translated into increasing the wealth of farmer. The rise in concentration has just spelled profit for the corporates.
The attempts by government to regulate these corporates have, on the other hand, has been inadequate, Mazumdar (2008) showcase the ineffectiveness of MRTP, CA(competition Act) and
other legislation by pointing that under liberalization the private corporate sector and the different industries present in India have been dominated by firm’s with a “past” i.e. incumbent firms both domestic and foreign from pre-liberalization era have consolidated their position and other segments of society are excluded that too with the aid of the state ,in short, “cronyism” with reference to concentration of economic power manifested itself. In our analysis of Food manufacturing sector, the aforesaid is vindicated. Mazumdar points out the firms that established themselves in the British era like ITC, Unilever etc., continued their dominance from the 19th century till his studied period (2008), our study points out that such firms not only have a large share in the food manufacturing segment but their share is actually growing in the last decade (2007-16), with other MNC’s too capturing a sizeable share post liberalization. P. Mehta (2009) highlights how the issue of enhancing competition has been emphasized in CA02 rather than checking monopoly power– the MRTP Act too in its enthusiasm to check monopoly had placed a restriction on dominance rather than its abuse thus throwing away the baby, in the form of competition, with the bathwater. The CA02 neglects the issue of existing monopoly of private corporates in market by focusing on competition in the market.
Efforts by the state to increase corporate presence in agriculture through APMC (2003) law and its amendment, new contract farming rules (2017), promotion of FPI etc., opening up of 42 mega- food parks by MoFPI, tax holidays, efforts to pump-up foreign investment through easing restriction and allowing 100 per cent FDI in retail and e-commerce, conduct of transactions in agricultural market through the platform of e-NAM etc., apprises us of the thrust of government policies that is tilted towards privatization of agriculture. To what extent these efforts contribute in resolving agriculture crisis is debatable under the circumstances of high levels of corporate concentration. Corporate concentration and its changing context, however, may explain why such efforts are being undertaken. Solution to the agrarian crisis may therefore require other measures - regulation of private corporates at domestic as well as global scale to rein in the increase in the price of Agri-inputs ; Government’s own research and development in agriculture input market needs to be increased to promote competition in this highly concentrated market; investment by the state in irrigation facilities, stepping up of subsidies in fertilizers; greater procurement should operations; and promotion of organic farming. What needs to be addressed and contained is the
structural imbalance of the agriculture market consisting of pseudo-monopolist corporate sector on one side and a weak fragmented farmer on the other.
References
Alfaro, L., & Chari, A. (2009). India transformed? insights from the firm level 1988-2005 (No.
w15448). National Bureau of Economic Research.
Athreye, S., & Kapur, S. (2006). Industrial concentration in a liberalising economy: A study of Indian manufacturing. The Journal of Development Studies, 42(6), 981-999.
Bagchi, A.K. (1972), Private Investment in India 1900-39 (1975 ed.). Cambridge: Cambridge university press
Basant, R. (2000). Corporate response to economic reforms. Economic and Political Weekly, 813- 822.
Cabinet committee on Economic Affairs (CCEA), GoI, (2017, May 3), Cabinet approves New Central Scheme-SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-
Processing Clusters), [PIB release]. Retrieved from
http://pib.nic.in/newsite/PrintRelease.aspx?relid=161512
Chakravarty, S. (1998). Development planning: the Indian experience. OUP Catalogue.
Ch-3, Mazumdar, S. (2015). Monopoly and Indian Industry in Chandrasekhar, C.P. (2015) Economics Volume 1 Indian Industrialization (pp. 94-125), India: OUP
Chandrashekhar. C.P. (2016) Agribusiness: Consolidation against the farmer, frontline print
edition: oct 14, 2016 retrieved from
http://www.macroscan.org/cur/oct16/pdf/Agribusiness.pdf
Das, G. (2006). The Indian model. Foreign Aff., 85, 2.
Fugile, K., Heisey P., King J. & Schimmelpfennig D. (2013). Concentration in ag input industry influences farm technology; Amber Waves | Jan 31, 2013
GDP statistics of India retrieved from https://statisticstimes.com/economy/sectorwise-gdp- contribution-of-india.php