Agrarian distress: what options do farmers have?

No easy solutions to India’s rural-urban gap

Andaleeb Rahman, Chandni Singh

Development, Economics and finance, Food & water | Asia, South Asia

4 May 2018

Is the ‘move up, move out’ strategy the key to solving agrarian distress? Andaleeb Rahman and Chandni Singh discuss the challenges facing Indian farmers.

In a recent interview, the Director General of the International Food Policy Research Institute (IFPRI), Shenggen Fan, said that the solution to agrarian distress in India lies in the ‘move out, move up’ strategy.

On this view, farmers need to ‘move out’ from rural to urban areas, while those continuing with farming should attempt to ‘move up’. Moving up within the agricultural sector can take place through either crop diversification or investing in value-adding activities. Moving out implies leaving the agriculture sector for other occupations and migrating to urban centres.

Fan’s argument is based upon the idea that greater non-farm income avenues for farmers would lower the incidence of rural poverty. So, why aren’t farmers moving out or moving up in India?

The simple answer is that it’s not so easy. There are several barriers for both labour mobility and changing production patterns, and we simply do not know enough about these barriers.

Justin Sandefur, a Senior Fellow at the Centre for Global Development, says, “When they move, their incomes may not go up as much as we thought.”

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This questions the basic tenets of the theory of structural transformation. The theory claims that with economic growth, the output and employment share of the agricultural sector tends to decline and that this decline is due to the widening gap between rural and urban productivity levels.

This classic argument assumes that the opportunity cost of moving out of agriculture is always lower than staying put. Yet in the case of imperfect markets and lack of adequate information, moving out is fraught with risk.

On moving up by farmers, the natural question is: how? Indian farmers are reeling under acute distress and cultivation is not remunerative enough because of stagnant yields, weather vagaries and market price fluctuations.

Agricultural policy seems to be muddled and reactionary at its best.

Given the precarious nature of India’s growth trajectory, where rural-urban disparities have widened, moving out or moving up is often not a choice but a symptom of distress. A less-acknowledged feature of rural livelihoods in India is that income diversification by smallholders is nothing new.

In a research paper, Chandrasekhar and Mehrotra show that 88 per cent of the households with cultivation as their primary source of income in India are also engaged in other forms of employment. This includes raising livestock, working as labourers (migrant or non-migrant) or being employed as salaried workers.

Given their economic constraints, farmers always try to diversify their earning potentials. Moving up, therefore, has always been a part of their livelihood. It is just that there are few opportunities to do so profitably.

Moving up by diversifying into high-value crops has definite advantages in terms of returns, but the price volatility for these crops also happens to be higher. Inadequate post-harvest facilities, poor marketing infrastructure, gaps in value chains and mismatched government support makes cultivation of high-value crops riskier.

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Also, moving up has implications for gendered roles around farming – something that is seldom acknowledged.

For example, in Kerala, shifting to high-value crops has increased demand for labour that is skilled in tending to those crops (for example, rubber tapping), which often excludes women who have been marginalised to work on minor food crops such as tapioca.

This substitution can either result in higher workloads and insecurity as labour opportunities shift but also necessitate a “retreat in domesticity”, as seen in the Kerala case. Moving up in agriculture without an enabling policy environment is only a mirage which festers discontent and brings distress among the farming community.

At the same time, opportunities to move out to urban areas or find non-farm employment are limited by the availability of quality jobs, possession of required skills, and the affordability of urban housing. These are some of the pressing challenges that farmers will face with the ‘move out, move up’ policy.

The policy is also characterised by jobless growth, rising informality and urban poverty. A farmer moving to an urban area will often encounter these obstacles, which are dependent on the nature of economic growth and the provision of basic amenities. Urban planning has abysmally failed in the provision of housing for the poor, while a lack of sufficient jobs in manufacturing has further contributed to urban deprivation.

Another important dimension of labour mobility is class: which section of the rural population finds it easiest to move out?

In our ongoing research using the longitudinal India Human Development Survey (IHDS) data, we find that between 2004-05 and 2011-12, the decision to move out is a function of landholding size, physical assets, caste and education.

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Furthermore, we find that it is the salaried class of rural households that have benefitted the most from remittances. These findings lend further credibility to the argument that migration in India is ‘exclusionary’, with cities being more conducive for the relatively better-off sections of society. Urban labour markets require certain skills, which most poorer farmers lack.

When we tracked those households that moved from farming to labour wage earning, we found their real earnings dropped between 2004-05 and 2011-12. It needs to be understood that apart from cultivation income, these households also lose out on earning from livestock. In addition, we found that the social issues of caste and class affect every economic decision.

Addressing agrarian distress requires fresh thinking around the process of growth in India and the role of agriculture. Knee-jerk policy responses like raising support prices, providing farm-loan waivers, or making other populist announcements, do not build adaptive capacity in the rural economy. Such measures fail to facilitate the inevitable process of structural transformation and fail to provide a long-term solution to agrarian distress.

The ‘move out, move up’ strategy is definitely an option to consider. However, structural issues undermining the profitability of agrarian livelihoods, as well as the precarious conditions migrants enter when they move-out, need to be addressed. Moving out into non-farm occupations exposes individuals to a host of other risks and vulnerabilities.

The policy priority should be to use agriculture as the lever of growth and increase the capabilities of farming households so they are able to choose whether to move or to stay. At the same time, the government should invest in reducing the barriers to mobility by focusing on job creation, safety nets and skill development. This would increase the ability of urban areas and absorb a greater inflow of people.

This strategy has potential. But, policymakers and the government need to consider the individual lives of the farmers they are affecting and actively address their problems.

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