Labour exit december 15, 2015

DownToEarth 1-15 DECEMBER, 2015

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EXODUS EFFECT

As labour participation in agriculture declines in India farmers find new ways to do farming

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FINDING ANSWERS TO THE 34 MILLION QUESTION

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ndia’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 (see ‘India’s labour crisis’ p30-36). It is a worrying situation because agriculture still employs close to half of India’s workforce and accounts for 64 per cent 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

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STORY

ARINDAM GHOSH

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STORY (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 per cent due to the rise in labour cost that now accounts for up to 50 per cent 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 betterpaying livelihood alternatives in nonfarm sectors such as construction and service sectors. According to icrisat, though the value of gdp from agriculture and allied activities has increased by 142 per cent during the last decade, and by 121 per cent 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 per cent in 2001-02 to 12.9 per cent in 2013-14. Some also say the Mahatma Gandhi National Rural Employment GuaranteeAct(mgnrega)thatguarantees 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

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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 `100,000 crore through various attempts to minimise their labour cost. Down To Earth correspondents travelled across the country to report on this turnaround, while India’s noted agriculture economists and scientists explain the phenomenon. The message is clear: it is a curious case for deep probing.

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PURUSTTAM SINGH THAKUR

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Opportunity in crisis

Farmers across the country are innovating to overcome the labour shortage

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NE THING is common between Chhatt-

isgarh 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 1-15 DECEMBER 2015

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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, Raipurbased 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

Chhattisgarh farmer Rahul Chawda uses drones for farming because of acute labour shortage

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INDIA'S LABOUR CRISIS

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India's total workforce increased by 10 million...

2004-05 | 457 million 2011-12 | 467 million

Source: Various rounds of NSSO (2004-05 to 2010-11)

Sisir Kumar Panda rents his farm equipment to 200 small farmers in Odisha's Tentuliapada village in Balasore district

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 per cent of the total production cost. This was not even 25 per cent 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 `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.

UNITED FRONT

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.

SAMARJIT SAHOO

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... but agricultural workforce decreased by 34 million 2004-05 | 249 million 2011-12 | 215 million

Source: Various rounds of NSSO (2004-05 to 2010-11)

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, 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 `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

CH NARENDRA

share, is around `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. Fortyyear-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.

Members of farmers' clubs in Telangana.

The clubs are helping farmers adopt farm mechanisation

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UP, Karnataka, WB, Bihar and Rajasthan account for 79% of total labour reduction

Kerala | 37% Uttarakhand | 34% Karnataka | 27% J&K | 26% Haryana | 24%

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*Five states reporting highest dip in agriculture workforce (2004-05Ð2011-12)

The turning point, according to the farmers, came in 2008 when the state government launched the `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.

Past perfect Odisha has age-old farming traditions that reduce the need for labourers is not new to India. Tribal and farming communities in Odisha have age-old traditions that reduce the dependency on contractual labourers. But these practices are being forgotten.

Farmers in Odisha's Sambalpur, Bargarh, Debagarh and Sundargarh districts have traditionally followed the Pancha system, where men from all farming families come together and work at farms. If a farmer remains absent, he has to hire a labourer and send him as a substitute.

"The traditional system, which is prevalent in tribal pockets, could be a deterrent to rising wage cost. But community trust has been steadily eroding. The system is struggling to survive as tribal youths have started looking for jobs in cities," says Saroj Mohanty, spokesperson of farmers' association Pashim Odisha Krushak Sangathan Samannaya Samiti.

Farmers in coastal Odisha also follow a similar practice which is called Badalia (exchanging of labour).

Tribals in southern Odisha follow a community farming practice called Kutumb Bada where all the villagers work together on paddy fields. The interesting feature of Kutumb Bada is that the farm owner has to make a nominal contribution, which can be as low as `20 per person, to a collective fund that is used for community development.

LABOUR CRISIS

Like Odisha, farmers in Andhra Pradesh are also benefitting from farmers’ clubs. One such initiative was taken by rice farmers in Korrapudu village of Kadapa district after they struggled to find labour during the rice transplanting season.

With the help of the state government they set up a Rythu Club (farmers’ club) and procured a rice transplanter for `10.20 lakh. The farmers say the machine ensures perfect spacing and better aeration of the field. This increased the yield by 25 per cent. They also save around `13,600 per ha on labour.

Even the state government in 2008-09 started providing 50 per cent subsidy on farm machines through the Intensified Farm Mechanization Project under the Rashtriya Krishi Vikas Yojana.

The state government is also encouraging farmers to form Rythu Clubs to collectively buy and use machines.

“Both Andhra Pradesh and Telangana gave priority to farm mechanisation even before the bifurcation of the state. In fact, both the states are allocating 40 per cent of their agriculture budget to mechanisation,” says Aum Sarma, principal, Institute of Agriculture Engineering and Technology, Hyderabad. Sarma, who is also the head of the state government committee on farm mechanisation for both Andhra Pradesh and Telangana, says mechanisation is preferable because there is a huge demand for workers during transplantation of rice that lasts for only 45 days. He adds that one of the major reasons farm mechanisation is still expensive is that the machines are imported. “At present, farmers in the two states are using completely mechanised processes for paddy, sugarcane, sunflower, groundnut and maize.

But the machines are being imported primarily from China, Japan and South Korea” says Sarma.

There are 33 Rythu Clubs in Andhra Pradesh and eight in Telengana for paddy and one each in both the states for sugarcane. Rythu Club members say mechanisation is helping manifold. Parimi Venkata Narasimha Rao, a farmer from Pasivedala 1-15 DECEMBER 2015

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Crops in 97 million ha affected by labour shortage

Paddy | 45 mln ha Wheat | 30 Cotton | 10 Sugarcane | 5 Groundnut | 7

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*Crops majorly affected by dipping workforce (2004-05 Ð 2011-12); Figures in million ha; Source: Analysis by KPMG for FICCI, 2015

LANDESA

village in Kovvur mandal of West Godavari district, says his farm productivity has increased by 12 per cent and he earns `22,500 additional income per hectare because of mechanisation. The farmers also say losses during cutting of paddy have come down to less than two per cent.

ADVANTAGE WOMEN

Kerala, which has been facing labour shortage in agriculture for a long time because of its distinct socio-economic status, is sustaining agriculture through a women’s self-help group (shg) programme, Kudumbashree. Launched in 1998 by the state government for poverty alleviation, the Kudumbashree programme has four million members and covers more than 50 per cent of the households in Kerala.

The farming sector in Kerala has been facing labour shortage since the 1990s primarily because of the high literacy rate, which has prompted labourers to shift from farm to non-farm sectors.

According to nsso data, between 1993-94 and 200405, the number of farm hands in Kerala declined by 879,000, though the total number of workers increased by 1,605,000. In 2004-05, only 35.5 per cent of Kerala’s workers were engaged in agriculture while the national average was 56.5 per cent.

The shortage of labour in the state has forced many to quit farming. The state lost over 500,000 ha of paddy fields between 1980 and 2007 and harvest came down by almost 50 per cent, severely threatening its food security.

Kudumbashree first experimented with farming in 2013 when its shg group from Madakkathara village signed an agreement with the Kerala Agricultural University to take up vegetable cultivation on a two-hectare land of the university that was unused because of labour scarcity. Within months, the women’s group earned `2 lakh from selling vegetables. Seeing the success, other shgs under the scheme entered farming. In 2014, a total of 47,611 groups under Kudumbashree 1-15 DECEMBER 2015

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entered farming across the state. They primarily started farming on farmland that were abandoned because of labour shortage. Today, it is popularly said that the state has more shg members farming than farmers.

To bolster the initiative, the state government has now started setting up joint liability group of women farmers (jlg) under Kudumbasree. The groups are eligible for agricultural loans and receive subsidy on the loan interest. The state government gave loans worth `123 crore last year to facilitate farming. The state has also started the Master Farmer Programme to train 10,000 women in farming from all the panchayats in the state.

Kerala has employed women self-help groups under the Kudumbashree programme to revive farming in abandoned farmlands

GOING BACK TO WORK

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Labourers earn 100% more than what farmers earn from crops

Farmer | K 2,400/month Farm labourer | K 5,000 Industrial worker | K 7,000

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*Income from paddy cultivation in 2011-12; Source: KPMG Analysis for FICCI using Department of Agriculture and Cooperation data

Former farm labourers in Uttarakhand's Gaurikot village have formed a cooperative and started farming in abandoned farmlands

of farmlands lie barren in the hilly state. But now former labourers have taken the lead to recover the land and prepare it for farming once again.

It is a win-win situation for both farm owners and labourers.

For instance Gaurikot, about eight km from Pauri town in Uttarakhand, former agricultural labourers and their families set up a cooperative farming enterprise called the Gauri Swayam Sahayata Samuha in December 2013. The farming cooperative used a loan of `470,000 acquired from a local cooperative bank to invest in new tools and alternative techniques to make a living out of farming again. Today, Gauri Swayam Sahayata Samuha has 26 families collectively farming on about 2 ha. The cooperative is curently earning money through poultry and will start selling their farm produce by next year. They say the loan has to repaid by 2018.

After setting about the painful task of clearing abandoned farm plots of unwanted wild plants, the self-help group, spearheaded by women, invested in power tools. “We acquired a power tiller with the help of government subsidies. Now we can till the soil without cattle which have become difficult to VIKAS CHOUDHARY / CSE

keep because of increased leopard attacks,” says Rekha Rawat, deputy secretary of the group as she fires up the tiller and demonstrates its usefulness on an empty plot.

Investment in power tools is not the only innovation the group has undertaken. The farming cooperative has diversified into organic horticulture, poultry and pisciculture. The group is now contemplating opening huts as home stays for tourists. So where did the members of Gauri Swayam Sahayata Samuha get these ideas?

Rawat says that Nepali labourers who have taken up farming in neighbouring areas have been their teachers in resourcefulness. One such migrant from Nepal, Arjun Singh, has been working hard over the past three years on farms abandoned by the owners. “We used to be migrant labourers, but over the years several families have moved to Pauri and other districts to farm. We usually pay the land owners about `10,000 every year to do farming on .4 ha and the business is great in most places,” says Singh as he displays his plots of radish, tomato, pea, bitter gourd and ginger.

In neighbouring Himachal Pradesh, a different kind of cooperation is taking shape. Here, the government, the apple orchard owners and the private players are coming together to adapt to labour shortage. Farmers say there has been 3040 per cent labour workforce reduction in the agriculture sector in the recent years. The state witnessed the worst crisis in 2010 when several horticulturists could not find enough employees to pluck their bumper apple crop and the fruit was allowed to rot.

The primary reason for the labour shortage in the state is that the labourers, who are mostly from neighbouring Nepal, are travelling to other countries for higher pay. Over the past five years a major chunk of the Nepalese labourers has started moving to Qatar, Dubai, Oman, Malaysia and even Canada for higher income. A large number of them also prefer to work in infrastructure projects within India and as porters.

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Share of farm sector in rural employment dropped from 71 to 64% in last 10 years 2004-2014 | Share of secondary and tertiary sectors increase by 5% and 2% Source:KPMG analysis for FICCI using data from Labour Bureau, Ministry of Labour and Employment

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sation is not possible in Himachal Pradesh because of the topography, say farmers. “The steep slopes in the case of apple and the small terraced fields in case of vegetables leave almost no scope for use of large machines,” says orchardist Baldev Chauhan from Rohru village in Shimla district.

So what did the farmers do? “Since the vocation continues to be labour intensive, we have no option but to be at the mercy of the workers. Last year, I had to get additional workers from Jammu and Kashmir. Small orchardists also rent workforce from bigger farmers for a few days during the harvesting season,” says Sanjeev Thakur, an orchardist from Matyana village near Shimla.

Agriculturists and horticulturists are also entering into contracts with labourers for carrying out different cultivation phases in return for some portion of their produce. “This year, I entered into a contract that gave the other party the right over 50 per cent of the produce on my land. There seemed to be no option. Massive rainfall would have destroyed the entire produce. Harvest had to be done at the right moment,” says Manish Verma, a farmer from Kaylar village in Solan district. Many apple growers in the area are following this practice, says Chauhan.

Farmers point out that the entry of some private players who have set up cold storage units has provided some relief to the apple growers. “The headache for the grower remains to the extent of plucking and transporting the apples to the private firms, who then do the grading and packaging,” says Dewan Justa, an orchardist from Jubbal village in Shimla district.

GOOD BUSINESS

While farmers in most states are innovating to tide over the labour crisis, farmers in Haryana, which is one of the country’s most agriculturally productive and mechanised states, are making money by renting farm machines to neighbouring states.

One such farmer is 44-year-old Krishna who rents his harvester to other states. “Just a decade 1-15 DECEMBER 2015

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ago, labourers would regularly come from states like Bihar, but the supply shrunk slowly,” says Krishna, sitting on a cot with a friend at a dhaba on National Highway-10. He says farm machines from the state are rented to farmers in Madhya Pradesh, Rajasthan, Maharashtra, Uttarakhand, Uttar Pradesh, Bihar, Jharkhand and Odisha.

Thirty-four-year-old Jagdeesh Singh, who recently returned to his village, after working on soybean and wheat planatations in Indore, says, “I travelled over 2,500 km this harvesting season, and earned `4-5 lakh in two months.” He normally travels with a team of four men. “Local agents from the areas facing acute labour shortage contact us during sowing and harvesting periods. These agents know hundreds of local farmers who want to get their crops harvested,” says the farmer from

Haryana farmer Jagdeesh Singh (extreme right) travels to neighbouring states with his farm machines during harvesting season

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In next 5 years labour shortage will increase

2020 | 23 mln fewer labourers | Share in rural employment down from 48% to 41% Source: KPMG analysis for FICCI using erstwhile Planning Commission data

Haryana’s Daryapur village. He charges `1,000 per ha for soybean, `1,500 per ha for wheat and `2,500 to `8,750 per ha for paddy, depending on the quality. “They find the rent cheap because of the high labour cost,” says Jagdeesh.

Another farmer, Sharavan Singh, says he recently returned for Kota, Rajasthan after harvesting soybean crops of 200 farmers. “During harvesting season our demand is quite high. We get calls from different parts of the country, especially from farmers’ groups from the northern or central region,” he says. Om Prakash, an Indore-based agent who has been in the business for the past three years, says farmers prefer hiring machines because the job is done quicker, which is crucial because of extreme weather events. He says he shifted to machines two years ago after his rabi crop was destroyed by unseasonal rains and hailstorm during the harvesting season.

A NEW OPPORTUNITY

The labour crisis has given Rajesh Jejurikar, the chief executive of the farm equipment division of the world’s largest tractor manufacturer, Mahindra & Mahindra Ltd (M&M), a reason to be happy. This is unusual because even industries are facing acute labour shortage. A recent survey by industry body Federation of Indian Chambers of Commerce & Industry (ficci) shows 90 per cent of industries are facing labour shortage, just like farming. Ask Jejurikar the reason for his happiness and he says, “Farm mechanisation has become an attractive option for those farmers who either have shortage of workforce or want to adopt new modern technology.” This new-found urgency among farmers to embrace farm mechanisation is resulting in huge profits for all industries that are engaged in farm equipments.

According to crisil, the farm equipment sector will grow at the rate of 10 per cent annually for the next five years. And big players such as M&M are going the extra mile to capitalise on the growth.

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centres across the country to reach out to farmers.

M&M’s Samriddhi centres will provide access to hybrid seeds, crop care and micro-irrigation products, soil and water testing facilities, finance and insurance along with supporting knowledge to farmers to manage their farms, according to the company’s website. “We are focused on providing complete mechanisation solutions for the entire agri-value chain,” says Jejurikar.

Companies are also launching machines for labour-intensive processes like transplantation of paddy fields. M&M recently launched two rice transplanters for paddy cultivation. Similarly, several other companies, including VST Tillers Tractors Ltd, Redlands Ashlyn Motors, have launched a range of tranplantors. According to a study by the Directorate of Rice Research on the status and prospects of mechanisation in rice, manual and self-propelled transplanters can reduce the cost of rice transplanting by 45-50 per cent and labour requirement by 75-80 per cent.

This has prompted companies to invest heavily in research and development. M&M has a dedicated research and development centre for its automotive segment and tractors in Chennai.

Similarly, Chennai-based Tractors and Farm Equipment Ltd recently opened two R&D centres in Madhya Pradesh and Tamil Nadu that employ over 300 specialist engineers dedicated to farm machinery.

The recent labour crisis has made it clear that the agriculture sector has to mechanise if it wants to survive. Will all the stakeholders—farmers, companies and government agencies—work together to realise the goal remains to be seen.

Reporting by Purusttam Singh Thakur from Chhattisgarh, Samarjit Sahoo from Odisha, Ch Narendra from Andhra Pradesh and Telangana, Ratheesh Kaliyadan from Kerala, Rajeev Khanna from Himachal Pradesh, Shreeshan Venkatesh from Uttarakhand, Jitendra from Haryana, and Karnika Bahuguna and Rajit Sengupta from Delhi 1-15 DECEMBER 2015

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