Transcript Agricultural Diversification in India and Role of Urbanisation

Agricultural Diversification in
India: Regional Analysis
P. Parthasarathy Rao
Dharmendra Kar
Workshop cum Training on Agriculture and Rural Indebtedness
Jointly sponsored by the Project for economic Education, Press Institute of India and
the Indian Liberal Group
Oct 30, 2005 - New Delhi
Diversification of agriculture:Schematic
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4
High diversification –low per
capita income.
SUBSISTENCE agriculture; low and erratic
rainfall, poor infrastructure, low irrigation,
low population density. RISK MITIGATION
Strategy (Rajasthan, MP)
High diversification- high per
capita income:
Commercial oriented diversification:
need to sustain diversification through
technology, vertical integration and
value addition (Maharashtra, AP,
Karnataka)
2
3
Low diversification - low per capita
income.
Low diversification - high per
capita income.
Agro-climatically better endowed region,
Lack of infrastructure, low irrigation, poor
adoption of improved technology
Need to promote diversification through
technology, and infrastructure development.
(Orissa and Bihar)
SPECIALISED AGRICULTURE:
high level irrigation, inputs,
mechanization, low income risk
no concern for sustainability, labor
problems, low relative profitability of
substitute enterprises (Punjab and
Haryana)
Resource endowments
Facets of Agricultural Diversification
Macro level
• Shift from farm to non-farm activities
• Shift to high value commodities/enterprises
• Use of resources in diverse and
complementary activities
Micro level
• To meet household food security
• Minimizing production and marketing risks
• Generating additional income
Definition of Diversification for this study
Diversification towards High Value Commodities (HVCs)
HVCs for this study include: Fruits, Vegetables, Milk and
Meat
Objectives:
• Spatial sub-division of districts based on
diversification towards HVCs
• Nature and speed of diversification
• Role of urbanization determining nature and speed
of diversification
• Andhra Pradesh: Case study
• Implications for policy and regional planning
Determinants of diversification
Supply side factors
Demand side factors
Technology
Population growth
Infrastructure
Income growth
Market linkages
Urbanization
Resource endowments
Change in taste and preferences
Socio-economic factors
Export potential
Agricultural diversification (High Value Commodities)
Relative importance by level of diversification: 1998
Level of Diversification
Selected indicators
High
Medium
Low
56
167
86
No. of districts (%)
18.1
54.0
27.8
Share in NCA (%)
11.3
53.0
35.6
Share in VOP (%)
14.0
57.9
28.1
Share in population (%)
19.7
60.3
20.0
Share in urban population (%)
24.9
54.1
20.9
No. of Districts
Selected indicators by level of diversification: 1998
Indicators
Level of diversification
High Medium
Low
Population density
Urban population (%)
Literate rural female (%)
426
31.5
41.9
370
22.3
29.4
227
26.0
25.4
Land size (ha)
Small land holders (%)
Irrigated (%)
Normal rainfall (mm)
Area under HYV (%)
Fertilizer (kg/ha)
Tractor density (per 000 ha)
Market density (No./10,000 sq km geog)
Road density (Km/100 sq km geog area)
Value of HVC per district (Rs million)
0.9
88.3
29.1
1660
27.7
98.1
4.4
27.1
0.7
1370
1.5
80.3
40.7
1195
43.8
88.4
9.6
22.0
0.5
1099
2.6
60.6
35.7
952
26.7
62.4
8.8
21.6
0.4
568
Nature of diversification: 1998
90.00
80.00
Share (%)
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
High
Crops
Fr&veg
Medium
Total livestock
Low
High value commodities
Diversification and
Urbanisation
Diversification and urbanisation
Relative importance of urban and other
district groups: 1998
Urban
Urban
surrounded
Others
31
91
187
No. of districts (%)
10.0
29.4
60.5
Share in NCA (%)
10.3
31.4
58.3
Share in VOP (%)
14.6
33.0
52.5
Share in population (%)
20.1
30.2
49.7
Share in urban population (%)
41.2
21.7
37.2
No. of Districts
Selected indicators of urban and other districts: 1998
Level of diversification
Indicators
Population density
Urban population (%)
Literate rural female (%)
Land size (ha)
Urban
Others
surrounded
725
350.3 278.6
55.9
19.6
20.4
45.4
30.7
27.4
Urban
1.4
1.6
1.8
Small land holders (%)
80.9
75.8
75.0
Irrigated (%)
46.2
40.0
36.2
Normal rainfall (mm)
1253
1162
1229
Area under HYV (%)
37.5
37.7
36.4
110.7
83.1
73.2
Tractor density (per 000 ha)
11.5
8.7
8.3
Market density (No./10,000 sq km geog)
30.0
24.9
18.6
Road density (Km/100 sq km geog area)
0.7
0.6
0.4
1813
1148
794
Fertilizer (kg/ha)
Value of HVC per district (Rs million)
Nature of diversification by district groups: 1998
80.00
70.00
Share (%)
60.00
50.00
40.00
30.00
20.00
10.00
0.00
Urban
Crops
Fr&veg
Urban surrounding
Total livestock
Others
High value commodities
Sources of diversification by district groups:
1982-98 (1982 prices)
60.00
Share (%)
50.00
40.00
30.00
20.00
10.00
0.00
Urban
Fr&veg
Urban surrounding
Total livestock
Others
High value commodities
Nature of diversification in urban surrounded district
groups and highway passes
Items
No. of districts
Share in agricultural value (%)
Fruits
Vegetables
Bovine milk
Meat
Poultry, pig meat and eggs
Total HVC's
No. of National Highway passes
Two highways
Zero
One
and above
(0.39)
(0.57)
(0.82)
1982
1998
1982 1998
1982
1998
25
45
23
4.42
6.93
13.35
0.87
1.19
26.8
4.93
6.06
14.81
1.19
1.45
28.4
10.30 11.24
8.68
7.40
11.94 14.14
1.34
1.96
1.60
2.86
33.9
37.6
6.92
5.66
14.28
1.59
2.31
30.8
9.91
6.31
16.94
1.54
3.07
37.8
Spatial Analysis: HVCs
Area under fruits
(% NCA)
(000’s ha)
Area under vegetables
(000’s ha)
(% NCA)
Share of livestock value to total agricultural value: 1998
Milk
Meat
Concluding remarks
HVC’s account for > 50 % of agricultural production in 56
districts and < 25 % in 86 districts
Milk and poultry meat had the fastest growth rate among HVCs
Urbanisation has a significant influence on diversification
towards HVCs , particularly poultry meat and fruits
Other factors:
road density, small farms, improved technology, fodder
availability and rainfall positively influenced diversification
Tractor density, HYV area and irrigation negatively influenced
diversification
Andhra Pradesh: Case study
Andhra Pradesh farming sector:
Facets of the crisis
• Yield stagnation in traditional crops
– Food self-sufficiency achieved
– Accounts for 35% of rice
procurement in India
• Relentless pressure on natural
resources
– Declining water tables
– Unsustainable rice cropping
• Excessive use of inputs
– Fertilizers, pesticides, water,
electricity
• Newer pressures from trade
liberalization
– Prices, quality, sanitary and
phytosanitary (SPS) measures
• Rising rural unemployment
• Decline in rural per capita incomes
• Inadequate access to formal credit
• Poor rural and marketing
infrastructure
• Profound disquiet in rural areas
– AP has dubious distinction of
highest farmer suicides
– High levels of out-migration to
urban areas
– Highest incidence of child labor
Annual compound growth rates of agriculture sub-sectors and
GDP, Andhra Pradesh (1993-94 prices)
Diets trending away from basic cereals
NSS Round Expenditure Shares
Food item
1983
1987-88
1993-94
1999-00
Total cereals
49.8
41.8
41.2
40.7
Milk & milk products
7.5
8.4
8.9
10.0
Meat, egg & fish
7.6
7.3
7.6
7.5
Vegetable & fruits
8.4
10.9
11.2
11.6
Food total
100
100
100
100
Composition of the value of agricultural production by level of diversification;
Andhra Pradesh, 1999-2001 (1980-82 prices)
HVCs based diversification zones
High
Medium
Low
Total
(Zone 1)
(Zone 2)
(Zone 3)
(All zones)
Commodities
———————(% to total value) ————————
Paddy
16.0
38.2
25.0
27.8
23.5
16.8
33.5
24.8
Total crops
49.4
62.5
73.4
63.6
Fruits
16.0
14.7
3.5
10.7
Vegetables
2.9
1.2
2.2
2.0
Total livestock
31.6
21.6
20.9
23.7
High value commodities
50.6
37.5
26.6
36.4
Commercial crops
1
1: Commercial crops include oilseeds, sugarcane, cotton, chillies, turmeric and tobacco.
Districtwise HVC share in total value: Andhra Pradesh,
Change in share, 1982 to 2001
Distribution by HVC share
Selected indicators by level of diversification; Andhra Pradesh, 2001.
Indicators
High
Medium Low
(Zone 1) (Zone 2) (Zone 3)
Population density (No./KM2)
319
291
236
Urban population (%)
37
22
22
No. of small land holders (%)
82
84
78
Irrigated area (% to GCA)
34
59
36
Feed availability (t/livestock unit)
1.3
2.0
1.6
Rainfall (mm)
793
1031
847
Income from HVCs - Kurnool, AP: 2002-03
(household survey)
Irrigated
Rainfed
Employment effects of HVCs, AP, 2002-03
household survey (average)
HVCs: Challenging policy terrain
• Marketing
– Domestic
– Export
• Processing
• Contract farming
– Case study: Gherkins
• Credit
• Infrastructure
Share of food processing industry by type: Andhra Pradesh
Share in total
enterprises
1999-00
Growth rate
Manufacture of dairy products
1.8
4.91*
Canning and preservation of fruits
Processing, canning and preserving of
fish, crustaceans and similar foods
Grain milling
1.0
0.58
0.6
3.91
66.7
1.43*
Manufacture of bakery products
2.4
4.27*
Processing of edible nuts
8.4
5.1*
Item
Source: Mahendra Dev and Chandrashekar Rao, 2005
1991-92 to
1999-00
Contract farming: a new frontier
Company
Crop
Area (ha)
District Covered
Sical, Godrej, Palmtech
Mark fed.
Oil palm
38000
East & West Godavari
Cadburys India Ltd
Cocoa
8500
East & West Godavari
BHC Agro
Vegetables
417
Chittoor
Global Green, Capricorn
Foods Ltd.,
Gherkins
3333
AEZ-Gherkins Districts
A.V.Thomas Co.
208
417
Ananthapur
Dabur India
Marigold
Amla (Indian
Gooseberry)
Exim Foods Pvt. Ltd.
Baby corn
208
Around Hyderabad
Venkateshwara Hatcheries
Broiler birds
50-75 farms
Around Hyderabad
Source. A.P Horticulture Department.
Across State
Agri-Export Zones (AEZ) in Andhra Pradesh
S.no
Name of AEZ
Districts covered
Fruits /
Products
1
AEZ Vijayawada
Krishna
Mangoes
2
AEZ Hyderabad
Ranga Reddy,
Mahabubnagar and
Medak
Grapes and
Mangoes
Ranga Reddy,
Mahabubnagar, Medak,
Karimnagar, Warangal,
Nalgonda and
Ananthapur.
Gherkins
3
AEZ Gherkins
Total estimated
cost (crore Rs.)
18
57
20
4
AEZ Chittoor
Chittoor
Mango pulp
and vegetables
11
5
AEZ Chillies
Guntur
Chillies
—
Source: A.P Horticulture Department.
Distribution of priority sector credit
Andhra Pradesh 2003-04
Priority sector
Crop sector
Distribution of credit by diversification zones,
Andhra Pradesh, 2003-04
Pro-HVC policy interventions
• Pricing water
• Building efficient marketing networks
– Implement Model Marketing Act
– Dismantling government monopoly
• Increasing investments in infrastructure
–
Roads, cold storage, bulk coolers
– Foster improved linkages between
rural-urban markets
• Emphasizing vertical integration thru’
contract farming
– Increase enforceability
– Harness private sector innovations
in food processing and marketing
• Adding value thru’ processing
– Simplify procedures for setting up
food processing industries
• Enhancing access to formal credit
– Expand crop/rainfall insurance
schemes
• Enabling public-private partnerships
– Extension