‘To Double Farm Incomes, India Must Get People Off Farms’
Increasing climate variability, extreme weather events and rising temperatures pose challenges to India’s food and nutrition security, according to the 2018 Global Food Policy Report by International Food Policy Research Institute, an agriculture think-tank based in Washington DC, U.S., IndiaSpend reported on March 22, 2018.
With half of the country’s farms unirrigated, agriculture growth rates in India fluctuate a lot, India’s 2018 Economic Survey noted.
With hotter, drier weather becoming increasingly common, Indian farmers must diversify their income sources beyond agriculture, according to Shenggen Fan, director general, IFPRI.
India has an ideological problem with farmers moving out of agriculture, he said. “I think some of them must go out [of the sector], including some of the well-to-do farmers. [This is what] we have learnt from China, Vietnam and other countries in east Asia.”
Fan, 56, winner of the 2017 Chinese Nobel for management and a PhD in applied economics from Minnesota university in the U.S., in an interview with IndiaSpend, discusses the paradox of hunger amid economic growth in India, doubling farmers’ incomes in a time of climate change and challenges of urbanisation.
Here are some edited excerpts:
“Climate change is the most pressing issue facing [south Asia],” according to IFPRI’s 2018 Global Food Policy Report, as we reported on March 22, 2018. In 2030, India’s agriculture output might be 7 points lower at 1.56 times the 2010 level against a potential 1.63 times without climate change, and the number of hungry 22.5% higher at 90.5 million against 73.9 million without climate change. In that context, is it possible to double farmers’ incomes?
I do think it is possible. It really depends on what the government will do. First, climate adaptation would be very critical to make sure that farming practices and production are able to cope with hotter, drier weather. The whole agriculture direction must change. Second, to double farmers’ income, we must go beyond agriculture. A big percentage of farmers’ incomes is not from farming but from non-farming activities such as trading or casual work.
I think India’s economy will continue to grow–I have no doubt about that–around 7% a year. That’s a big number, a good number that can really generate lots of jobs. Farmers should move to cities, to the non-farming sector even in rural areas.
There’s a view that India’s economic growth does not generate jobs. I don’t agree. That depends on what kind of jobs and policies you have.
Manufacturing, for instance, needs to go beyond information technology. Usually, growth in IT does not trickle down to others. Take infrastructure investment. That sector needs a lot of labour and can absorb rural labourers. At 7 percent a year economic growth, demand for services will also grow in the form of food, restaurants, hotels and tourism.
So, how can we help farmers move out? I think sometimes we have ideology problems. People always want to keep farmers on the farm even as prices are going down and land is getting smaller. There, they are condemned to be poor, hungry, malnourished.
I think some of them must go out [of the sector], including some of the well-to-do farmers. If they have the money, they can go to the city and invest somewhere to provide a job for themselves as well for others. These are the lessons that we have learnt from China, Vietnam and other countries in east Asia.
Even though the economy as a whole grows around 7 percent a year, agricultural growth fluctuates a lot. How do you ensure a stable income growth in the sector?
Again, adaptation is critical. Also, non-farm income growth is pretty stable. So, part of the strategy can also be to increase the share of non-farm income to, say, 50 percent, so that a farmer can feed his/her family and provide education for his or her children.
Crop insurance can help too but that is a tricky one. It has not worked in many countries unless the government is very rich to pay the claims itself. Private companies are reluctant to insure agriculture because of small land holdings, heavy costs and difficulties of monitoring. Companies find it difficult to verify claims made by farmers.
So, I think adaptation and diversifying income from agriculture are the best ways of doubling farmers’ incomes.
Half of the world’s population currently lives in cities and this is expected to go up to 66 percent by 2050, as the 2017 Global Food Policy Report pointed out. Is urbanisation getting enough attention from policymakers in the context of food policy and security?
Urbanisation actually creates opportunities for agriculture. People move to cities and demand more food, better food. They don’t produce their own food anymore. So, food prices go up and farmers benefit. Apart from that, some farmers are always moving to cities as part of urbanisation. Government policies should encourage this movement and train farmers to find jobs in cities.
For instance, China gives a lot of migration support. Government authorities come to the village and train young people, give them certificates. They teach you a skill, say of a driver, a chef or a construction worker. Sometimes, they also provide you with credit to travel to the city.
Governments should not just encourage people to move to cities but also food, particularly perishable food–vegetables, fruits, dairy products–to cities. For moving food, we need good infrastructure like cold chains, better roads and electricity; otherwise the food will rot. So, people and goods have to be linked. Well, obviously, knowledge too.
When young people who migrated to cities come back after five to 10 years to work on their farms, the agriculture they practise is very different from their parents. It’s on a much larger scale, they use the internet and produce higher-value crops. That’s the way to go. The younger generation don’t want to repeat what their parents have been doing.
People move to the cities, demand more food and push up prices, which will benefit farmers. But that also causes food inflation.
That needs a reformed public distribution system that is targeted at the poor and provides more nutritious food. Not just rice or wheat. Better targeting will cut costs dramatically by weeding out corruption and leakages; for example, when the food is cheap, it’s fed to animals.
Moving food to cities has been a problem. Our policies on cold storage have not taken off. Harvest and post-harvest loss of India’s major agricultural produce is estimated at Rs 92,651 crore in 2016 as three of five components–pack houses, ripening chambers and reefer vehicles–in the cold chain remained almost entirely without funding, IndiaSpend reported on Aug. 11, 2016.
The government needs to encourage the private sector to invest but the private sector will need support in some form of finance or tax concessions. That’s how it has happened in many countries like Thailand or even rich countries like Japan.
“India faces a paradoxical situation — its rapid economic growth is coupled with a much slower decline in undernutrition,” said the 2017 Global Food Policy report. What could be the reasons for the slow decline compared to countries like Bangladesh where stunting dropped from 55 percent in 1997 to 36 percent in 2015?
This is what we call the south Asian enigma. It’s a phenomenon peculiar to this region. Rapid growth has not been able to translate into rapid poverty reduction or reduction in hunger and malnutrition. Why is that? One reason is the inequality of growth. It’s only the rich who benefit from economic growth. Those who work in the IT sector, the educated or the wealthy families.
Another reason is that growth in the agriculture sector has not improved the nutrition profile. This is because growth comes largely from cereal crops, not from a diverse food basket.
Yet another problem is the lack of awareness about nutritional food, balanced diet and sanitation among the poor.
India’s focus in reducing malnutrition and ending hunger has been in the villages. In what way could the urban poor, living in slums with inadequate sanitation and water facilities and spending a large part of their income on food, become a part of government’s strategy to end hunger?
Many countries–not just India–ignore the urban poor. We don’t even know the number of urban poor globally. That must be changed. In urban centres where they do not produce their own food, the poor need social protection, particularly for food. In urban slums, providing clean drinking water and education is critical.
Twenty years ago, IFPRI ran a project in Cairo, Egypt, where we provided subsidised food through ration shops in poor neighborhoods. The country, then, did not have a household registration system. We did not know who the poor were but we could identify poor neighborhoods. So, we targeted subsidies in those neighborhoods.
Before we can do that in India, we need to do some research about who the poor are, why they are poor and what strategies could help them. As more people move to cities, tackling urban poverty, hunger and malnutrition will become important.
How do you think a country like India could increase efficiency and incomes in agriculture in alignment with sustainable development goals?
The first thing is that markets should work; in India, markets are distorted. Output prices do not reflect the real cost of production. Input prices are subsidised and distorted. Some of the inputs used in agriculture are actually free. People get away with polluting air or land. All these things must be fixed. Yes, you need to increase efficiency so that they can produce more, but in the meantime prices should be determined by markets.
As urban incomes go up, rising food prices will lift farmers’ incomes. The problem is that the Indian government wants to keep food prices low. That hurts a lot of farmers. All the consumers benefit, including the rich ones. The rich consumers should be paying more, while the poor should get government support.
Vivek is an analyst with IndiaSpend.
This article has been published in arrangement with IndiaSpend.