Development of Capitalism in Indian Agriculture

Dr. Soma Sundar Marla, Principal Scientist (Bioinformatics). Indian Council for Agricultural Research, New Delhi

Indian economy today is witnessing rapid growth. But the Agricultural sector employing a majority of workforce is going through a severe crisis. Plagued with low productivity and stagnating grain production agriculture today is rising doubts about its ability to feed our population posing threats of food and nutritional security. Farmers are no more producing food to feed their families but for increasingly for markets, a sign clearly indicating the growth of capitalism in agriculture. Major indicators- pattern of production, ownership of land (means of production), level of productive forces (farm mechanization, influence of green and biotechnology revaluations and others), employment of workforce, extraction of surplus value and mobilization of capital, available infrastructural facilities, prices of farm produce and finally those paid by consumers will be discussed in this paper to assess the impact of capitalism on today’s agriculture.

Growth of Agriculture

Growth rates in agriculture have fallen remarkably from 3.3 percent in 1980-95 to mere 2.0 percent by 1994-95, and even down to negative numbers by 2010. What is interesting is, this slow down is observed in the wake of active implementation of neoliberal economic policies and opening of gates of our economy to multinational firms truthfully obeying the diktats of World Trade Organization and IMF. Active implantation of these polices is vigorously bringing Indian agriculture under the control of indigenous and multinational business houses starting from supply of inputs (seeds, pesticide, tractors, land) to marketing of produce and even to their retail trade.

The fall in the yields can be observed in almost all crops (rice, wheat, cotton, sugar cane etc.). The yields of these crops have reached a plateau and even registered negative growth rates during the last few years. The decline in production can be witnessed in all the agro-climatic zones across all states of the country. In fact this clearly indicates a visible shift in growing food from sustenance (growing food for one’s family needs) to sell in markets.

Looming foods insecurity

Significant investments made by government during the first, seconds and third five year plan periods on medium and heavy irrigation projects have contributed to increase. in irrigated area. Similarly emphasis on public sector farm research and the subsequent release & popularization of high yielding varieties & hybrids of major crops and horticulture led to increase of food grain production. Over the year (from 1960-61 to 1980-81) food grain production has risen by 4.5 times reaching to 220 million tones), where it has been stagnation for the last many years. The chief reasons for this stagnation in production is due to decimal level of capital investments in basic infrastructure development (creation, repair of irrigation facilities, farm machinery, rural roads, marketing years, credit facilities etc.). The crisis in agriculture is having a direct impact on lives of rural poor directly affecting their purchasing power. The later in turn has influenced the total caloric consumption: 68 percent of caloric intake in rural areas and 56 percent in urban areas comes from rice and wheat alone and with very low levels of protein and vitamin intake ie from 11 percent are met from pulses (with very low consumption of fish, eggs and meat). A healthy diet composes of cereals (rice & wheat), pulses (or egg. Fish or meat), fruits and vegetable oils) and reflected in body / mass index of population. The production of pulses (dal) has also declined over the years. High prices of food paid by consumers is severally affecting the size of their food basket and posing a serious threat to food and nutritional securities.

Land ownership

India being primarily an agrarians nation, with nearly 68 percent of population is dependent on agriculture. Nearly 38 percent of land is under irrigation and the remaining 62 percent is rainfed. Farmers owing land below 1,0 ha (2.4 acre in irrigated tracks) and 2.0 ha (5acres in upland.

rainfed areas) are considered poor and marginal farmers (landless farmers) operating leased land are also classified as marginal and poor farmers. These poor and marginal farmers constitute nearly 68 percent of total farmers. Small farmers own land up to 5.0 acres (2 ha in irrigated areas) and 10 to j2 acres (in rainfed areas like vidarbha, Adilabad, Rayalseema) constitute 22 percent of all farmers. The medium rich (middle class) farmers owing land between 10 to 25acres and rich land lords owing above 25 acres. Middle and rich farmers number absent 23 percent of total farmers. In short poor and marginal farmers, who constitute nearly 80 per cent own only 34 percent of land area. Where as high as 64 percent of land (i.e. nearly two thirds) is owned by rich land lord sections.

Another remarkable feature is the state of scheduled tribes or adivasis numbering 84.3 mln or 8.2 percent of country’s population, nine out of ten depend on agriculture for their livelihood. This is more than any other social section and are the poorest of all. They are also considered as marginal farmers.

Pauperization of peasantry and over growth of agriculture

Over the last four decades, the net sown crop cultivated area virtually remained the same. While the number of farm holdings has steadily increased: thus the average size of holdings have halved, i.e. falling from 2.63 ha in 1961-62 to 1.34 ha in 1991-92. The fragmentation of land occurred chiefly due to breakdown of nuclear families and distribution of land to sons.

During the period (1961 and 2003) number of farmers owing 5.0 acres and less gradually started loosing their land (chiefly due to high cost of cultivation, un-remunerative produce prices and heavy credit indebtedness) and joined the. Most of the poor and marginal farmers are becoming land less waged coolies. Similarity lakhs of poor and marginal farmers lost their tiny holdings and become land less waged agriculture coolies. During the last three decades nearly 120 min of them become waged farm labourers or immigrated to urban areas in search of employment.

What is most significant is, despite the crisis in agriculture 57 percent of the workforce continues to be employed in agriculture. Why do more and more workers crowd in to agriculture in the face of falling incomes? The answer lies in lack of employment opportunities out side agriculture.

Waged agricultural labourers who lost their land migrated to urban areas are unable to find employment in factories to become industrial workers. Present industry in search of mass products and high profits is becoming highly automticised, technology intensive and employs very few workers. If at all employed only unskilled contractual labourers are employed on temporary casual basis. The recent findings by labour Bureau’s employment and unemployment survey (2009- 2010) shows that agriculture continues to employ about 57 percent, industry & manufacturing 6.7 percent, services 6.3 percent, construction 7.3 percent. :

This pattern of slow absorption of liberated workforce from villages as industrial factory workers is very much different from the classical way in which historically in Europe rural poor went to become factory workers during early stages of industrialization. Given the nature of industrial development in India with close links with world economy and the transfer of production technology lower employment opportunities will be available and the over crowding of agriculture may likely to continue.

Even after tall claims by successive governments of implantation of card reform and distribution of land to land ownership pattern in rural India is very unequal. The top 5.2 percent of feudal land lords own 42.8% of land. The middle class and rich farmers constitute 20%’ of farmers and own nearly two thirds (i.e. 62%) of land in Indian villages. The remaining one third is being owned by the rest of 80% of small and marginal farmers. It is important to remark that 41.6 percent of rural population does not own any land and are engaged either as self employed, skilled artisans or waged agricultural labor

Land use statistics reveal availability of large fallows (26 million ha) and substantial

cultivable waste land (13 million ha) apart from common grazed lands for like stock. Thus 39 million ha of land is readily available for distribution to land less poor. This figure does not include nearly another 10 million hectors illegally occupied by rich landlords (which is actively under cultivation and is presently leased to tenants). Although various laws relating to land reforms have been passed by various state governments, the rich landed feudal section successfully evaded them. Large chunks of land still is being occupied by these feudal sections evading card reforms thanks to spurious & benami transactions, litigant court manipulations and seeking support from administration. Contrary to this in the left ruled states of Kerala, West Bangal and Tripura land reform have been honestly implemented and land distributed to the land less poor. Large chunks of land illegally occupied by feudal sections need to be evicted and distributed to land less poor, tenants and marginal farmers. Popular peasant struggles waged by rural poor with a slogan “Land to the tiller” during 1950’s later in 60’s and early 70’s in states of Bihar, Andhra Pradesh are some of the notable examples of popular demand for justful redistribution of land in Indian villages. As s result of these popular peasant straggles at least some small volume of land was distributed to land less poor in few states.

Food production needs to be increased upto 350 min tones by 2025 to meet the increasing levels of population and attain food security. To increase food grain production and attain respectable growth rates in agriculture the land need to be distributed to rural land less poor by strict & honest implementation of land reforms. Along with implantation of land reforms capital investment on infrastructure development for supporting poor and marginal farmers need to be taken up. These steps include land reclamation, repair of irrigation & drainage facilities, availability of quality seeds, rural roads and crop loans at cheeps rates and construction of market yards. The lack of sufficient support from the government of West Bengal to poor farmers even after successful implantation of land reforms appears to be the chief cause for the backwardness of in the state in rural West Bangal. In this respect Kerala fared relatively better in supporting the poor formers after implantation of land reforms, as reflected in over all human development index. Tenant farmers :

The landed rich feudals are owning two thirds of cultivated land lease out to land less poor on huge rents. These tenant farmers end up paying rent equal nearly 50 to 60 percent value of obtained farm produce.

It is estimated that there are nearly 5 crores of tenant farmers operating in rural India. In East and West Godavari districts of Andhra Pradesh alone they number up to 1.0 million. Although various Tenancy laws. have been enacted by state government, rarely they protect these vulnerable poor farmers from exploitation of rich land lords. In fact much of such tenancy does not get recorded, since land lords do not want to crake tenancy rights. Eventually majority of tenants do not have access to various subsides, quality seeds and cheap credits from public sector banks. As a result these poor farmers seek credit from local money lenders, shahukars, fertilizer & pesticide dealers at exorbitant interest rates. Some times interest rates changed by user go as high as 25 to 30 percent. The recent case of micro finance firms in A.P., and Vidarbha in Maharashtra is a typical example. Sandwiched between lack of just ful remunerative prices for their produce and high interests charged by money lenders, farmers often commit suicides. These miserable incident are common in cash crops cultivation exclusively grown for grown for the markets (cotton or red mirchi), where heavy loans are sought by poor and tenant farmers from usery to meet the high costs of inputs. Due to Lack of insured mechanism when prices of produce fall, these farm produce is often bought away by middle men-trader-Miller The recommendations of Prof. Swami Nathan’s Commission on provision of justful support prices considering the full expenses of cultivation should be implanted strictly.

Appropriation of surplus value:

With crisis in agriculture level of surplus in Indian agriculture as whole is low (compared to

factory manufacturing), it does not mean there is no surplus. As waged agricultural labourers, poor and tenant farmers being the primary producers of food, the rich land owing feudal lords, usury, traders, input supplying corporate seed firms, marketing middle men & mill owning sections try to extract as much profit possible from these producers to appropriate the available surplus in their hands.

With very high levels of landownership the rich landed feudal sections, usurer traders and input supplying corporate firms exercise their clout.... To set the terms in markets (high land lease charges, low wages to farm labours, credit, high costs of seeds, pesticide, tractors etc. and maniploration of prices to firm produce. One of the methods to maximize profits include payment of low wages and getting the most out of farm labour, low payment of market price & its manipulations, high costs of inputs and charging high rates of tenancy rent and interest on loans. The surplus value appropriation in Agriculture can be analyzed market approach divides the value of product in the “means of production” and “he means of subsistence” of the producers and the surplus”. Expenditure on means of food productions includes.

1 Input coast (seeds, fertilizers, pesticides, irrigation, tractor, electricity charges)

2.And also allowances set aside on depreciation or repair of land, irrigation canals etc. (ie. amortization) enabling next season / years reproduction.

Unlike in industry the “means of subsistance” to the wages of workers, in agriculture we consider the means of subsistence to be the consumption expenditure of the agricultural laborers, poor farmers or tenant farmer households, which broadly accounts to its income. Without this income, the labour force would not be fit for next day/season crop reproduction but simply starve to death. Hence these two elements should be added to the value of the production in order the production takes place during the current crop season and for reproduction in next seasons/years. Here we means the value of product could either be wages paid to farm labourers or remunerative prices paid in the market to the produce (i.e, cost of a bag of wheat). The remaining value of the product after subtracting these two is called ‘surplus’. It also includes the rent paid on land, interest paid on loans, profit gained by the producer or the merchant. Unlike in industry, where the worker is paid wages and separated from means of production, in agriculture there are several classes of farmers (rich land lords to small and marginal farmers) and all of them could potentially reinvest this “surplus” in next crops reproduction.

Today the surplus is not being reinvested in agricultural reproduction, but is being appropriated by a sequence of people that includes rent collecting land lords, usurer-traders, rice mill owners, middle men grain traders, big agro business corporations operating through their local sale dealers. The surplus, thus generated is being taken away to urban areas as capital for trade and industry.

Lack of reinvestment of surplus in agriculture (crops reproduction) is severely hampering the growth rates of development and is the chief reason for the current crises in agriculture.

Entry of Corporate sector in Agriculture:

What ever little surplus generated in agriculture is being targeted by various domestic as well as foreign multinationals. The corporate section not content with control on supply of inputs various seed, animal. Biotechnology products, fertilizers, pesticides, farm machinery these corporate firms want to exercise full content other production, marketing and retails distribution of farm produce directly to consumers through their super market chain outlets.

Jute and sugar mills have long practiced corporate agriculture in India by entry in to contracts with farmers to supply of produce. Various state Governments are also actively dollng out huge chunks of land to corporations involved in major seed production, food processing and retails trade.

Governments have entered in to MOUs with multinational firms like Monsanto and Pepsi. Several business houses such s ITC, Bajaj, Rallies have been beneficiaries of allotment of thousands of hectares of land in the name of research & development. It is a direct attempt by corporate houses to exercise control over means of production ie. large volumes of land. Can the other companies like Pepsi (in Punjab), Mahyco, ITC, and other companies have long entering in to contractual farmine with small & poor farmers in Punjab, UP, MP for p

Governments have entered in to MOUs with multinational firms like Monsanto and Pepsi. Several business houses such as ITC, Bajaj, Rallies have been beneficiaries of allotment of thousands of hectares of land in the name of research & development. It is a direct attempt by corporate houses to exercise control over means of production ie. large volumes of land. Can the other companies like Pepsi (in Punjab), Mahyco, lTC, and other companies have long entering in to contractual farming with small & poor farmers in Punjab, UP, MP for production of potato, soya bean, sunflower vegetables. These companies procuring the produce from farmers at through away prices are directly marketing it in their retails outlets such as lTC echoupal, Reliance fresh, McDonalds etc. Vast difference persist between prices on produce paid to farmers and the food prices charged in retails markets & super markets clearly show the extent of appropriated volumes of “surplus”.

Slow but gradual concentrating of land in hands of big landlords and major corporate houses while pauperizing the poor & marginal farmers is an important feature of development of Capitalism in agriculture witnessed during the last three or four years. Similarly attempts by big Agri-business houses and multinationals to exercise full control over input supply- production- retail sale chain is  also a notable feature of recent development. The shift of Indian agriculture from sustenance to markets is a clear sign of development of Capitalism in agriculture.