Agricultural Livelihoods and Market Exclusion in Andhra Pradesh

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Agricultural Livelihoods and Market Exclusion in
Andhra Pradesh
Priya Deshingkar, John Farrington, Sreenivas Rao
and Laxman Rao
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Household Income Shares from different sources
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Semi-arid, tank irrigated or rainfed sorghum,
paddy, cotton, maize. Land distribution still
feudal in remote village
Agricultural prosperous, canal irrigated, paddy,
pulses, sugarcane Mixed caste but FC
dominated Polarised land distribution
Semi-arid, tank irrigated, groundnut, paddy,
mulberry, tomato BCs have emerged as powerful in
remote village recently More equitable land
holding
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Input markets in AP

• Registered town shops accessible to only those
  who could pay cash on the spot - only 29 bought
  there
• Roughly 34 of the respondents bought inputs from
  unregistered (informal) village suppliers
• These shops provided credit _at_2-3 per month for
  the purchase of inputs with the poor paying more
• A further 25 bought inputs from traders who also
  bought the crop and landlords (60 purchased the
  crop).
• Only 1 medium and 1 large farmer bought seed from
  a seed company and the State outlet. The rest
  purchased seed from each other or saved it from a
  previous crop.

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Informal private suppliers

• Most (92) located in well integrated villages
• Fast, easy and flexible service
• Access to credit without collateral - rates high
  but no red tape or bribes
• Flexible repayment schedules
• Technical support provided but unethical
  practices common
• Provide access to markets
• Provide services to tenant farmers, marginal
  farmers and farmers (usually lower caste) in
  inaccessible areas

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Output markets

• Most of the trading of major crops (paddy, black
  gram, maize) was outside the formal system 1.6
  sold to govt directly
• 76 of the paddy farmers sold to
  middlemen/traders who offer them more than the
  MSP at certain times of the year
• All but STs seemed to benefit from these
  privatised purchase arrangements. 60 of the STs
  sold produce in village markets locally because
  of the kind of produce (traditional millets) and
  very small surpluses produced

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Advantages of informal private buyers

• Provide transport and other logistical support
• Provide access to credit
• Although this interlocking could in theory result
  in lower prices being paid to the producer, this
  has not been observed in well integrated areas
  where several buyers and suppliers compete

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Input and output markets in remote locations

• Traditional patron-client arrangements or State
  regulated markets are the main sources of inputs
  and points of sale
• These do not work in the interests of small,
  lower caste producers who have little access to
  capital or information and so they sell cheaply
  and buy expensively.
• They are frequently trapped in debt with patrons
  and/or have to pay bribes (30 of the loan) to
  officials for access to credit and marketing
  facilities
• Their vulnerability is compounded by
• natural stresses and shocks drought, pest and
  disease
• unequal access to natural resources groundwater
  depletion

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Does current agricultural policy recognise the
imperfect nature of rural markets?

• Both the National Agricultural Policy (2000) and
  the Tenth Plan (2002-2007) fail to analyse the
  reasons for growing rural inequalities
• Interlocked and segmented markets mean that
  heavily indebted, drought affected, information
  starved and socially excluded farmers and
  labourers may not be able to switch rapidly to
  other options with market changes brought about
  by globalisation or liberalisation

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Impacts in a Chittoor village

• Groundnut farmers
• Groundnut was the cash crop of the poor
• Despite drought and disease, one good crop every
  three years could sustain a household
• Farmers in debt could not withstand price
  decreases brought about by liberalisation of
  edible oils
• In 2001 only 12 of the total area cultivated
  planted with groundnut rest planted with ragi
  and by 2002 land left fallow
• Those who could migrate did, others impoverished

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Impacts in a Chittoor village

• Sericulture
• Important source of supplementary income for rich
  and poor
• Primary occupation for 30 of small and marginal
  farmer households
• All SC households with extra labour in the
  household (including sick and old)
• 17 of the cultivated area was planted with
  mulberry
• By 2002 all mulberry removed and not a cocoon in
  sight.
• Falling prices due to Chinese imports had
  affected several areas along the Karnataka-Andhra
  Pradesh border
• Those who could migrate did so, others slide
  further into poverty

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Implications for Policy

• Need to recognise that small and marginal farmers
  in poorly integrated areas are especially
  vulnerable to falling commodity prices because of
  their inability to switch rapidly to alternatives
• design measures that can protect the livelihoods
  of vulnerable groups but also promote
  agricultural growth
• Liberalise input and output markets and focus on
  making them work for the poor

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Policy (contd)

• Improve access to information too little
  available, inaccessible, privatised
• Liberalise land leasing but taking care to
  discourage reverse leasing
• Introduce standards for private agents quality,
  weights and measures, technical advice
• At the same time continue to empower the rural
  poor to challenge monopoly control and cheating
  capacity building (functional literacy), external
  support

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• THANK YOU