Small and Marginal Land Holdings — Farmer Challenges
From a very long time, we have been taking measures that improve GDP growth outside agriculture sector in India. But the truth is GDP growth originating in agriculture is at least twice as effective as GDP growth originating outside agriculture, in reducing poverty.
Small and marginal holdings agriculture is important for raising agriculture growth, food security and to improve the economy in India. These holdings contribute to 80% of Indian agriculture. In direct words, the future of sustainable agriculture growth and food security of the nation depends on the performance of these small and marginal farmers.
In the year 2000–01, the Agriculture Census data showed that 121 million agricultural holdings exist in India. In these, around 99 million holdings were small and marginal.
The average size of land holding has decreased from 2.3 hectares in 1970–71 to 1.37 hectares in 2000–01. There are significant land inequalities in India. The objective of this article is to examine the role and challenges of small holding agriculture in achieving agricultural growth, food security and livelihoods in India. This article also explains that market reforms are not sufficient for the small land holdings to face the above challenges and government intervention is needed. Support is needed for small and marginal farmers who face several challenges even in access to inputs and marketing. They are usually dependent on other large farms to access land, water, inputs, credit, technology and markets. They find adapting to climatic changes difficult and face challenges on liberalization effects, globalization effects, integration of value chains, market volatility and other risks.
A major paradox in Indian economy is that, the decline in the share of agricultural workers in total number of workers has been slower than the decline in the share of agriculture in the total GDP. The share of agriculture in the GDP declined from 57.7% in 1950–51 to 15.7% in 2008–09 whereas the share of agriculture in total workers declined from 75.9% in 1961 to 56.4% in 2004–05. That means in a tenure between 1961 and 2005, there was a decrease of 34% points in the share of agriculture in GDP and the decrease in the share of employment was low i.e. 19.5% points.This resulted in an increase of gap between labor productivity in agriculture and non agriculture. After Independence, the crop output growth of around 2.57% per annum was much higher than the negligible growth rate of around 0.4% per annum before independence.
As a result, India achieved significant gains in food grains and non-food grain crops. The highest growth rate of GDP from agriculture of 3.9% per annum was recorded in between 1992–93 and 1996–97. In case of decade wise averages, 1980s recorded highest growth rate of more than 3% per annum. This percentage however declined to 2.765 per annum in the post reform period. It is disquieting to state that during the tenure from 1997 to 2005, agriculture growth was only 1.6% per annum. It again recorded a growth of 3.5% per annum during 2004–05 to 2010–11. The 12th five year plan, 2004–05 to 2010–11 aimed to achieve 4% growth in Indian agriculture. By all the above numbers, we can surely say that significant fluctuation in growth of agriculture is a matter of concern for India.
Intensive cultivation has characterized Indian agriculture after the green revolution period whereas extensive cultivation during the pre 1965 era. the use of modern inputs in India has been significant in Indian agriculture. The percentage of net irrigated area to net cultivated area has increased from 17 to 41 and the fertilizer consumption showed a rise from less than 1 kg per hectare to 90 kg per hectare, during the period 1950–51 to 2003–04.
The percentage of area under high yielding varieties to cereals cropped area rose from 15 in 1970–1 to 75 in 1990s. The share of agriculture in electricity consumption has also increased from 4 per cent in 1950–1 to nearly 30 per cent in recent years. These stats show a significant increase in agricultural output over time.
GDP from Agriculture in India decreased to 3245.21 INR billion in the third quarter of the year 2017 from 3897.32 INR billion in the second quarter of the same year. GDP from agriculture averaged 3949.63 INR billion from 2011 until 2017.
Structure of land holdings
The Agricultural Census 2000–01 stated that there are 98 million small and marginal land holdings out of the total 120 million land households in the country. The share of both small and marginal land holdings recorded 81% of operational holdings in 2002–03 where as 62% in 1960–61. Also, the area operated by small and marginal farmers has increased from 19% to 44% in the same period. Stats for 2005–06 show that small and marginal farmer share in land holding was 83% which clears the fact that the small holding character of agriculture in India is prominent than ever.
The average size of land holdings in India declined from 2.3 hectares in 1970–71 to 1.33 hectares in 2000–01. 63% of land holdings belong to marginal farmers with less than 1 hectare land i.e 2.5 acres. The average size of marginal holdings in an all India level is just 0.24 hectares and that of small holdings is 1.42 hectares. The average size of marginal holdings varies from 0.14 hectare in Kerala to 0.63 hectare in Punjab.
Irrigation Access
The access to irrigation has increased for some categories of farmers. But for some marginal farmers, it is still a very serious problem. The percentage of area under irrigation for large farmers rose from 16% to 31% during 1980–81 to 2000–01. On the other hand, for small farmers it rose from 40 to 51% during the same period. This is because the large farmers often capitalize on canals as they are cheaper sources while small and marginal farmers rent water for farming. Almost 40% of the irrigated land of large farmers was from canals while it is less than 25% in case of marginal and small farmers.
Fertilizer Access
The fertilizer needed per hectare is related inversely to the size of farm for both non irrigated and irrigated areas. It increased from marginal farmers in irrigated areas from 100 kilograms to 252 kilograms in between 1980 and 2002. The per hectare fertilizer consumption for all farm sizes was similar on irrigated areas in 1981–82 and a fast rise for marginal and small farmers was seen in 2001–02. The same is the case of non irrigated lands also.
HYV area
The percentage of area under high yielding varieties is also inversely related to the size of the farm. In irrigated areas, the area coverage under High Yielding Varieties was 78%, 86% and 89% respectively in large, small and marginal farmers in 2001–02. In case of farms that are not irrigated, the coverage was above 50% for small and marginal farmers whereas for large farmers it was 30%.
Cropping Intensity
Multiple cropping index is higher for small and marginal farmers when compared to large farmers as they cannot stay dependent on a single crop in fear of losses. The cropping intensity for marginal farmers increased from 134 in 1981–82 to 139 in 2001–02. Whereas in case of a large farmer, the number rose from 116 to 121. The differences across the farm size always persisted in India and farmers also prefer crop rotation and mixed cropping.
Cropping Patterns
There has been a misconception that small and marginal farmers cannot grow high value crops. But some reports suggest otherwise. Studies provide conclusions that small and marginal farmers allocate larger proportion of their cultivated land to high value crops like fruits, and vegetables. They seem to have a comparative advantage in growing vegetables than fruits knowing the fact that vegetables provide quick returns. Also, small and marginal farmers allocate lower proportion of land to pulses and oil seeds and higher proportion of land to rice and wheat when compared to other farmers.
Productivity
A study states that small and marginal farmers possessed 46.1 % land but they contributed 51.2% to the total output at all India level in the year 2002–03. This proves that the output contribution is higher for small and marginal farmers when compared to their share in area.
Regional variations can also be seen in the output. For example the contribution of marginal and small farmers to output ranges from 86% in West Bengal to 19% in Punjab. The share of both area and output are high for farmers in the eastern states. Whereas medium and large farmers dominate in area and output in Central, Western and North-Western regions. If we have a look at the terms of production, marginal and small farmers make larger contribution to the production of high value crops which is near to 70% to the total vegetable production, and 55% to fruits against their share of 44% in land area. In case of cereal production, it is 52% and in milk production, it’s 69%.
So we can easily derive that small and marginal farmers contribute to both diversification and food security excluding the cases of pulses and oil seeds. Several discussions have been conducted in India based on the relationship between farm size and productivity. Results of NSS Farmers’ survey state small farmers produce more in value terms per hectare than large and medium farmers. According to this report, the value of output per hectare was Rs.8783 for large farmers, Rs. 710655 for medium farmers, Rs.13001 for small farmers and Rs.14754 for marginal farmers. This again proves that, small holdings are equal or better than large holdings in efficiency point of view.
As stated earlier, large regional variations can be seen in the value of output per hectare. It is around Rs.7177 in Rajasthan and Rs.29448 in Punjab for marginal farmers. In case of medium and large farmers, it ranges from Rs.4213 in Rajasthan and Rs.28983 in Punjab. This is to be noted that small land holdings have greater value of output per hectare than large farms in some states. But it is the opposite in states like Tamil Nadu, Himachal Pradesh, Uttar Pradesh, Madhya Pradesh, and Kerala. The large farms have greater productivity in value terms, than marginal farmers in these states. Only the state Punjab, the difference is not major across land holdings.
In an agriculture country like India, there are plenty of challenges and hardships for small and marginal farmers. The NSS 2003 Farmers’ survey brought into light many issues that small and marginal farmers face. Some of them are -
- Smaller value realizations due to imperfect market for inputs/produce
- Sub optimal input decisions due to low access to credit markets or imperfect credit markets
- Lack of proper human resources
- Low access to proper and suitable extension services restricting apt decisions regarding technology and innovative cultivation practices
- Low access to public irrigation, electricity grids, command area development and information regarding contingency situations and consequences of poor quality land and water management.
While these sum up as the main problems for small and marginal farmers there are also several other problems that are being faced.
Water Problems
As we know, water is the most important input in agriculture. In order to raise the living quality in rural areas, Irrigation and water management needs to be developed. As we have mentioned above, large farmers have access to canal water for irrigation purposes. But small and marginal farmers mostly depend on ground water and are going to face more problems regarding water in future.
Credit and Indebtedness
Credit is needed by small holdings for both consumption and investment purposes. The problem with indebtedness is, it keeps on increasing for small farmers with time. Some farmers also define indebtedness as a never ending problem that leads to the declination of farmers. In case of informal institution sources, the indebtedness for the small & marginal farmers is lower than large farmers. It is vice versa in case of informal sources.
Marginal farmers depend a lot on money lenders and the share of formal source increases only with the increase of land size. In India, the share of formal source varies from 65%-68% for medium to large farmers and 22.6%-58% for small and marginal farmers. In states like Tamil Nadu, Punjab and Andhra Pradesh, the dependency of small and marginal farmers on informal sources is higher. In Andhra Pradesh, the dependency on loans from informal sources is as high as 73% to 83% and the financial inclusion is very low in the state. The NSS data shows that the indebtedness through formal sources is lower for scheduled tribes as compared to others across social groups.
Land Issues
Land relations are complicated and this complexity has contributed significantly to the problems being faced by actual cultivators. There are also arguments that relatively successful implementation of even a modest package of land reforms can surely improve the prospect of the poor. Small and marginal farmers cultivate their own land but it is a limiting factor for getting resources. So tenancy security should be brought into action so that tribal cultivators, tenants and unregistered cultivators do not face any difficulty in accessing institutional credit and facilities available to farmers with land titles. Some more important tasks are, to record and register actual cultivators including women cultivators and tenants, providing passbooks to them, and to ensure that they gain access to institutional credit and other inputs.
The lease market has not proved to be effective and secure in regard to the farmers. A different form of security reforms need to come into action, that will ensure availability of land for cultivation on marginal and small farmers. There is considerable scope in future for further land redistribution, particularly when waste and cultivable lands are taken into consideration. Inputs required for initial land development and credit should be provided to every farmer. Assistance needs to be provided to small farmers to buy land through the provision of institutional credit, at a low rate of interest, on a long term basis and by reducing stamp duty.
At the other hand, they should be enabled to increase their operational holdings by liberalizing the land lease market. In such a reform, the two most important elements are, the right of the land owner to resume land ownership once the period of contract is over, and the security for tenants during the contract period. On an overall note, we need to ensure land leasing, create conditions including credit, where small can seek land from farmers who have an agricultural land but prefer other professions to farming.
Climatic Changes
Climate changes have been a major challenge for food security, agriculture and livelihoods for millions of people including rural farmers and poor people in India. People like farmers, fishers and forest-dependent people who are vulnerable and face food insecurity, are expected to face adverse impact on their living conditions. Rural communities who live in fragile environments, face an immediate and ever-growing risk of loss of livestock, increased crop failure and reduced availability of aquaculture, marine and forest products.
They would have adverse effects on livelihoods of small farmers and food security in particular. There is a significant potential for small farmers to isolate soil carbon if exact policy reforms are implemented. Research and practice state that collective action institutions are very vital for technology transfer in agriculture and natural resource management among resource dependent communities and small land holders.
Globalization challenges
Globalization has increased in the recent times giving rise to a lot of problems for small and marginal farmers. The policies of protection policies and huge subsidies by developed countries have negative effects on small holding farmers in developing countries like India. Globalization may become advantageous for large farms if support is not given to small farms. There has been negative impact of trade liberalization on the agricultural economy of the regions growing cotton and oil seeds in which foreign trade is important.
Due to liberalization, the issue of efficiency has become highly relevant as domestic production is forced to compete with products of other developed countries. Domestic prices of many agricultural commodities have turned higher than international prices in the recent years. India is not able to check import of a large number of commodities even at high tariff. This is true in case of import from developed countries (agriculture is highly subsidized) and also in case of products from developing countries.
Severe import competition is faced by India in case of items like spices from Vietnam, China and Indonesia, tea from Sri Lanka, rice from Thailand and Vietnam, and palm oil from Malaysia and Indonesia. India needs to reduce various post harvest costs and undertake suitable reforms to improve efficiency of domestic markets and delivery systems, to compete in the global market. The single most adverse effect for farmers has been the combination of low prices and increasing output volatility for cash crops. The effect of volatile international prices on domestic agriculture should be checked by aligning tariffs with the changing price situation.
Social Groups
When compared with medium and large farmers, the proportion of scheduled castes and scheduled tribes is higher among small and marginal farmers. 22% of semi marginal and marginal farmers belong to the scheduled caste group and the number is around 7.8% in medium and large farmers. Scheduled castes have more than half of their holdings with size less than half a hectare. In a similar fashion, 15.6% of small farmers belong belong to scheduled tribes compared to 14.9% among medium and large farmers.
Some facts prove that the quality of lands belonging to scheduled tribes are of the lowest quality. Social identity of farmers is also seen to mediate access to economic resources and outcomes. Marketing, access to information, credit and publicly provided inputs, and extension services are lower even after accounting for quality and quantity of land owned by socially deprived classes. This information makes us think about the suffering from discrimination in the delivery of public services as well as market.
Low Level Education
In order to improve investment, productivity and farming practices, modern technology based machinery, education and skills are very important. Studies state that literacy and mean years of education are lower for small holding farmers compared to medium and large farmers. According to the study, in case of marginal farmers, literacy among males and females were 62.5% and 31.2% while the same for medium and large farmers were 72.9% and 39%.
The mean years of education for males among marginal farmers was 3.9 as compared to 5.3 for medium and large farmers. Low level of education for farmers limits the public dissemination of information and knowledge. Surveys clearly state that awareness about bio-fertilizers and minimum support prices is somewhere associated with education levels which are lower for marginal and small farmers.
Diversification
A lot of diversification can be seen in Indian diets that vary from food grains to high value products like milk products, vegetables, fruits and meat products. The increasing middle class due to increasing per-capita income, rapid urbanization, increased women participation in urban jobs and globalization impact, has been largely responsible for the diversification of diet in the nation. High value products have caught the eye of the expanding middle class for which the growing demand for high value processed products is a clear cut proof. There is growing demand for non-food grain items in India and the expenditure elasticity for non-cereal food items is quite high.It is thrice as high when compared to cereals in the rural areas and over ten times as high in urban areas.
Per capita consumption of vegetables and fruits have shown the highest growth followed by edible oils. One of the important sources for raising agricultural growth is diversification to high value crops and allied activities. Marketing and necessary support in infrastructure is needed since risk is high for diversification. Price policy should also encourage diversification. Small and marginal farmers can get higher incomes with diversification. But, there are risks in shifting to diversification as the support systems are more for food grains. These support systems for diversification need to help the small holder farmers in order to improve the agriculture economy of the nation.
Women Role
The significance of women in agriculture has been increasing. In rural areas, the share of females in agriculture was around 83% in 2004–05 as compared to 67% among rural men. This shows the importance of women in rural agriculture. In 2004–05, percentage of women among marginal farmers was 38.7% whereas in case of large farmers, it was 34.5%. As these proportions have increased over time and men migrate to rural non-farm sector, agriculture is becoming increasingly feminized.
Women usually work in seed selection and seed production, applying manure, fertilizer and pesticides, land preparation, sowing, threshing, transplanting, winnowing, weeding, harvesting, fish processing, back yard poultry, collection of fuel wood, fodder and other products for family needs, animal husbandry, dairying, and in collection of non timber forest produces etc.
Women are continually denied their property rights and access to other productive resources despite their importance and involvement in agriculture. Enhancing infrastructure support to women farmers, protecting women’s rights in land,and giving legal support on existing laws, will facilitate recognition for women as farmers and enable them to access credit, inputs, and marketing outlets.
Risks
Enough evidences are present to suggest that the small and marginal farmers often face poverty and are vulnerable to a range of risks affecting individuals, communities and households. These risks can have a devastating affect on their well being and livelihoods. Some of the risks faced by small and marginal farmers are -
- Health Hazards: illness, injury, accidents, disability
- Labor Market Risk: High risk of unemployment and underemployment is noticed as many work in informal sector
- Risks related to harvest, life cycle, and social groups.
- Community risks: Droughts, floods, structural adjustment policies and cyclones etc.
Small and marginal farmers are vulnerable to all these risks. Some households follow some coping mechanisms like spending from savings, borrowing, sale of assets, expanded labor supply, bonded labor, child labor, reducing consumption, assistance from relatives and govt, migration etc.
Social protection programs are required to curb the negative effects of risks and vulnerabilities. Major schemes in India launched for the poor and needy fall into 4 broad categories.
- Food transfer like public distribution system (PDS) and supplementary nutrition
- Self employment
- Wage employment
- Social security programs for unorganized workers
The effectiveness of these programs have to be improved so that small and marginal farmers can also benefit from them. Crop insurance program and agriculture marketing have to be strengthened to reduce risks in price and yields.
If well planned and executed, every scheme launched by the government of India can be expected to reach the small and marginal farmers of the nation. We need to provide much more inputs for the small and marginal farmers in rural areas and help them get over the line of poverty and hardships. There are a lot of opportunities to build and lessons to learn from.
India’s green revolution which started in the mid-1960s indicated a new era in Indian agriculture. The cultivation of high yielding varieties of seeds at recommended dosages of fertilizers were encouraged in water assured areas. Initially, the medium and large farmers in irrigated areas benefited from the new technology. However, small holding agriculture also benefited from green revolution because of government support in accessing services. These kind of access to government services and symmetry in information can lead to prosperity of small and marginal farmers.
During 2006–08, there was a significant increase in food prices of rice and wheat globally. In India, the food grain prices increased around 10% as compared to global food price with an increase of 80–90%. Food grain management is partly responsible for insulation from the rise of global food grain prices. Small and marginal farmers benefited from the policy and such policies can also contribute to farmer betterment.
The government on its part needs to aggressively pursue innovative agriculture development programs by liberalizing markets, inviting private capital, reinventing agricultural extension, improving roads and other infrastructure. Institutional innovations in input services, land water management and output marketing for marginal and small farmers need to brought into practice. The government also needs to improve and take actions that support agricultural transformation, education, infrastructure, macro policies, doing business, equitable asset distribution and, rural non-farm sector development. Rural infrastructure will also enable small and marginal farmers to compete with other farmers in India as well as in other countries.
As we mentioned at the start of this article, small and marginal holdings agriculture is important for raising agriculture growth, food security and to improve the economy in India. These holdings contribute to 80% of Indian agriculture. In direct words, the future of sustainable agriculture growth and food security of the nation depends on the performance of these small and marginal farmers.
Originally published at blog.farmguide.in on December 28, 2017.
