Size-class and returns to cultivation in India

'Size-class and returns to cultivation in India: a cold case reopened' is the title of a recent working paper from IGIDR that Sarthak Gaurav and I have co-authored. This revives the age-old debate on farm size and productivity that started in the early sixties  by Amartya Sen. Some excerpts from the abstract, introduction and conclusions of the working paper are given below. An abstract of its revised version published in Oxford Development Studies is also given below.

Abstract

This paper investigates the relationship between returns to cultivation per hectare and size-class of land cultivated in India, using unit level data from the 59th round National Sample Survey, 2003. The analysis is done separately for ‘kharif’ and ‘rabi’ − for total value of cultivation from all crops at the all India level. The empirical evidence rejects the null hypothesis of no relationship and points to the existence of an inverse association. We argue that the efficiency of the small-holders has to be taken with a pinch of salt because their low absolute returns brings into focus the question of their livelihood sustainability which is further aggravated on account of higher unit costs. Being the first exercise in a series of proposed explorations into disaggregated analyses across states, and for specific crops, it opens up the classic debate on farm size and productivity in the 21st century.

Introduction

In recent years, Indian agriculture has been reeling under a crisis and one of the concomitant outcomes is poor returns to cultivation which has rendered farming as an unsustainable livelihood option – particularly for the marginal and small holders.2 This also raises the long debated question of inverse relationship between size-class and productivity, that is, whether marginal and small farmers are relatively efficient vis-à-vis larger size-class farmers? The current paper explores this aspect of Indian agriculture using unit level data from the Situation Assessment Survey of Farmers, administered in the 59th round of the National Sample Survey (NSS).This survey was conducted during 2003 and collected information for the agricultural year 2002-03.This is the latest (and the largest) nationally representative data set for analyzing the state of farming in India. By conducting the analysis at the unit level, to the best of our knowledge, we provide the first baseline for the 21st century. An attempt has been made to assesses the relationship between size-class and returns to cultivation; and in doing so, it expects to contribute and open-up the long drawn out, and till recently dormant debate.

...

Conclusions

An analysis of size-class and returns to cultivation using nationally representative data from the Situation Assessment Survey of Farmers (SAS) of the 59th Round of the National Sample Survey, for the period 2002-03 opens up the classic debate on the efficiency of the small holder. Our empirical results, computed separately for kharif and rabi, at an aggregate all India level as also for each size-class reject the null of absence of any relationship between size-class and productivity and indicate the existence of an inverse relationship. While the small holder seems efficient the low absolute returns raises questions on livelihood sustainability. This is also important from the perspective of the risk bearing capacity of the small-holders given the fact of their per hectare costs being higher.

To the best of our knowledge, these are the first estimates for the 21st century and at the pan-Indian level; and could be used as a baseline for comparative analyses in the future. Our empirical evidence can be considered as an important contribution to the literature on size-class and productivity relationship. While opening up this cold case we are aware that one needs to go down to further details and control for other factors that may affect returns to cultivation. It would be equally important to analyse the variation across states, social groups as also the crop-specific patterns. We plan to do some of these in a series of future exercises.

In spite of the limitations of our study, it is a first attempt at a fundamental problem in Indian agricultural using a nationally representative sample. Given the relevance of our findings in corroborating the story of a crisis in Indian agriculture on one hand, and with the promise to reopen the classic debate on farm size and productivity on the other, we argue for the need for further inquiries, and if feasible, a future round of the SAS as it is almost a decade since the first (and only) survey.

Those interested in the full paper can click, 'Size-class and returns to cultivation in India: a cold case reopened'.

A revised version of the paper is now available as 'Farm size and returns to cultivation in India: revisiting an old debate' Oxford Development Studies, Published online 21 Nov 2014.

The abstract of the revised version is as follows. This paper revisits the long-debated question of the relationship between farm size and productivity by studying the relationship between area cultivated and net returns to cultivation in India using a nationally representative data-set. The analysis is carried out separately for the two major agricultural seasons, kharif and rabi, and for both the seasons pooled together. Our findings suggest the existence of an inverse relationship, even when we control for a number of household and farm characteristics and even when we treat factors such as household type (occupation), social group (caste), agro-climatic zone (region) and agricultural season as fixed effects. The result is also robust to correction for selection bias. However, the efficiency of the smallholder as a result of this greater productivity has to be treated with some caution as it ignores the low absolute levels of their returns, which raise questions about the sustainability of their livelihoods. This is further aggravated by the fact that they pay relatively higher unit costs and because of their greater dependence on purchased inputs.

May 2010: From Goa to North-east and back in Mumbai

This has been a fascinating summer for me. Travelled from Goa to the East/North-east and then back to amchi Mumbai. This sojourn, including Mumbai, spread across 10 states, was enlightening and here I recall a few selective encounters.

The trip to Goa (3-8 May) was a long due vacation. The initial plan was a trip to Himachal Pradesh with a few school friends...but it fizzled out in the last moment when we finally decided, on Munna's suggestion,to try out Club Mahindra, Varca beach, Goa. Neri, Nandini and I had a whale of time. In their words - I was without work after ages and 24 hours with them. The visit to temples and churches left us in awe. Honestly, we did not feel the pinch of summer.

Neri's exitement continued as we left for Hyderabad (my in-laws place), where Neri and Nandu stayed for the rest of the month. Summer was at its peak but nothing better than 'Mother's hearth' or 'Tatta and Ammu'. After a couple of days, I returned to Mumbai for the Task Force work. The days were spent working at the National Bank for Agriculture and Rural Development (NABARD) office and, post-dinner, Sarthak, a research scholar working for his PhD, and I tried to sort out some data issues with the 59th round National Sample Survey (NSS) on Situation Assessment of Farmers.

While in Goa, I received the news of my 'sana' mamu's death (my mother's younger of the two elder brothers). I decided to leave for Orissa to be ther on the tenth day. I also was keen to visit two of my teachers' families in Cuttack (one from school and the other one who had unfortunately passed away at a relatively younger age a couple of months earleir (see, Sakti Padhi Sir...). Finally I left for Kolkata and was lucky to get a train to Anugul (a special train that goes once a week).

In Kolkata, a comfortable way to reach Howrah is the Volvo bus - cheap (Rs.40 per person), air conditioned and fast. On the bus met an Odia family traveling from Arunachal Pradesh; offered an old lady my seat. They were all complaining about others not helping and soon managed to get a seat for themselves and created a world for themselves oblivious of others in the bus. En route, we crossed Badabazar (Baraabazzar in Bengali) where one could see banners and posters (surprisingly, all in Hindi!)for the local body election, which was subsequently won by Mamtadi's Trinamool. I was later told by a friend that this was always a Hindi speaking area.

This was my first visit to Anugul station, my mother's natal place and my own birth place. The situation was sombre, but nostalgic. I met many of my cousins and their children, after years, bringing back memories of childhood and the memorable hailstorms... As I sat with my aunt 'maain', ice pieces came and hit her; a sentimental thought occurred as if sana mamun was trying to tell us that he was very much with us all. I observed, there were some positive changes in the society. A decade ago, in case they lost their husbands, women were expected to wear white clothes; now - this had changed. Sana maain and some others present on the 10th day wore off-white sarees even with some light prints. Certainly a much needed, positive social change in that society.

The next day I was at Cuttack and went to Prof Sakti Padhi's house. I could not meet Sadhna Nani as she was with her son in Trivandrum but I spent some time at their place with her mother. From there I went to meet my school teacher Mr Jayace Nayak who taught us Geography and Economics. I met him after 25 years. It was a nice feeling. He was happy too and requested everyone from school to drop by his and other teachers' places whenever they could. There is an independent discussion on Mr Nayak at the Stewart School, Bhubaneswar facebook group. The most memorable thing at his place is about his daughter who is doing her 12th and planning to do her medicine and then serve the vulnerable poor in remote parts of the country, a noble thought indeed. The society needs more like you.

The day after, I was in Bhubaneswar at home for a few hours and left for Delhi for the Task Force meeting. The next day evening I was back in Kolkata to start my North-east trip for the Task Force.

After an overnight stay in Kolkata, I was in Agartala, Tripura the next day. Pre-paid phones do not work in the North-East, but anyway, the nation's security concerns precedes mine. The most impressive part of Tripura that I heard was that their Chief Minister was taking interest in people related issues and would be initiating camps in each and every block of the state to identify all farmers (including tenants) and try to get them into the formal credit fold before end June.

The next stop was Gwahati, Assam on the banks of Brahmaputra, the only male river. The sunrise at four was the highlight. With such an early sunrise I was surprised that the meeting was at 11, as in Mumbai. This was a blessing as I could use the morning to go to a village Dharapr nearby and visit some farmers who cultivate in 'shar' land (islands within Brahmaputra). SThe meeting later in the day was fruitful and then after a late luch suddenly decided to visit the Kamakshi temple, which was not in my itinerary. The visit was smooth and there was no queue but immediately formed within minutes. As they say, some things are destined to happen.

Dimapur, Nagaland was my next visit. The advisory here was not to venture out in the evening and if one is traveling then the best place to stay overnight is the church. I did go to a village Dhanasripar that was close by where I also met a landless household. The village comprises of Kacheri farmers (one of the 12 tribes who can own land in Nagaland) who also reside in Assam; in fact, the bordering village in Assam is called Dhanasri. Penetration of formal banking is low but many farmers have savings account in the bank branch in Assam, but they cannot get agricultural credit. Nagaland is also known for the hottest chilli and this is being used to produce pickle and self-defence spray. One is told that the preferred lingua franca is English, but when I asked the villager they preferred Hindi.

From Nagaland I went back via Gwahati to Shillong, Meghalaya. In the initial part of travel from Gwahati (till about the 17th mile) one has Assam on the left and Meghalaya on the right. On this stretch all petrol pumps and liquor shops are on the Meghalaya side - the reason is that taxes are lower. I had thought that I would stop by on the road if I see some farmers in their land, but was warned that the day being a Sunday, I would not be successful and it was true.

The next day morning I visited three villages- Lad Mawreng, Lait Bynter and Mylliem, all in East Khasi. Land rights here are matrilineal, but I did meet some without land. This could be because they or their mothers had sold out theirs due to some exigencies or as per tradition among Khasis a major portion and in some cases the entire land right passed only to the youngest daugther . Further, each village is identified by a particular tribe and they do give some land from the general pool to the landless for cultivation, but this is given to those from their own tribe and village. Like Nagaland, outsiders cannot buy land here, but what is most important is that the owners also have rights over natural resources. Thus, mining is a lucrating option where the owners of land get a regular source of income. One wonders, why could this could not be used in central India. Of course, aalong with some rights for the landless also.

With my visit over, I return via Gwahati and Kolkata to Hyderabad. Complete some Task Force work and meet some functionaries of the Society for Elimination of Rural Poverty (SERP) before getting back to Mumbai where I have my hands full till end June.