Who Wants To Quit Agriculture And Why?

Farmer in Nalanda District, Bihar. Source: Divya Pandey, IFPRI
Farmer in Nalanda District, Bihar. Source: Divya Pandey, IFPRI

Agriculture the backbone of Indian economy that engages more than 50 percent of the country’s workforce, is losing its preference as the most desired profession. Research shows that more than 40 percent of farmers dislike farming as a profession because of low profits, high risk, and lack of social status, yet they continue with it owing to a lack of opportunities outside agriculture.

A recent study on “Farmers' Preference for Farming: Evidence from a Nationally Representative Farm Survey in India” identifies factors that underlie farmer’s reasons to move out of agriculture.

Farmers who express a preference for moving out of agriculture are mostly those with small landholdings, poor irrigation facilities, fewer productive assets including livestock, and follow a cereal-centric cropping pattern. They also have relatively lower access to credit, insurance, and information, and are weakly integrated with social networks such as self-help groups and farmers’ organizations. Within caste group, the dislike for farming moderates with larger landholdings.

If look in the past, over the year’s Indian agriculture faced the challenge of stagnation in arable land, rise in population with increase in demand, changing consumer preference and growing small land holder with an average size of 0.38 ha. According to the latest decennial population census 2011, for the first time in the last four decades, the absolute number of farmers in India fell by 9 million, from 127 million in 2001 to 119 million in 2011. However, a commensurate decline in the agricultural workforce did not occur. The share of agricultural workforce in the total employment declined extremely slowly from 74 percent in 1972-73 to 60 percent in 1993-94 and further to 52 percent in 2009-10.

The author’s highlights that lack of profitability, high risk, and lack of social status in farming and others in that order are few of reasons for moving out. About 67 percent disliked farming due to low profits, 18 percent due to high risk factors and remaining 15 percent based it on the low social status attached to the profession and other factors. Across the different farm land classes, low profitability remained the prominent denominator but it is relatively more pronounced among smaller farmers. Risk was directly in proportion with landholding sizes.

Study reveals that by comparing the net returns on the farms of potential quitters (those who don’t like farming as a profession) and willing stayers (those who like farming as a profession). It is as high as 25 percent in the medium (2.0-4.0 ha) farm class and 18 percent in small (1.0-2.0 ha) farm class. Importantly, the probability of quitting does not seem to be much influenced by social identity as the proportion of farmers disliking agriculture as a profession is almost similar across social classes.

The authors identifies number of pull and push factors underlying farmers’ decisions on agriculture. Pull factors mostly relate to the income opportunities outside agriculture for eg. access to non-farm business activities, higher education, income from labour/salaried jobs, while push factors are a reflection of the constrained livelihood opportunities in agriculture, forcing farmers to seek avenues outside agriculture for eg. lack of access to irrigation, farm credit, crop insurance, information on crop agronomy and modern technology. On the other way around access to irrigation and diversification of production structure towards high-value crops and livestock production make farming attractive to stay in agriculture.

These findings have two types of implications; one for the farm sector and the other for the nonfarm sector. The results point toward a tendency of possible decline in viability of agriculture as a profession. It was noted that farmers who practice integrated farming can be a signal for a greater policy emphasis for diversification toward these activities. Farmers need an improved availability of finances, inputs, information, and markets to benefit maximum from technological change and diversification. Since risk was identified as important reason for disliking farming, insurance agencies can target efforts to improve their outreach among smallholders.

Authors conclude that to improve viability of small-scale agriculture, investments and prioritization on climate smart agriculture interventions by the policymakers can be an important step towards improving the food security and rural livelihoods in addition to mitigating the climate impacts.

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40 per cent Indian farmers do not prefer farming as profession

Scattering the Crowd: Freeing up Indian Agriculture

Konark Sikka is an intern with IFPRI- South Asia office

Farmer in the field at Nalanda District, Bihar. Source: (Flickr) Divya Pandey, IFPRI
Farmer in the field at Nalanda District, Bihar. Source: (Flickr) Divya Pandey, IFPRI

Smallholders form the core of the agricultural system in India. Yet, they are marginalized and their
problems overlooked. They face rising wages, rural-urban migration as well as growing market and climatic risks. In order to deal with these complex challenges, a “one size fits all” policy may not work.

At the 74th Annual Conference of Indian Society of Agricultural Economics, Dr P K Joshi, Director of the IFPRI South Asia Office, gave a keynote address titled ”Has Indian Agriculture Become Crowded and Risky? Status, Implications and the Way Forward”.

Dr Joshi stressed that the issue is compounded by the growing number of smallholders and their declining areas of operation, which leads to continual shrinking of the size of their landholding. Developing countries, including India, have praised smallholders on their efficiency, promoting them on the belief that “small is beautiful”. Although there is no doubt about their efficiency, there are questions regarding their viability and sustainability due to the steep decline in their holdings without any additional income sources.

Over the past 30 years, the number of smallholders has increased by 70%, with their land share jumping to 45%. However, the total operating area has fallen by 4 million hectares (ha), due to increased urbanization, land degradation and real estate development. Furthermore, smallholders are mostly clustered in areas with high poverty and low urbanization, as well as low scores on other social indicators, such as human development, sanitation and access to toilets. Dr Joshi said that increasing smallholders without appropriate measures would have wide socio-economic and political implications.

The crowding of smallholders not only leads to the overuse of natural resources and over-use of chemical fertilizers, but also leads to a rapid degradation of land and water resources. Dr Joshi indicated that,  despite the developments in the markets and value chains in India, smallholders remain at risk because they are left behind due to their lower marketable surplus than large farmers, lower bargaining power, higher transaction costs, greater price volatility and underdeveloped markets in smallholder-dominated areas. Moreover, Dr Joshi said, they are uninformed about markets and financial institutions.

In the public extension system, around 72% of farmers, especially smallholders, are untouched by any source of information delivery system. Those with more access to information sources had more land ownership and irrigated areas. Further adding to the stress is the risk of climate uncertainty. In the past, Dr Joshi said that there had been major risks of drought and flood episodes in South Asia due to climate change, coupled with water shortages and outbreak of water- and mosquito-borne diseases. Such events would cut down productivity and increase prices for staple foods, furthering the burden on smallholders.

Looking at the states of Bihar and Odisha with high concentrations of smallholders (97% and 83%, respectively), they have weak institutions and infrastructure, complex social stratification as well as climate and pest risks, all of which lead to low productivity. Other bottlenecks such as a weak market and credit system, lack of implementation of the Model Market Act as well as a lack of electrification further pull agricultural growth backward, Dr Joshi commented.

On the other hand, diversification toward high-value agriculture as well as several public and private sector initiatives have increased the participation of a large number of smallholders in modern value chains of milk, fruits and vegetables, thus raising their income. Smallholders can benefit with initiatives to bridge yield gaps, promote high-value agriculture, strengthen agro-processing, and create enabling institutions. However, Dr Joshi added, creating job opportunities outside agriculture for smallholders is the ultimate solution to improving their livelihoods.

In his presentation, Dr Joshi highlighted several policy-based ways forward:

1. Land & Labour Reforms: A new land ceiling law for a minimum size of landholding should be implemented in order to prevent further lowering of holding size and fragmenting of landholdings. Labour laws need to be reformed so that industrial and service sectors can absorb surplus manpower from the agricultural sector.

2. Market Reform: Developing markets in areas with more concentrated smallholders would be beneficial, as would adopting a cluster approach while developing markets. Creating institutions, such as contract farming and cooperatives—which link smallholders with markets as well as minimize risk in marketing of agricultural commodities—would help as well.

3. Reform Agricultural Extension System: There is a need for a new cadre of agri-business professionals who should be mandated to develop business plans for farmer groups and link them with service and tech providers as well as markets, especially in smallholder-dominated areas.

4. Minimize Risk: The government should evolve policies and institutions to promote climate-smart agriculture, agricultural insurance and strengthen weather advisory services in order to deal with the risks that climate change portends.

5. Innovations toward pro-smallholders: There needs to be a pro-smallholder thrust in any new agricultural research agenda set out by the national agricultural research system. The time is also right for convergent innovations, related to social mobility, technologies, financing and marketing and processing and retailing

6. Non-Farm Employment Opportunities: Industry and manufacturing needs to be strengthened so that smallholders have means of alternative employment, which allows for poverty reduction.

 

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