Risks in dry land agriculture: A note from AP

E Revathi, Centre for economic and social studies.

Actually this note flows from our field study and in that sense limited in scope more based in the field and the larger study that we have done on agrarian distress and farmer suicides in Andhra Pradesh.  First I would like to give a background of the dry lands and then come to the findings and risk analysis that has flown from our own study in  four districts.  

In 1972 the Irrigation Commission of India identified, as drought prone, districts with normal annual rainfall of equal to or less than 750 mm and experiencing at least 25% deficiency in at least 20 observed years. From these identified districts, those districts having net irrigation intensity of  more than 30% had been excluded.
Subsequent modifications have identified 11 districts in AP as drought prone and one as desert prone that is Anantpur.  The 11 districts that are classified as drought prone are mostly six districts that fall in the region of Telangana and three districts from Rayalseema and one from the North coast and one from the South coast.

AP can be divided in a two way classification.  One is the ?Trige region and the other is five agro climatic zones of North coast, South coast, North Telangana, South Telangana and Rayalseema.  We know that there is a growing disjunction in water resources. Over a period of time there has been neglect of surface water, that is tank irrigation . There is a growing reliance on well irrigation in all these dry areas, which has placed a lot of stress on Simultaneously, sand mining from the river beds is taking place. These one are all human interventions which has made the incidence of drought severe.  Along with this, the nature of farming system in dry land has also undergone transformation which is very well known to all of us.  In one way, small and marginal farmers are trying to improve productivity - by trying to catch up with the market model that is there in front of them by switching to high value and high yielding and hybrid commercial crops --  where it’s reflecting their change in aspirations and upward mobility.  One can see this very clearly and on the other side there is no corresponding improvement in institutional support.

In one way, the outcome of the kind of interaction between the natural and and human interventions and the increased aspirations and the dominant model,  farmers are exposed to high risk in normal season and compounded risk during drought years.  And of course the nature of risk is related to the high cost of accessing the ground water. This is compounded by lack of adequate recharge of ground water, and so the externalities of ground water usage are high, leading to some kind of collective irrationality.  Further the  the social cost of drought  is heavy and is increasing, and a substantial part of these costs are being borne by the small and marginal farming community.  

Now having said this, I think the method of organization of agriculture has also changed drastically. There are more risks that are encountered and which leads to non viability of agriculture, more stress and more suicides. We all know  that besides the weather risks, there are are the natural catastrophies. There are production risks, price risks, credit risks, technology and knowledge risks, institutional risks etc. There are imperfect markets and  the more the backward region is, the higher the price risks. The prices tend to be more variable in poorer areas. The price sways are high due to limited market access and greater cost of market intermediation. Further there are commodity price shocks. These are more in certain crops like chilly and cotton where there is an incorrect estimation of trend in prices leading to an over investment. There is always a discrepancy between the expected price and the actual price.   

Further from namely the NSS report, we find agricultural extension services provide only 9% of farmers’ information whereas most of the farmers’ information comes from either input dealers or other progressive farmers.  This therefore does not favour any change in cropping pattern.   In the risk analysis that we have done relating to the suicide case, based on the the perception of the farmers and  the surviving members of the farmer households,  we have classified all the risk they have listed , into the covariant risk and idiosyncratic risk, where covariant risk included the natural disaster risk and the output related risk and idiosyncratic as input related and human capital risk and violence related and psychological risk.

Input related we have classified it as idiosyncratic because it’s the access to all the inputs and it varies across the class of farmers like credit, irrigation, seed, pesticide and the analysis shows that the idiosyncratic risks are the highest of all risk for suicide cases.  Again from this, the input related risk is high and uniform across all districts, class of farmers and social category also. Among the covariant risks natural disaster risks are at the highest and among the production risk that is the input and output risk, output risk is the least.

In the non production risk, the psychological risk is the most frequent where non production risks are like human capital.  Human capital risk is basically towards health, education and not even having basic needs like food and all.  And the violence risk is also high like family disputes, death, alcoholism and most often the psychological risk, the pressure for repayment that is also even very high.  

So in this case regarding the policy analysis, this analysis throws up that it is mostly individual kind of policy implications that it has.  However when the desegregation is done between the class and category of farmers, it was found that pest risk is high where there is a mono cropping where high percentage of net sown area is under non food crop which is the most case in the three districts Anantpur, Warangal, Guntur. Non remunerative price that the output risk is high again where the high percentage of net sown area is under non food crop where as I have said earlier there is a high variation between the expected and actual price.

In all the four districts the credit leading to debt that is what the credit they take eventually leads to debt burden is very high.  This is because there is high dependence on informal sources of credit which also has a link to the psychological pressures that they have to repay, abuse and form of insult and all that which eventually lead to suicide.  

The risk of bore well failure (for the ground water irrigation) is high, in all the three districts Warangal, Mahabubnagar, Anantpur.  The risk of spurious seed is also high where it reflects the non regulatory nature of the market, especially in case of Warangal.

So, I think this kind of analysis says that covariant risk is more in case of Mahabubnagar district. This throws open that idiosyncratic risks have larger role in suicides. However what comes out significantly from regression analysis shows that the input related risks and domestic violence related risk are significant and more so in the social category of farmers.  A scheduled tribe farmers maybe due to their non integration into the input markets it has not come out, it is kind of negatively related.  And in the case of scheduled caste farmers maybe they are completely integrated due to their less bargaining power, but the risk faced by them is higher.  I think this kind of analysis has flown from our field study and I shall stop at this. Thank you.