India’s domestic market for vegetables is growing. The national and state governments have ambitious plans to increase production. As new forms of contractual and sharecropping relationships emerge between private dealers and farmers, what interventions are required to ensure that small and low-caste farmers are not left behind?

Research from the Overseas Development Institute assesses the impacts of vegetable production in Andhra Pradesh. The authors demonstrate how conventional production and marketing arrangements have excluded lower caste and marginal farmers. Very few disadvantaged groups have benefited from the recent horticulture boom and several are being by-passed. Better access to credit, markets and other inputs – all currently out of their reach – are essential if these groups are to be included.

India is the second largest producer of vegetables in the world (after China) and accounts for 14 per cent of the global production. Andhra Pradesh currently produces about ten per cent of India’s fruit, vegetables and flowers. Production remains geared for catering to expanding urban markets. In addition to traditional Indian vegetables – such as cabbage, tomato, aubergine, onion, cauliflower, pea, potato, okra, cucumber and squash – India’s middle classes are developing a taste for exotics such as broccoli, parsley, gherkin, asparagus and baby corn. Exports in these exotics are also expected to increase, further widening the market.

International and national supermarket chains are not yet major players in India’s vegetable value chain. However, a number of large companies are keen to expand into vegetable marketing. Andhra Pradesh planners seek to boost horticulture through private sector investment in infrastructure and food processing. Companies locating within newly established Agriculture Export Zones receive incentives to enter into contract farming arrangements with producers.

The authors note that:

• Promotion of contract farming is highly controversial: critics argue that it will harm the poor.
• Upper caste farmers with irrigated land close to roads have done well from growing vegetables.
• Few lower caste farmers, even if they own some land, can afford to take the risk of growing vegetables as they are dependent on moneylenders for credit and private traders for inputs.
• Low-caste farmers are often excluded from co-operative membership and discriminated against in state-regulated markets (mandis).

Some farmers are developing new ways to share resources and access markets. Poor farmers are getting irrigation water from neighbours with tubewells and paying for it with labour. Sharecropping arrangements allow low-caste farmers to grow marketable crops such as tomatoes. Groups of marginal farmers with plots of dryland are pooling their land and leasing it. Outsiders acquire the land on a five-year verbal lease and drill a tubewell. Landowners get regular wage work, acquire new skills and inherit an irrigation system at the end of the lease. Such partnerships are not imposed by the government but entered into voluntarily by people with established relationships of trust. Contracts are verbal but are based on culturally accepted norms and rules.

The authors recommend that those who shape horticultural development policy in Andhra Pradesh should:

• ensure that contracts are framed in terms that are readily understandable by small farmers, which would imply that the state plays no more than a facilitating and regulating role
• take action to stop banks, officials and traders from excluding lower-caste and poor people
• start considering the needs of landless agricultural labourers instead of focusing exclusively on assisting landowning farmers
• recognise the role played by commission agents and traders at the mandis in reducing transaction costs but end their monopolistic and exploitative behaviour towards the poor.

India’s state and national governments have an opportunity to ensure that the growing urban demand and changing dietary preferences work for the benefit of small producers. Primary growers’ co-operatives - based on people’s own models of resource sharing and marketing - could play a major role in safeguarding the interests of the poor in the marketplace.

Source(s):
‘Changing food systems in India: resource-sharing and marketing arrangements for vegetable production in Andhra Pradesh’ by Priya Deshingkar, Usha Kulnarni, Laxman Rao and Sreenivas Rao, Development Policy Review, vol 21, issue 5, pp  627 – 639, September 2003
‘Changing food systems in India: resource-sharing and marketing arrangements for vegetable production in Andhra Pradesh’ by Priya Deshingkar, Usha Kulnarni, Laxman Rao and Sreenivas Rao, chapter 7, ‘Food policy old and new’, Overseas Development Institute, pp81-91, 2004

Funded by: Department for International Development, UK

id21 Research Highlight: 17 May 2004

Further Information:
Priya Deshingkar
Rural Policy and Environment Group
Overseas Development Institute
111 Westminster Bridge Road
London
SE1 7JD
UK

Tel: 44 (0) 207 922 0300
Fax: 44 (0) 207 922 0399
Contact the contributor: p.deshingkar@odi.org.uk

Overseas Development Institute, UK

Other related links:
'Cutting out the middleman: maximising benefits for poor farmers in India'

'Labour flexibility in African horticulture'

'Big is beautiful? Improving farm productivity in Bangladesh'

'Tamil Nadu for the development of fruits and vegetables'

'Contract farming in India: a few sucessful cases'