Crisis of Increasing Costs in Agriculture: Is There a Way Out?

Authors(s): M. V. Nadkarni
Source: Economic and Political Weekly, Vol. 23, No. 39 (Sep. 24, 1988), pp. A114-A119
Published by: Economic and Political Weekly
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 Crisis of Increasing Costs in Agriculture
The increasing costs, in the manufacturing sector have received considerable attention in recent years. But the
situation in agriculture is no less serious. The output-input ratios are declining and costs per unit of output are
increasing rapidly. The rate of growth in inputs per hectare has been more than double that of output. Clearly,
we are increasing the productivity of our land through a strategy which is proving to be increasingly costly, reflecting
the inherently unsustainable character of the increase in productivity.
BEING a pioneer in evolving national in-
come accounting for India, it was only
natural that V K R V Rao provided many
valuable insights into the working of the
Indian economy when he came back to his
pet field again in the eaily eighties. One of
these insights based on his analysis of
National Accounting Statistics (NAS) since
1950 is contained in his observation on how
"India is developing into a high cost
economy in spite of its comparatively low
level of employee compensation. No doubt,
there has been economic growth and a
substantial increase in national output, but
this is being achieved by increasing costs"
[Rao, 1983, p 179].
Using the disaggregated data from the
NAS about inputs and outputs in three
sectors, Rao observed that output-input
ratios at constant (1960-61) prices declined
between 1960-61 and 1979-80 from 4.63 to
3.59 (by 22.5 per cent) in agriculture, from
6.24 to 4.33 (by 30.6 per cent) in mining, and
from 1.40 to 1.29 (by 8.1 per cent) in the
registered manufacturing sectpr. Rao
observes here: "The amazing fact. . . is the
steady fall in the output-input ratio in the
case of all three industrial sectors listed,
though the fall has been considerably less
in the case of registered manufacturing. The
steep fall in the case of agriculture and
animal husbandry and mining is particularly
disquieting because of the cost-push effect
they could have on the economy, as their
output consists of either food or raw
materials which enter into the cost of labour
maintenance and industrial production"
[Rao, 1983, p 179]. It may be added that it
is disquieting also because of the effect it
has on the income of millions of growers,
as the value added by them shrinks relatively
to inputs invested. It should be noted here
that the cost increases observed here are in
real terms, independent of inflation rates
and terms of trade of agriculture.
We may now look into the latest data
available to see if the trend observed by Rao
has continued or reversed in recent years.
Table 1 presents here output-input ratios at
constant (1970-71) prices for seven major
sectors for the years 1970-71, 1975-76,
1980-81, and 1984-85, based on NAS data.'
Among these sectors, only two-construction
and communications-show an improve-
ment in the ratios (that is, reduction in costs)
though marginal. All the remaining sectors
showed a decline,2 which was particularly
significant in agriculture and allied activities,
and mining ,nd quarrying. Agriculture
shows the maiimum decline now, and at a
faster rate than before. Whereas the output-
A-114 Economic and Political Weekly September 24, 1988
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Is There a Way Out?
M V Nadkarni
input ratio declined at an average rate of 0.05
point per year between 1960-61 and 1979-80
in terms of Rao's calculation, it declined at
the higher rate of 0.07 point per year
between 1970-71 and 1984-85. The cause for
cooncern, therefore, continues to exist in
agriculture.
The increasing costs in the manutacturinig
sector have received considerable attention
in recent years. It is true that there is cause
for concern in this sector too since the
output-input ratio, already the lowest amiion*g
all sectors, continues to fall. With the pro-
portion of value added in the total output
beiiig reduced to marginal levels, growth and
employimeint prospects in the sector caninot
be bright unless technological breakthroughs
take place to lower per unit costs significant-
ly. But the situation in agriculture is no less
serious, since the ratios are declining and
costs per umnit of output are increasing most
rapidly among major economic sectors. The
gravity of the situation in agriculture can be
better appreciated if it is realised that, on
the whole, an expenditure of Rs 272 on
inputs (including capital consumption) was
incurred in 1970-71 to obtain Rs 1,250 as
output per hectare of gross cropped area. In
1984-85, on the other hand, an expenditure
of Rs 460 was incurred (69 per cent more)
to obtain Rs 1,665 as output (only 33 per
cent more), both at 1970-71 prices. The rate
of growth in inputs per hectare has been
more than double that of output. Though
we can still take some consolation from the
fact that even in this process, the value added
per hectare increased from Rs 986 to
Rs 1,256 (27 per cent more) during the
period at constant prices, justifying increas-
ed expenditure, it should be clear neverthe-
less that we are increasing the productivity
of our land through a strategy which is
proving to be increasingly costly, reflecting
the inherently unsustainable character of the
increase in productivity.
ROLE OF NEW TECHNOLOGY AND
INDUSTRIAL INPUTS
Rao had indicated that the main tactor
behind the increasing costs in the Indiain
economy was the 'management factor', im-
plying that while we have been earnestly
pushing up inputs and investments our
attempt in raising their productivity is much
less serious [Rao, 1983, pp 179-80]. While
accepting this as a general explanation
applicable to the economy as a whole
including agriculture, the author wishes to
be more specific and assert that the main
factor which has contributed to this state of
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affairs in agriculture is the choice of develop-
meint strategy in agriculture, which relies
principally on high-cost industrial inputs like
fertiliser, pesticides, mnachinery and diesel.
Since local varieties had a low yield and since
High Yielding Varieties (HYVs) were ferti-
liser responsive, it looked evident that
reliance on these inputs was indispensable
for self-reliance in foodgrains. These inputs
cannot be produced on farms and have to
be purchased from the markets, making
them more vulnerable to the market, a con-
sequence of which is reflected in the terms
ot trade discussed in the next section. But
even apart trom this question of terms of
trade, it has rcached a situation which shifts
the generation of value added from agri-
culture to industry, which is supposed to be
advantageous to agriculture. Inherently, it
has beeni a shift from low cost self-produced
inputs to high cost capital intensive market
inputs.
Tlhe new strategy has been acclaimed as
a technological breakthrough by agricultural
scientists and economists alike. Strictly
speaking, a technological breakthrough, as
understood in economics, shifts the produc-
tion function upwards, which means that a
greater production is achieved at a given
input level, and thus at a lower per unit cost.
Our experience of technological break-
through in Indian agriculture so. far defies
this definition. Greater production was no
doubt achieved per unit of land, but at much
greater costs per unit of output. Even gran-
ting that the adoption of a new technology
would require greater investment and inputs
than before to reach new heights in produc-
tion which were considered infeasible in old
technology, it is expected that such a break-
through is accompanied by lower costs.
Unfortunately such was not the case in
practice.
The role of industrial inputs and the new
technology behind this phenomenon is
becoming more and more obvious. Going
back to Rao's calculations, they show that
output-input ratio in agriculture declined
only marginally from 4.63 in 1960-61 to only
4.49 in 1970-71, during the period when both
the area under HYVs and the consumption
of inidustrial inputs in agriculture were also
margiinal. It was only during the subsequent
period that most ot the decline in output-
iniput ratio was concentrated, which also
witnessed unprecedented expansion both in
rea unlder H YVs and industrial inputs.
Fakinig together the five major crops affected
by HYVs viz, rice, wheat, maize, jowar and
bajra, the proportion of area under HYVs
to total cropped area under themn, was only
16.7 per cenit in 1970-71 anld rose to 44.9 per
cenit in 1980-81 aIind 55.8 per cenit in 1984-85.
Of the total increase in all inputs (valued at
1970-71 prices) between 1970-71 and 1984-85,
tthe increase in three inajor industrial iniputs
(fertilisers, pesticides, and diesel) Conlstituted
64.6 per cenit. While these three inputs
acou.nted for a imere 14.9 per cent of total
input.s in 1970-71, their- share increased to
35.1 per cenlt in 1984-85 at conistanit prices
indicating a iiore than dLoubled role. The
consumnptioni ot chemical tertilisers increas-
ed fromii a miiere 2.9 lakh tonnes of nutrients
in 1960-61 in the country to 21.8 lakh tonnes
in 1970-71, 55.2 lakh tonnes in 1980-81, 82.1
lakh tonnles in 1984-85, and 87.4 lakh tonnes
in 1986-87 [India, 1988, p S-26]. The increase
in agricultural production or yields bears no
comparison with this phenomiienal rise in
fertiliser consumption.
The paradox ot the new techniology in the
case of' wheat comlies out from the con-
trastirng cases ot Punjab and Madhya
Pradesh, known respectively as progressive
and backward in technological advance.
Fromn the suLmmInary presenitation of the
studies on Cost ot cultivation for 1983-84,
it is secen that Punjab obtained an average
yield ot 40.7 quintals per hectare, and MP
only 34.0 quintals per hectare; but a wheat
grower in PuLnjab spent Rs 3,169 on inputs
(cash and kind expenses) and obtained a net
return of Rs 3,908 per hectare, compared to
a grower- in MNP who spent only Rs 2,227 and
obtained a net return of Rs 4,360 per hectare
over operating costs. While the progressive
farm-er of Plunjab used 138 kgs of nitrogen
anid 58 kgs of P,O,, the backward grower
ot MP used only 74 kgs of niLrogetn and 48
kgs of pzO, per hectalre and yet obtainied
more protit 0 l [ndia, 1987, p 305].
We have a siiilmiar contrast between
Pondicherry arid B3ihar in the case of paddy.
The paddy growers in the tormer applied on
an average 125 kgs ot Nitrogen, 75 kgs of
P,O^; and 50 kgs of K,O per hectare in
1583-84. Their operatinig cost of production
per hectare was Rs 5,546 and they obtained
Rs 4,862 as net return per hectare over
operating cost. In contrast, paddy growers
in Bihar applied much lower doses of ferti-
lisers, viz, 69 kgs of nitrogen, 42 kgs of
P,O, and 28 kgs of K,O per hectare, in-
curred a much lower cost of production of
Rs 2,888, but obtained a higher net return
of Rs 5,303 per hectare than their more pro-
gressive Pondicherry colleagues. Indeed, the
average yield per 'hectare was higher in
Pondicherry at 73 quintals compared to only
40 quintals in Bihar [Inidia, 1987, p 305].
There is no dearth of similar paradoxes.
This is not to suggest that there is
necessarily or unavoidably a strong and
negative correlation betweeni yields and net
return. But such paradoxes as have beeni
noted above are more likely to depict the
normal patterni in the wears to come and
retlect oni objective ot maxin sing yields per
hectare irrespective of costs to farnmers. Of
courrse, the cost to the farmer is tried to be
-eduLced thlough huge subsidies on irrigia-
tion, electricitv and tertili.sers aLndic hi kes in
procuremenlt pries. T he real co.st of thi.s
a*griculttiurl deCveltopmenclt sAtrateg,y inlustlive'
of subsidy, the^reftore, is higher thanlr what is
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indicated by private costs to farmers. ing prices. The decline in the terms oi iuduL
The goal of maxinlising production during the seventies has received con-
irrespective of costs comiies out even more siderable attention both by farmers' lobbies
clearly durinig droughts. Even normally, and academics, but it has tended to be attri-
when production is lower in the face of btuted more to the so called urban bias rather
failure of raint'all, costs per unit of output than to the adoption of the new technology.
go up. Farmers normiially try to adjust to It is neccssary to note in this regard that
droughts either by not sowing or even where relative agricultural prices were continuously
they sow, by miniilmising their purchase of and sharply--moving upward (in favour of
market inputs so that risk of loss is thereby agricLulture) throughout the period preceding
minimiiised. But the of'ficial machinery seeks the Green Revolution from 1948-49 to
to Counter this by pushilg up fertiliser con- 1966-67, except for a year in 1954-55. After
sumIptioni through easy crop loans so as to staggering somewhat between 1966-67 and
comiipenlsate for t'ailLure of rainfall and 1971-72, they rose to an unprecedented
prevenit a steep decline in production. height in 1973-74, only after which there was
T'he process cani be observed in Table 2. a sharp decline in 1975-76. After a slight
It should be noted that the table is at an improvement the decline continued, but has
aggregate level and blunts the sharpness of been reversed since 1982-83. The terms of
actual adjustments in different regions. Even trade, however, have not regained their
thein, the table is revealing eniough. In the earlier heights prevailing in 1973-74 [See
face of impending decline in output, farmiers Nadkarni, 1987-a, pp 169-170 for a long-
were induced to increase the application of term view]. The reversal in the long-term
industrial inputs, which was accompanied trend in 1973-74 coincided with the hike in
with either a decrease in other inputs or only petroleum prices. This was no mere coinci-
a marginal increase in them. The outcome dence, since, as noted earlier, the proportion
is a far greater increase in costs per unit of of industrial inputs-fertilisers, pesticides
output thani could have occurred in the and diesel-had sharply increased since the
absence of such official emphasis on market mid-sixties, and when the hike in petroleum
inputs. prices came in 1974, the Indian agriculture
had already become sensitive to it.
TERMS O01 TRADE ANt) INDUSTRIAL
Focusing on the movements in the terms
IN PUt1S
of trade of agriculture after 1970-71, we can
Pressed by the increasing costs, it is only easily observe the role of industrial inputs
natural that farmers would demand increas- vis-a-vis the remaining inputs in contributing
TABLE 1: OUTPUT-INPUT RATIOS AT CONSTANT (1970-71) PRICES IN MAJOR ECONOMIC
SECTORS IN THE INDIAN ECONOMY
Output-Input Ratios at Constant Prices by Sectors
Year Agri and Fishing Mining Registered Construc- Railways Communi-
Allied and Quar- Manufac- tion cations
rying turing*
1970-71 4.59 7.74 3.31 1.27 1.64 2.08 4.69
1975-76 4.32 7.41 3.15 1.25 1.64 2.21 4.88
1980-81 3.81 7.70 3.04 1.22 1.66 1.98 4.94
1984-85 3.62 7.39 2.75 1.21 1.71 1.89 4.90
Change (per
cent) bet-
ween 1970-71
and 1984-85 --21.10 -4.50 -16.90 -4.70 +4.30 -9.10 +4.50
Notes: * Since value of output was available only at current prices in the published data in the
NAS, the Implicit Price Index for GDP in Manufacturing (Registered) was used to
obtain output at constant prices.
Inputs are inclusive of consumption of fixed capital, but not remuneration to labour,
rent and interest.
Source: Derived from Disaggregated tables in various issues of National Accounts Statistics,
CSO, Government of India (see note 1).
TABLE 2: CHANGE (AT CONSTANT PRICES) IN OUTPUT AND INPUTS IN INDIAN ACRICULTURE
IN DROUGHT YEARS OVER PRECEDING YEARS (AT THE AGGREGATE NATIONAL LEVEL)
Change in Output Total Industrial Inputs other
Inputs Inputs* than (3)
(1) (2) (3) (4)
1972-73 over 1971-72 a: -1108 - 26 + 8 5 -111
b: (5.3) (0.6) (11.0) (3.2)
1979-80 over 1978-79 a: -2472 +192 +200 -8
b: (9.8) (3.5) (13.4) (0.2)
1982-83 over 1981-82 a: -579 +90 +63 +27
b: (2.2) (1.5) (3.3) (0.6)
Notes: a: Change in terms of Rs crore; b: Percentage change (in brackets).
* Chemical fertilisers, pesticides, and diesel oil.
Source: National Accounts Statistics, CSO, Government of India (see note 1).
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to the decline in them. This can be seen from
Table 3 which presents the terms of trade in
three series: prices of agricultural output
relative to prices of all inputs, the three
major industrial inputs and other inputs
respectively. The relative prices with respect
to all inputs together declined during the
period at the rate of 1.3 per cent per annum
(linear trend as per cent at mean), while the
relative prices with respect to the three
industrial inputs declined by 3.4 per cent per
annum. Both these trends were statistically
significant at 1 per cent level. The relative
prices with respect to other inputs on the
other hand showed a very moderate decline
at the rate of 0.37 per cent at mean, which
was statistically not quite significant (being
significant only at 10 per cent level). One
could say that terms of trade of agriculture
with respect to inputs other than the three
major industrial inputs remained stable, in
spite of cost pressures on them. We see thus
that not only have the industrial inputs con-
tributed directly to increasing the real costs
(at constant prices) per unit of output, they
have also significantly contributed to in-
creasing the monetary costs and turning the
terms of trade against agriculture.
The share of increase in real costs is more
significant than the share on account of the
worsening of terms of trade. This can be seen
From the fact that as per the calculations
derived from NAS data, the cost of material
inputs including consumption of capital (but
excluding wages, rent and interest) has in-
creased by 31 per cent from Rs 21.1 to
Rs 27.6 per Rs 100 worth of output at con-
stant prices between 1970-71 and 1984-85.
At current prices, the same cost increased
by 39 per cent from Rs 21.1 to Rs 29.4 during
this period. This indicates that difficulties
on the cost front have to do more with the
basic fact of deterioration of the natural
resource base of agriculture and with the
choice of an inherently costly strategy of
development, than with relative prices.
Rich farmers generally complain about
high cost of labour and try to minimise the
same, though they are not so calculating
about material costs. The labour costs per
unit of output, however, appear to have
actually declined at current prices in absolute
terms, let alone as a proportion. The NAS
data on factor incomes by industrial origin
give estimates of compensation of employees
at current prices. Calculating this cost on per
unit basis, we find that in agriculture, the
compensation of employees (excluding
mixed income of the self-employed) per
Rs 100 worth of output, declined from
Rs 16.9 in 1970-71 to Rs 15.1 in 1984-85 at
current prices. This would clearly show it is
the rise in material costs which is responsible
for the cost escalation in agriculture, and
that labour costs have actually exercised a
dampening influence.
Though the increase in the cost of
material inputs per unit value of output, in
real terms by 31 per cent and in money terms
by 39 per cent between 1970-71 and 1984-85,
may not look very alarming, it is necessary
to caution here that this calculation is at the
aggregate national level and includes many
areas with traditional agriculture where, even
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if yields are low, input use is lower still. The
situation can be worse in areas with miiodern
agriculture. Besides, cost expr-essed in rela-
tion to value of output (both at currenlt
prices) is deflated by the implicit price index
of output. The increase in actual monetary
costs per unit of output in physical terms
can be far m ore sharp, as it is not so
deflated. Both the leading cereals-wheat
and paddy-provide eloquent illustrations
of such an increase. The cost of cultivation
data published in the Agricultural Prices
Commission Reports and Indian Agriculture
in Brief together show that the total cost
(Cost 'C') per quintal at currenit prices
increased by 105 per cent in the case of
wheat (from Rs 61 to Rs 125) between
1970-71 and 1980-81 in Punjab, and in the
case of paddy by 121 per cent in Tamil Nadu
(from Rs 53.5 to Rs 118.5) between 1971-72
and 1981-82. There is no case for com-
placency on the cost fronlt.
HUGE COSTS, LrTTLE GAIN
We have considered here only direct
economic costs. There is no need to go into
the debate over the distributional con-
sequences of this development strategy, since
there is a large degree of consensus that
though the new inputs are divisible and can,
in theory, be applied even on tiny holdings,
the access to capital and skills needed for
this technology is not neutral to scale. This
was inherent in their being capital intensive
in nature. The strategy has not stopped at
promoting the use of divisible inputs like
fertiliser. It has also stimulated considerable
extent of mechanisation. The whole strategy
has been to use more of costly inputs and
economise on labour, a cheaper input. The
distributional impact of such a strategy
cannot but be adverse.
The environmental costs of the strategy
are also becoming obvious. In the course of
zealous extension of these new inputs,
farmers were hardly made familiar with
hazards associated with them, thanks to the
low value imputed to human health and life
in India. On the other hand, there is a
tendency to minimise the severity of the
problem by comparing per capita consump-
tion of these inputs in lndia with that in
advaced countries. Such comparisons hide
excessive uses in several regions, the damage
done by which is not arithmetically cancelled
by lower use in other regions. Moreover,
other regions are also fast catching up. It is
relatively easier to control industrial pol-
lution by enforcing treatment of effluents
from factories, but practically impossible in
the case of hundreds and thousands of
farmers releasing pesticides and fertilisers
into the environment.
It is now known for quite sometime that
'excessive use of fertilisers and pesticides
contributes substantially to ecological distur-
'bances... Excessive use of nitrogen terti-
lisers, for example, can lead to leaching of
these excess fertilisers into water bodies.
These can be transformned by micro-
organisms into nitrites and carciniogenis. ..
which can find their way back to men anid
animals through the food chlain. Excessive
Political Weekly
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fertiliser-s canl also adversely affect trne
nitrogen fixinlg organiisnms in the soil anld
reduce natur al nitrogeni absor-ption
Similarly, pesticides, besides killing
unwanited pests, insects and birds or snall
animiials cani citer- the humi atn systemll '
[Nag Chaudhuri, 1983, pp 15-16]. Lest we
should take conlsolationl froim our relatively
low per capita consumilption of these inlputs,
we may take note of a OXFAM report in
1981 that there wvere 7,50,000 cases otf
accidenltal pesticide poisoniing a year, anld
that the third world couLltries, accounitilig
for less than 1 5 per cenit of world pesticide
consumilption, suffered 50 per cenit ot poisoni-
ings and 75 per cent of the resulting deaths
[quoted in Myers, 1985, p 123]. We have a
further warning agaiinst carelvss promliotioni
of these inputs in the Brunldtlanld Repor-t too
[WCED, 1987, p 127].
The danger of erosion of genietic diver-
sity of our plant life which is ilihercnlt in the
adoption of the HYV strategy hlas nlot
received adequate attention. Gene baniks in
artificial laboratory conditionis have hardly
provided a dependable solutionl to this
problem [Mooney, 1983, p 76]. Even if this
is done more satisfactorily in advanced
countries, it makes us dependent onl them
in a very critical field. On-farm conserva-
tion of genetic diversity could be a cheaper
and possibly a more dependable alternative,
though it does not mean that all farmers
have to give up HYVs and grow local
varieties. A few farmers could be selected on
a planned basis in different regions where
local varieties can be protected under scien-
tific supervision. Unfortunately this is not
done, and consequently, it is feared that
India has already lost many of its precious
rice varieties.
If the strategy of heavy reliance on indus-
trial inputs is considered justified in spite of
its higher costs, it cain be only on the ground
that it held the promise of significantly
increasing yields per hectare and thus
production. Almost pushed to the wall by
droughts during the mid-sixties and by the
humiliation of having to depend on imports
of foodgrains, self-reliance at any cost in a
critical situation like this did seem to be a
justifiable goal. The new strategy promised
quick results. The self-reliance we have
attained today in foodgrains, except for
marginal imports to maintain stocks during
severe droughts, has been attributed mainly
to the success of the new technology. It is
certaini that schemiies of increasing food-
grains productioni in the niext Plan would rely
on a significant expansion in the use ot
fertilisers, pesticides and diesel, in addition
to irrigation.
But how far is this premise really
justified? Has it, for example, been proved
beyond doubt that the new strategy produced
a major upward shift in the growth' rates as
compared to growth rates experienced
before? Indications are that at best the new
growth ratBs were not much higher than the
old, and that probably they have actually
been lower than the old rates. Rao has
himself shown how the annual compound
rate of growth of production successively
declined in the case of cereals, from 3.7 per
September 24, 1988
cent during the nineteen fifties to 2.8 per cent
during the sixties, and further to 2.3 per cent
during the seventies. And yet, cereals are the
show bov of the Green Revolution! Rao has
also shown that while the production of
pulses increased at the rate of 3 per cenit per
annum during the fifties, they recorded an
absolute decline both in the sixties and
seventies. If this backlash effect of the new
technology on pulses is consider-ed, it adds
turther to its debit side [Rao, 1983, p 56].
Growthl rates would, of course, differ
depending on the choice of initial and ter-
mlinal years. But even calculations based on
carefully choseni end-points do not indicate
a conlspicuous success story. For example, a
study by Rao and Deshpande [1986, p 92]
shioN-s that foodgrains recorded an output
growth of 2.55 per cent per annum during
the pre-Green Resolution period (1952-53 to
1964-65), and 2.77 per cent during the Green
Revolution period (1967-68 to 1978-79). The
new growth rate was only marginally higher
and did not represent a major breakthrough
conmpared to the difterence in the growth
rates between the pre-independence and the
post-independeince periods. No doubt, in-
crease in yields played a more important role
in the post-Green Revolution period; but
even the growth rate in yields was not
significantly higher. The same study shows
that it was 1.51 per cent per annum in the
earliei- period, and 1.84 per cent during the
latter-by no means a remarkable higher
figure. Compared to the negative growth in
yields recorded prior to indepenidernce, the
achievement even up to 1964-65 was a major
breakthrough. W!hat little incremiient to the
growth rate was achieved by the new techno-
logy in its first decadie was at a tremendously
higher cost. Wher all crops, including non-
food crops, were considered, growth rates
actually showed a decliie, and not a rise, in
the Green Revolution period, in spite of all
the extra investment.
A more recent study by Rao, Ray and
Subbarao [1988, p 7] covering subsequent
years shows that the period, 1968-85, record-
ed lower growth rates in crop production
compared to the earlier period of 1950-65,
wheat being the only exception.3 Their
calculatioins separate the drought during the
mid-sixties whein the new technology was
also introduced. They also make adjust-
ments for annual fluctuations in crop
output. Their study shows not only a decline
in growth rates but also an increase in
instability-a clear indication of unsustain-
able character of our agricultural develop-
ment under the new technology. Thus the
challenge that India is facing in agriculture
is not merely one of increasing costs, but
also of declining growth rates and increasing
instability. Fast diminishing returns to this
technology are inherent in its very nature.
Its strategy is to maximise short-term gain
at the expense of sustainability. Introducing
Fukuoka's method of natural farming to
readers, Larry Korn observes how the
fertiliser-intensive technology affected
Japanese agriculture. 'For centuries
Japanese farmers had maintained organic
matter in the soil by rotating crops, by
adding compost and manure, and by grow-
Economic and Political
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inig cover- crops. Once these practices were
neglected anid fast-acting chemical fertiliser
was used instead, the humus was depleted
in a single gcilen-ation. The structure of the
soil deteriorated; crops became weak anid
depenldenlt oil chemical nutrients. To make
up for- redLuced human and animal labour,
the thenew systeml Mined thefertility reserves
of the soif [em phasis added, Fukuoka, 1984,
p xxiv]. A basically renewable resource was
tulrn-ed into ani exhausted resource in the
process-a phenomenon much more evident
in Ildia even before reaching Japanese
heights of fertiliser consumption!
Accunmulationi of fertiliser stocks in India
has often been attributed to unfavourable
relative prices, on the basis of which the fer-
tiliser industry has been asking for more SUb-
sidies. But this coulld well have been due to
diminiishinig returns to tertiliser application
or their unsuitability in a variety of condi-
tions. Farmers seem to have already realised
this, though extension agencies are yet to
understand this. Where yield advantages are
not conspicuous, price manipulations do not
necessarily make such an input attractive.
Even if the new technology did contribute
to significantly stepping up food production
in India initially, its potential to continue to
do so in future seems to be nearing the point
of exhaustion. We have no choice but to find
an ecologically and economically viable
alternative.
IOWARDS A SUSTAINABLE ALTERNATIVE
Such an alternative has to be less costly,
more productive-not merely in the short
run-but in the long run too, environmen-
tally sound, and equitable. The alternatives
available need not be posed in simplistic
terms like modern vs traditional, or indus-
trial vs completely farm based. That is, the
alternative need not consist in simply going
back to pre-Green Revolution agrarian prac-
tices and shunning the use of the HYVs and
all industrial inputs. The alternative could
be even more scientific in the sense that it
would be based on a fuller understanding
of nature, and farmers' own innovativeness.
Though drawing on the experience of
organic farming in the west and Fukuoka's
natural farming in Japan, the alternative
need not be a copy of these models and has
to be adapted to Indian conditions. There
need not also be a sudden transition to this
alternative but a gradual one so that one can
continuously learn and adjust.
To correct the lopsided emphasis on short-
term gain in yields inherent in the strategy
pursued since the mid-sixties and to balance
it with the goal of securing long-term
improvement in soil fertility, there has been
a growing emphasis in recent years on
schemes of soil and water conservation,
water shed development and afforestation.
These schemes do not in any way alter the
strategy of agricultural development based
on industrial inputs but supplement it.
Necessary though they are, such marginal
correctives, however, do not go far enough,
for they do not change the character of
farming particularly its cost intensity.
Moreover, as long as farmers' orientation is
Weekly September
All use subject to http://about.jstor.org/terms
firmly grounded in industrial inputs, they
would not be enthusiastic about improving
the natural resource base of their farms. The
first requisite is to reorient them to improve
their natural resource base which can reduce
their costs and also improve yields on a long-
term basis.
Korn's introduction distinguishes between
three types of farming-traditional, chemical
and natural-in their effect on soil. While
in the traditional method, the condition of
soil remains about the same, it becomes
liteless and depleted in a short time under
the chemical method. Under Fukuoka's
natural method, however, fields improve
with each season [Fukuoka, 1984, p xxii].
In Indian conditions, even traditional
farming had not necessarily taken care of
soil erosioni. A lot of organic matter was
burnt or wasted. A blind reversal to such
methods is not what is needed. A fuller
ulnderstanding of how to improve soil ferti-
lity through methods vwhich depend mainly
on farmers' skills and labour and nature's
own free gifts, can alone reverse the degrada-
tion of land and meet human needs on a sus-
tainable basis.
There is of course a lot to learn from
traditional practices which were developed
to achieve high levels of productivity in
China, even before the talk about organic
or natural farming had started in the west.
It was mainly because of this that even with
less arable and irrigated land than in India,
China could obtain about 2 1/2 times more
food production. Nair has observed that
though in 1976-77 both countries were
applying practically identical doses of
chemical fertiliser per hectare (18.4 kgs in
China and 18.8 kgs in India), the Chinese
were applying an additional 23 million
tonnes (in nutritional content) and 2081
million tonnes in gross weight of organic
TABLE 3: INDEX-NUMBERS OF TERMS OF TRADE
OF AGRICULTURE IN INDIA, WITH RESPECT TO
INDUSTRIAL INPUTS VIS-A-VIS OTHER INPUTS,
BASED ON IMPLICIT PRICES IN NATIONAL
ACCOUNTS STATISTICS (1970-71 = 100)
Year Relative Price of Output,
with Respect of Price of
Total Industrial Other
Inputs Inputs* Inputs
1971-72 99.1 103.1 98.3
1972-73 102.7 113.8 100.2
1973-74 106.7 134.5 101.4
1974-75 98.7 79.3 105.9
1975-76 90.7 68.8 99.8
1976-77 92.2 76.4 98.8
1977-78 91.3 82.1 95.1
1978-79 91.0 81.1 95.3
1979-80 93.1 92.7 93.2
1980-81 87.5 73.2 95.1
1981-82 81.9 63.3 94.1
1982-83 83.9 66.1 95.7
1983-84 89.6 73.6 99.8
1984-85 90.0 77.8 98.2
Note: * Chemical fertilisers, pesticides, aIid
diesel oil.
Source: Derived from disaggregated tables in
National Accoulnts Statistics (seenote 1).
24, 1988 A-1 17
fertilisers from night soil (19 per cent), hog
manlure (24 per cent), draft animal maniure
(37 per cent), green manure (8 per cent),
comiipost (5 pev- cenit) and river and pond silt
anid muLd (7 pcr cent), ignoring other sources
like manure f'rom dluck or chicken droppings,
and weeds which too were used [Nair, 1983,
p 19]. While in China fertiliser use came on
top ot' a highly advanced state of traditional
soil and plant care, it tended in India to
substitute whatever little soil and land care
was taken within traditiorial agriculture.
Fukuoka's method goes ahead of tradi-
tional methods, learning from them and
avoiding its mistakes. While it eschews
modern inputs, it also tries to economise on
labour input, without reducing yields. It
requires no machinery, no chemicals, and
very little weeding. He does not even plough
the field or use compost. He puts agri-
cultural wastes after harvest back into
fields.4 The humid conditions in Japan can
take care of the soil under this method
without ploughing. But a shallow single
ploughing may be all that is needed even in
Indian conditions. Narayan Reddy, a farmer
near Bangalore, who has been practising
natural farming adapted to local conditions,
believes that tractor ploughing is a waste and
even harmful to the soil, as deep ploughing
can cause unnecessary soil erosion. Even the
shallow and single ploughing has to be
across the slope of the land and never along
it. If a farmer can also use all the organic
matter produced on farm and put it back
into soil, the resultant increase in microbial
activity can work wonders with the soil, he
asserts. Apart from increasing fertility, it
would promote stability too since it improves
moisture conservation and use of water can
also be reduced. Reddy feels that agricultural
scientists often give wrong advice without
knowing full facts. He had once the shock
of his life while listening to a scientist on
radio who advised the use of a chemical to
destroy earthworms, wvhich he believed,
disturbed the root system of plants! The
scientist obviously had no knowledge of the
beneficial role that earthworms play free of
cost to the farmers. Reddy ridicules scien-
tists' claims that the nutrient quality in
organic matter like cowdung is inadequate
and that fertilisers are indispensable.
Cowdung alone may be inadequate, but
fertilisers are certainly not indispensable.
Agricultural wastes, inter-crops and crop-
rotations can take care of inadequacy in any
particular organic matter. The farm has to
be viewed as a whole system where each part
and activity complements the other. If inter-
relationships and complementarities within
the farm are taken advantage of, farming
can be both cheap and more productive on
a sustainable basis. Reddy compares a farm-
holding with an earthen pot and the leaks
of purchasing power on industrial inputs to
holes in the pot. Plug these holes and
produce your own inputs on farm to increase
profits, he says.
His own experience has given him the con-
fidence for such assertions. He began as a
small farmer with only about two acres as
his inherited share, but has by now increased
his holding to 30 acre.s. His formal education
is only up to SSC. He learnt the new techno-
logy based on chemical inputs quickly and
A-1 18 Economic and Political Weekly September 24, 1988
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earned state award for best yields using
heavy doses of these inputs. He was using
this technology with all enthusiasm till
1978-79. It was at the end of seventies that
by coincidence he came in contact with an
American devotee of an Indian saint who
introduced him to organic farming-its con-
cepts, principles and practice. He did not,
however, switch over suddenly, because, as
he believed, once soils are depleted of their
natural reserves by fertiliser, they get
addicted to it and de-addiction has to be
gradual. He progressively increased the
organic matter, correspondingly reducing
chemical inputs, at the approximate rate of
100 kg, of NPK being replaced by 5 tonnes
(10 cartloads) of the former. When he found
that organic matter produced on his own
farm was insufficient, he went with his wife
and children to collect roadside leaf litter.
In 6 to 7 years, he stopped using any
chemical input; though he suffered a little
decline in yields in the first two years, later
continued to get the same high yields as
before and-what is important-at a much
lower cost. His lands are much more fertile
now, in spite of intensive cultivation. It is
possible, he observes, to reduce the depen-
dence on even the prepared compost, if
agricultural wastes and other organic matter
are put back into the soil.
When he had received a state award for
the highest yield in ragi in 1978, he was
cultivating it on three acres, all rainfed and
got 23 quintals per acre. He was cultivating
it even at that time in rotation with cow pea,
which yielded 2 quintals per acre. He used
200 kgs of fertilisers and about 20 cartloads
(10 tonnes) of organic manure per acre then,
but uses about 40 cartloads of organic
manure per acre and no fertiliser today and
gets the same yield as before in the case of
ragi, and a higher yield of 3 quintals per acre
in the case of cow pea. It should be noted
that he cultivates a high yield variety as
before, and asserts that the belief about
HYVs being responsive only to fertilisers is
a myth, a superstition. While the value of
his total produce in a year from this field
in 1978 amounted to Rs 4,800 per acre
(including ragi, cow pea and fodder), he was
spending Rs 1,800 per acre on inputs in-
cluding imputed cost of organic manure and
family labour (but excluding imputed in-
terest and rent). This gave him a net return
of Rs 3,000 per acre, i e, 167 per cent over
inputs. Today (1988) his total inputs even at
current prices amount to Rs 1,900 per acre,
including imputed cost of farm produced
organic manure and family labour. The
value of his farm produce per acre from ragi
and cow pea is Rs 5,710 (including fodder),
giving him a net return of Rs 3,810 per acre,
i e, 201 per cent over inputs.
The real gain, Reddy claims, is much more
than what is indicated by net return per acre
as indicated above. The substitution of
chemical inputs by farm produced manure
means the creation of extra value added on
farm, which is a net gain to the family,
though organic manure is normally counted
as a cost in crop production. If imputed cost
of organic mnanure is not counted, the net
return amounted to 534 per cent over inputs
in 1988, compared to only 200 per cent in
1978 when he was relying on fertilisers. The
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difference would have been greater still if he
was using only fertiliser and no organic
manure in 1978. Even at that time, he was
combining a lot of organic matter with
fertiliser.
This approach of natural farming enabled
him to view not at one crop in isolation but
at his farm as a whole, the total productivity
of which has increased very significantly, as
a result. This author could personally see for
himself what this meant. Surrounding his
holding, Reddy has grown honge (pongemia)
for green manure, subabul for fodder and
several other trees without keeping a single
square foot bare. He does not purchase any
fodder or oil cake for his 17 cattle heads
which are stall-fed and are in excellent
health. Their needs are met from the farm
itself. Apart from straw and subabul leaves,
they feast on excess banana shoots. Not even
an ounce of cow dung or leaf or straw is
burnt or wasted, but is used either as manure
in compost or is put directly into field as
mulch.
To get the maximum out of organic
manure, he takes care to see that it matures,
but neither dries nor rots through excess
water. Excess water in compost pits results
in the leaching of nutrients. Similarly, when
manure is put in small heaps (before
spreading) on fields, it has to be covered
immediately with about 2 inches of soil so
as to prevent its drying. He observes that
most farmers are careless in this matter and
as such cannot get the full benefit of
manure.
Natural farming does not need pesticides
or weedicides. Pests are a menace only when
a whole farm is devoted to a single crop. One
can carefully choose pest resistant varieties
and proper inter-crops. Tl,e inter-crops can
not only prevent the spread of pests, but can
also supply nutrients if prrcperly selected.
Reddy says that inter-cropping cabbage with
marigold, or carrot with onion can take care
of more than 25 per cent of pests. Cheap,
natural and harmless pesticides can be pro-
duced on farm itself; for example, soap
water, neem decoction5 and ash dusting can
control pests significantly if not eliminate
them altogether. But a total elimination of
pests through chemicals is neither possible
nor profitable. As for weeds, they are
automatically controlled if the field is
covered with agricultural wastes and leaf
litter. Even if some weeds emerge, they
should be plucked by hand and put there
instead of heaping and burning them, he
advises.
Reddy also feels that though natural
farming means a lot of attention and plan-
ning, it does not necessarily mean back
breaking and tedious labour. It is certainly
more labour intensive than chemical
farming, but the extra labour needed is no
more than about 20 or 25 per cent on the
whole. But this extra labour is much more
enjoyable than under chemical farming,
since it is living and working with nature and
deriving satisfaction from one's own creati-
vity and innovativeness. He also believes that
natural farming is as practicable for small
farmers as for the big, and on rainfed farms
as on the irrigated. Certain adjustments and
variations are necessary but farmers can be
educated to learn and devetop these skills.
Reddy feels that the emphasis of extension
service should be more on imparting the
knowledge of nature and skills than on
providing chemical inputs. He also believes
that a small farmer can overcome the con-
straint of his small holding by collecting
organic wastes lying all around, as he
himself did. But this would also require
increasing the common property resources
and improve their bio-mass productivity so
that supply of fuel, fodder and green manure
for small farmers and the landless can be
assured on a sustained basis.
Such farming may not, however, be
suitable for large capitalist farms run mainly
on hired labour and hired supervision. It is
ideal for peasant farms run mainly on family
labour and supervision, though it does not
eschew hired labour. A policy thrust in
favour of natural farming, therefore, would
be instrumental in promoting equity in the
agricultural sector and providing fuller
employment because of its being labour
intensive. It would be more equitable than
'industrial' or chemical farming spatially too
since it does not depend on intensive irriga-
tion and can be practised in semi-arid areas
under rainfed conditions. Because of its
potential for wider spread both across
farmers and regions, natural farming can
raise the overall productivity of agriculture
much more than chemical farming. The
potential for greater spread is obvious from
its cost advantage over the so-called pro-
gressive farming dependent on costly inputs.
Yields on an ideally natural farm like that
of Fukuoka may not be higher than the
yields from equally ideal demonstration
plots practising chemical farming. The claim
for higher productivity of natural farming
is not derived from such comparisons. On
the other hand, it rests on much lower costs
to farmers even in less endowed regions
under this farming and on the fact that by
ensuring a continuous improvement in the
natural resource base such a farming also
ensures a sustained increase in productivity.
There are not many like Reddy today-at
least to this author's knowledge -who prac-
tise natural farming. No sample survey to
derive 'statistically significant' conclusions
was feasible. Not even a physical verification
of his claims regarding inputs used and
yields obtained could be made by the author.
But his reasoning sounded logical and con-
vincing particularly after visiting his farm
and it indicated that there is definitely a way
out of the crisis of increasing costs facing
Indian agriculture. Certainly, more research
is needed to evolve suitable practices and to
demonstrate the potential of natural farming
in a variety of conditions. There is need for
a shift of emphasis from business oriented
research with an eye only on commercial
exploitation to people oriented research.
Research breakthroughs in bio-fertilisers and
bio-pesticides can be of help provided, as far
as possible, such inputs can be raised on
farms by farmers themselves instead of
making them dependent on bio-factories
and provided also that the ecological impact
of these inputs is well within the control of
farmers. But there is no need for waiting for
further research breakthroughs, because, the
technology of natural farming is basically
developed by farmers themselves using their
Economic and Political Weekly September 24, 1988 A-lI9
This content downloaded from 150.216.68.200 on Wed, 30 Mar 2016 10:37:13 UTC
own innovativeness and k nowledge. To
stimulate this and to enable farmiier-s to
discover their- own creativity and inniate
preference for imlproving their natural
resource base, a beginniinlg has to be made
by fixing the prices of chernicals at a level
that reflects their real environmrienttal costs.
It also means that ter-tiliser imports and
subsidies have to be stopped. It is only then
that emphasis of extenision agencies would
be more on helping tarnmers to increase the
productivity of their inputs and reduce costs,
instead of inducing them merely to apply
more and more industrial inputs with the
temptation of cheap loais. It is also only
then that we can avoid getting inito a
ridiCulous mnix-up ot ends and means, under
which otftake of accuLmlulated tertiliser
stocks is the end and agricultLural develop-
ment becomes the means.
iNotves
Rhis paper is suLbmitted ait thc seminilar, inc/in :
The Emerging Challenges, in felicitatioin of'
V K R V Rao at Iistitute t'or Social anid
Economic Chanige, Bangalore in October 1988.
Though grown out of the author's earlier work
[Nadkarni, 1987a and 1987bT, the paper owes
also to the stinmulatinig interaction he had at the
meeting of the group "Scierntists for Peace and
Development" at the Indian Institute of Scienice
in June 1988, and particularly to the opportuni-
tv he had of learnlinig from the experience of
Narayan Reddy, a farm-ler near Battgalore, wnho
believes in natural farminiig and has made a suc-
cess of it. Thanks are due also to V K R V Rao,
V 1I Rao and T R Satish Chandran for com-
ments and suggestiotts. Usual disclaimiiers
apply.
I Disaggregated tables f'rom the \National
Accounts Statistics (NAS), CSO, Govern-
ment of India, have been used here takling
the latest revised figures available. For the
years 1970-71 and from 1978-79 to 1984-85,
NAS published in 1987 has been used; anid
for other years, as follows: 1971/72: NAS
1980; 1972/73: NAS 1981; 1973/74: NAS
1982; 1974/75: NAS 1983; 1975/76: NAS
1984; 1976/77: NAS 1985; 1977/78: NAS
1986. These series have 1970-71 as the base
year.
2 Though similar data are available for forestry
and logging as well, we have excluded this
sector from our consideration here since the
comparability of input data over the vears
was doubtful. There is a sudden jump under
the item repairs and maintenance from
1974-75 onwards, which is unexplained. As
a result, this sector shows a steep decline in
output-input ratio from 20.2 in 1973-74 to
9.17 in 1974-75. The ratios are almost con-
stant between 1970-71 and 1973-74, and then
again at a lower level between 1974-75 and
1984-85.
3 Growth rates in production, adjusted for
annual fluctuations, calculated by Rao, Ray
and Subbarao [1988, p 7] are shown in
Table A (in per cent per annum).
TABLE A
Wheat Rice All Cereals Pulses All All Crops
1950-65 4.0 3.3
1968-85 5.5 2.4
All use subject to http://about.jstor.org/terms
4 f'our principles of natural t'atiting, atccording
to IfUk uoka, Cre: 1o cuLIltiVation, no chemilical
tfer-tiliser or- prepared compost, no weeding
by tillage or hcrbicides, anid no depenidence
on1 chemllicals 1includingL pesticides. "For
t'ci-tiliser, f Ukuoka gr1oss s leguLilr ilnouLs gr-ouind
cover of' white clovcr, r-Ctuirnis tth thr-eshed
strass to tlie t'ieldls, and adds a little poultry
mlaLlnure. Vie uses 110 pcr_sistcn1t or broad spec-
trulll poisotis, artd has no pesticide pro-
uramtme... Oni sot ic oi-rchard t rees he occa-
siottallv uises a mir,ZCteila oil Cemu.1lsioti fot the
col'tttol of, inisect Scales'' 1f-Iukuoka, 1984,
pp 33-341. Reddy, howescr, uses prepared
comp11)0ost, bLut hle a1lso ciriphasises spreaditig
of aItzriculttiral wastcs, anid growitng horse-
graim to be cut atid spread at the stage of
tlo\\critnc 5 htien its nitrogen implatiting is
op[t Iitt11ttii.
5 Neerni decoct ion is not to be prepared by
boilingv, buLt otil by putting out neetm leaves
itt a pot of \s atler in t le open sui t'oir tso or
thiece days. as o per Rcddv.
Referetnees
Lukuoka, Masanobu (1984): One-Straw,
Rev-oltiiott .4i Ituroduetiort o .oVatural
faroting, lndiati edition (origitial edition,
1978), Rasulia (Hoshangabad, NIP, 461001),
F-iends Rural Cetitre.
India, Goerttmeitit ot (1987): Indian
.Agriculture it Brief 21st edition, New Delhi.
- (1988): Economic Surv eY; 1987-88, New
Delhi.
Mlootiev, Pat Roy (1983): 'The Law of the
Seed-Another Development and Plant
Genetic ResoLurces', Development Dialogue,
Nos I and 2.
NMyers, Normatn (ed) (1985): The GAIA Atlas
oJ Planet .M1antagement, London and Sydney,
Pati Books.
Nag Chaudhuri, B D (1983): Introduction to
En iron,ne,ttal Managetnent, New Delhi,
Interprint.
Nair, Kusum (1983): Transforming Tradi-
tional/t. Land and Labour Use in Agriculture
in Asia attd Africa, New Delhi, Allied.
Nadkarni, N1 V (1987a): Farmsners' Movements
in India, New Delhi, Allied.
- (1987b): 'Agricultural Development and
Ecology: An Ecotioniist's View' (keynote
paper), Indian Journal of Agricultural
Econotnics, Vol 42(3), July-September.
Rao, C H Hanumantha, Ray, S K and
Subbarao, K (1988): Unstable Agriculture
and Droughts, New Delhi, Vikas.
Rao, V K R V (1 983): Indil's ,National Incom7e,
1950-80, New Delhi, Sage Publications.
Rao, V Mi atid Deshpande, R S (1986):
'Agricultural Production-Pace and Pattern
of Growth' in MI L Dantwala and others,
Indian Agric ultural Developtnent since
Independence. A Collec tion of EssaYs, New
Delhi, Oxford and IBH.
WCED (World Commission on Environment
and Development, chairman: Gro Harlem
Brundtland) (1987): Our Cotnmon Future,
New Delhi, Oxford University Press.
Foodgrai ns
3.2 1.2 2.9 3.0
2.9 0.7 2.6 2 6