The perennial paradox of Kerala’s agriculture

The release of the celebrated report ‘Poverty, Unemployment and Development Policy: A Case Study of Selected Issues with Special Reference to Kerala’ by the Centre for Development Studies in 1975 heralded a wider debate on the multifaceted dimensions of the “Kerala Model” of development.

One of the lingering dilemmas of the debate has been the staggered performance of the State’s agricultural sector over time. The dwindling status of the agricultural sector is evident from its declining share in the State’s GSDP from more than 52 per cent in 1960-61 to around 11 per cent in 2014-15.

Although the observed trend has been in tandem with national trends, the dominance of the perennial crops sub-sector in Kerala imparted a unique regional dimension to the policy challenges confronted in the era of trade policy reforms.

The eight perennial crops — coconut, rubber, arecanut, pepper, coffee, cashewnut, cardamom and tea — account for more than 65 per cent of total cultivated area in the State. Despite crop-specific variations, the crisis entangling the perennial crops sub-sector is manifested in the form of growing market uncertainties and a strategic vacuum of potential avenues for survival within the production sector.

The paralysis of the production sector and stalemate in conventional market interventions revealed the incompatibility between the professed prescriptions and basic issues.

In practice, the historical dependence of the perennial crops sub-sector on the promotional agencies under the Union government on issues ranging from production to marketing exposed the conflict between the approaches and interrelated characteristics of the issues from a regional perspective.

Apparently, the issues of the perennial crops have been subdued under the official pretensions on the asymmetries evolved in the State’s agricultural sector over time.

Therefore, issues of the country’s ‘perennial crops enclave’ are revolving around a vicious circle of dualistic policy approaches without perspective planning and necessary co-ordination between the agencies under the Centre and the State’s department of agriculture.

The genesis of the issues that surfaced during the past two decades are closely related to the five important features, viz; (i) a higher initial investment; (ii) longer gestation period and economic life; (iii) dominant share of crop harvesting costs in the total operational costs; (iv) inherited ‘export market’ orientation in a regional sense; and (v) an overarching responsibility of promotional agencies under the Centre, providing institutional support and implementing.

Commercially, unlike annual crops, cultivation of perennial crops is the agricultural enterprise equivalent of industry with in-built constraints to switch over to alternative crops at times of crisis, for survival.

Hence, the perennial crops sub-sector bears a higher vulnerability quotient in the context of unprecedented market uncertainties as experienced during the past two decades of trade policy reforms.

The resultant instabilities in farm income had a strong bearing on the dilution of routine agro-management practices and the resultant deceleration/stagnation of growth rate in productivity observed in the cases of the two major crops, viz; rubber (-2.53 per cent) and coconut (0.66 per cent), during the past one decade (2005-06 to 2014-15) is illustrative.

The combined share of these two crops is more than 51 per cent in the total cropped area in the State. Alongside, there has been a growing disengagement of the peasantry from farming activities reinforced by concerted attempts to diversify the sources of household income. The perpetual dependence on hired labour for crop harvesting across size-classes, a predominant share of crop harvesting expenses (50-70 per cent) in the total operational costs and increases in wage rates confounded the crisis.

Historically, a cardinal feature of the sub-sector has been its export orientation from a regional perspective.

The critical issue confronting the sub-sector has been persistent contradictions between the negligible shares of material costs in the net value-added beyond the farm gate (with the major exception of rubber) and the insignificant share of producers in the value chain.

The elevated status of trading capital for surplus appropriation has to be assessed in the backdrop of the growing domestic market orientation and challenges of Regional Trade Agreements (RTAs).

In essence, the challenges of market integration are confronted in the domestic market rather than in the export markets. Despite crop-specific variations, changes in tariff policy led to increases in the imports and reorganisation of trading capital.

Hence, there are well-defined limits for exploiting biological and technological possibilities at the farm level as the gains are often nullified by a more-than-proportionate fall in farm gate prices.

In short, there are serious limitations in responding to the crisis by singularly focusing on farm-management issues. An essential prerequisite for sustainable policy interventions is the creation of trade-related databases, including crop-specific RTA-wise tariff policies, as well as crop-wise imports.

At the farm management level, co-ordination and consensual approaches between the agencies under the Central and the State’s department of agriculture are necessary for preparing a perspective replanting programme and to capitalise on technological innovations in crop harvesting.

The writer is former Joint Director of the Rubber Board. Views are personal.

COMMENT NOW