Labour exit

Labour shortage in agriculture forces Indian farmers to innovate to stay afloat

Published: Tuesday 15 December 2015

Finding answers to the 34-million question

India’s agriculture labour market is in a state of flux. Going by the National Sample Survey Office’s (NSSO’S) periodic surveys, 34 million workers left the sector between 2004-05 and 2011-12. This is the first time in India’s living memory that the sector is reporting a decline in labour participation (see ‘India’s labour crisis’). It is a worrying situation because agriculture still employs close to half of India’s workforce and accounts for 64 per cent of rural employment. The dip in the agriculture labour force has been acute in India’s key grain-producing states like Uttar Pradesh and Madhya Pradesh. To make matters worse, the labour shortage is impacting the country’s five staple crops: rice, wheat, sugarcane, groundnut and cotton.

Such is the impact of the shortage that labourers are now earning more than the farmers. This is due to the significant rise in agriculture labour wage. According to an analysis by the International Crops Research Institute for Semi-arid Tropics (ICRISAT), the daily nominal wage rate of various agricultural activities, such as ploughing, sowing and transplanting, increased 3.6 to 4.2 times during 2004 and 2014. According to the Department of Agriculture and Cooperation, the cultivation cost of major crops such as paddy and wheat has been increasing at an annual rate of 10 per cent due to the rise in labour cost that now accounts for up to 50 per cent of total production cost of crops like paddy.

So, why are labourers moving out of agriculture at this time? For many, it is a simple play out of the change in Indian economy where people have better-paying livelihood alternatives in non-farm sectors such as construction and service sectors. According to ICRISAT, though the value of GDP from agriculture and allied activities has increased by 142 per cent during the last decade, and by 121 per cent during the past five years alone, its share in GDP has been declining due to the rise in other sectors. The share of agriculture in the GDP has declined from 20.7 per cent in 2001-02 to 12.9 per cent in 2013-14. Some also say the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) that guarantees manual jobs and offer significantly high wage rate is the reason labourers are quitting the farm sector. But several surveys done by both government and non-government agencies show that MGNREGA could hardly have lead to the abandonment of the agriculture sector to such an extent; at an average the employment scheme offers just 31 days of work a year. However, the employment programme did increase the wage rate for agriculture labourers. At the same time, the dip in the overall agricultural workforce has not been matching.

Estimates by consultancy agency KPMG, using the erstwhile Planning Commission’s data, suggest another 23 million more will quit agriculture in the next five years. It is clear that the current situation is both a threat and an opportunity for India’s agriculture sector. The threat is overwhelming: scarcity of labour and increasing wage bill might make agriculture unviable. The opportunity is that the much talked about extension of agriculture mechanisation can happen now. Farmers are now being forced to find new ways to reduce their dependency on manual labour. Innovations are happening on several fronts: individual farmers are embracing new technologies, governments are earmarking sizeable funds for farm mechanisation, agritechnology companies are making use of this opportunity to quickly supply machines suitable for India, and research institutions are propagating crops that require less labour.

The good news is that the consolidated efforts of different interest groups are working. According to the Indian Council of Agriculture Research, farmers are already reaping benefits worth Rs 100,000 crore through various attempts to minimise their labour cost. Down To Earth correspondents travelled across the country to report on this turnaround, while India’s noted agriculture economists and scientists explain the phenomenon. The message is clear: it is a curious case for deep probing.

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