Unlike the affluent western Maharashtra, represented by successful farmer-politicians like Union agriculture minister Sharad Pawar, which gets plenty of facilities by way of irrigation and credit, Vidarbha gets practically nothing (see graph: Tale of two regions), despite the fact that Vidarbha has harsher conditions mainly low soil fertility and less rain.
The figures are telling. Input costs for cotton have risen from Rs 5,000 per hectare (ha) in 1995 to Rs 10,000-12,000 now. Moreover, only 11 per cent of the cotton crop has assured irrigation in Maharashtra. Water charges are also the highest in the country. They vary from Rs 180 to Rs 1,080 per ha, depending on several variable factors. In most other cotton states, water is either free or charged nominal rates in the range of Rs 50 to Rs 200. Productivity is also a problem. Maharashtra has the highest area under cotton -- around 3 million ha on average, each year. This is more than Punjab, Haryana, Rajasthan, Madhya Pradesh and Andhra Pradesh put together. But its productivity is the lowest in the country -- it produces less than Gujarat, where the acreage is half.
Cotton farmers survived because of the higher msp paid by the state government and procurement and marketing systems that assured farmers their produce would be bought and sold by the government. Private sector participation in procurement and marketing hit the state schemes in 2002; and higher msps went this year. And suicides started going up.
Till 2003-2004 Maharashtra used to be the only state in the country where a monopoly scheme for procuring cotton was in operation. The state used to offer a 20 per cent premium on the central government's declared msp, under the Maharashtra Raw Cotton Monopoly Procurement Act, 1972, to counter low production and prices. The act gave the Maharashtra Cotton Producers' Marketing Federation (mcpmf) monopoly status as the sole procurement agency. Under the scheme, 75 per cent of mcpmf's profit was to be distributed as bonus to farmers while the rest was to be kept as a price-fluctuation buffer. Critics say the scheme was started to help the Mumbai-based textile industries rather than farmers. Visesh Joshi, an activist based in Mumbai, says the scheme was started in 1972 because the international prices were too high and there was a production crisis in India. But, clearly, farmers benefited.
This procurement scheme was better than the central procurement scheme by the Cotton Corporation of India (cci). cci procures only 10 per cent of the farmers' produce across the country, based on quality parameters, while mcpmf procured the entire harvest.
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But over the years, the scheme was destroyed by widespread corruption, which created huge losses. Till 1994, the loss was only Rs 172 crore. The figure rose to over Rs 5,000 crore in 2004-2005, when mcpmf incurred an incremental loss of Rs 1,600 crore. As a result, financial institutions refused to refinance the company, which the Maharashtra government cited as the reason for doing away with bonus and premium schemes.
The Maharashtra government breached its promise to farmers twice this cotton season. The initial blow came in the beginning of the 2005-2006 cotton season when the bonus was abolished after 33 years. This prompted farmers to flock to sahukars, who charged them much higher interest.
A study by the Tata Institute of Social Sciences on Vidarbha farmers' suicides reveals that about 75 per cent of farmers in the region obtained loans from moneylenders. It also found that most of them had defaulted on bank loans over the last four years, which is why they had to turn to moneylenders. Even moneylenders have become cagier. With rising costs and the advent of Bt seeds increasing credit requirements, the situation has turned desperate .
The second blow came mid-way through the season. The government lowered msp from Rs 2,500 per 100 kg to Rs 1,750. This translated into huge debt traps even before the season ended, triggering suicides before procurement started. "The government reduced procurement price to the all-India level to reduce the Rs 5,000-crore loss of the procurement agency, mcpmf," claims N P Hirani, the chief of the agency.
"This year's payment crisis has its roots in electoral promises made before past elections. The Democratic Front government (Maharashtra's ruling coalition) promised a rate of Rs 2,700 per 100 kg to cotton growers before elections. But it reneged. It reduced payment liabilities by asking mcpmf to declare a support price of Rs 2,500. Even that went down the tube, ruining most farmers," says Jaideep Hardikar, a journalist and researcher in Vidarbha. "The promise of Rs 2,700 per 100 kg and past years' boom in international markets saw the acreage under cotton rise by 20 per cent. Now with a price crash, the textile mills will have a field day," says Vijay Jawandhia, a farmer leader.
The cotton failure in Vidarbha is a lesson in policy failure -- a fact underlined by Gujarat's spectacular success.
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The worst losers are farmers in the least developed countries (ldc). This subsidy is helping only a few thousand farmers in the developed nations but is putting millions of poor Africans into a death trap. For example the us $4- billion subsidy that the us gives is only meant for 20,000 farmers who cultivate cotton in that country," says D K Nair, secretary-general of the Confederation of Indian Textile Industry (citi). The fact that many countries in west and central Africa are heavily dependent on cotton exports makes the situation worse. In Benin, Burkina Faso, Chad, Mali and Togo, cotton accounts for two-thirds of agricultural exports and one-third of the total exports, meaning many livelihoods depend on growing cotton. In many non-African countries too, cotton is a major source of export revenue. In Uzbekistan, Tajikistan and Turkmenistan, it accounts for 45, 20 and 15 per cent of total commodity exports and make a significant contribution to gdp (8 per cent in Uzbekistan and Tajikistan, and 4 per cent in Turkmenistan).
At the individual level, a fall in prices means attrition of incomes that are already, in many cases, close to subsistence level. At the macro level, it means that adverse terms of trade reduce revenues of governments in these countries and therefore their capacity to put in place programmes for livelihood security -- say, in this case, subsidies to their cotton farmers. It's a vicious circle. In the wto era, Brazil disputed the issue of cotton subsidies of the us in April 2004. The dispute-settlement panel ruled in favour of Brazil. The cotton issue is so important for the livelihood of the African nations that the wto ministerial in Hong Kong decided to remove all kinds of export subsidies from cotton by 2006 and allow a duty-free and quota-free market access for exports from ldcs. But this is cosmetic surgery, given that export subsidies account for less than 7 per cent of total subsidies given by developed countries. Most subsidies are domestic and remain untouched by wto rulings.
Tariffs are also an issue. The average world import tariff on cotton is 5.3 per cent, ranging from China's 90 per cent to zero for 64 countries including members of eu, Australia and Turkey. Of the other large cotton-producing countries, Brazil imposes a tariff of 9.2 per cent, India 10 per cent, Pakistan 5 per cent and Uzbekistan 30 per cent. The average tariff for West and Central African countries is 7 per cent. The us has variable tariffs ranging between nothing and us $0.31 per kg.
India trades in almost all segments of the cotton market either as buyer or seller. Projected figures show it will be the third largest producer, second largest consumer and fourth largest exporter of cotton in the world in the 2005-2006 season. It used to be the 10th largest importer till last year. This year, however, imports are likely to see a decline of 600,000 bales from last year's 1,200,000 bales. India will end with the second highest closing stock of cotton this year (see box: Balance sheet), more than the us and just below China. a pact that ensured that textile trade was freed from tariff and non-tariff barriers -- at the turn of 2004 has opened opportunities for India's textile exports. India has always been a big player, but has played second fiddle to China, ever since it implemented its policy of market socialism under Deng Xiaoping in the early 1980s.
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Cotton is the only genetically modified (gm) crop to be cultivated in India. gm cotton accounted for an estimated one-third of the total cotton acreage in 2005-2006, which also includes illegal Bt cotton, mostly in Gujarat, Punjab and Rajasthan, where the yields are the highest. But the exorbitant price of Bt seeds and royalties are areas of concern (see box: Grey areas). Besides, they do not always fit into Indian conditions. Scientists also believe a variant that suits Indian conditions must be developed soon.
Bt cotton can definitely help farmers, as it reduces the incidence of American bollworm, says B N Khadi, director, Central Institute for Cotton Research (cicr). The initial Bt cotton uses the Cry1Ac gene, which has been brought to India by its us- based patent holder Monsanto. Its effectiveness has always been under scrutiny. Studies by geneticist Suman Sahai of Gene Campaign found the first two varieties of Bt cotton, mech-162 and mech-184, introduced by Mahyco Monsanto Biotech, were unfit for Indian conditions. The study found that Bt cotton required higher inputs like water and fertilisers and was not effective against pink bollworm, the second most prevalent cotton pest. Another recent study by K R Kranthi of cicr found that the first Bt varieties sold by mmb and Rasi Seeds were not effective against bollworm pests. The study further said the Bt gene was 10 times less effective in the case of American bollworm, India's main pest, compared to the tobacco budworm, the major cotton pest in the us . "Though we assume these to be the best possible seeds available, we can do better," says S Nandeswar, a scientist at cicr. (see 'Cotton tangle', Down To Earth, Aug 30, 2005)
When Monsanto and the us department of agriculture developed Bt cotton, they considered pest incidence, existing varieties and agro-climatic situation in the us. The gm variant chosen was Cocker-512. Considering Indian conditions, this variant is not the best possible option, and second, when Bt hybrids were developed in India, Cocker-512 was crossed with Indian strains. This reduced the effectiveness of pesticidal toxins. Given India's vast biodiversity, the problem of introducing gm seeds becomes very complicated. Since Bt seeds were developed without taking this diversity into account, its success was limited.
After constant criticism of the initially introduced Bt varieties, Monsanto came up with Bollgard- II , an improved variety. "This is 10 times better than the earlier version and it includes a new gene Cry2Ab," says Ranjana Smetacek, director, corporate affairs, Monsanto. Senior scientists at cicr agree. "This is a better technology, no doubt, but the question is if they can do this today why not earlier," adds Sahai. But problems remain. The long gestation period involved in developing new seeds is one of them, Smetacek says.
American cotton -- Gossypium hirsutum -- and its hybrid varieties today cover 70 per cent of the cultivated area in India while only 10 per cent of the area is under the Indian variety, Gossypium herbaceum . But American cotton is not suitable for Indian situations, which leads to frequent crop failures. It has brought numerous diseases, including the notorious American bollworm. It also requires at least three times more water and other inputs and its yield plummets after three years, unlike Indian cotton, which gives the same level of yield for 30 years. Although not suitable for Indian conditions, the long staple American cotton is popular because machines to gin and spin Indian cotton are not readily available.
The technology problem dates back to the mid-eighteenth century when Richard Arkwright invented the first spinning machine based on the staple length of American cotton. All machines developed subsequently were based on the same model. After the us civil war, when Lancashire started importing cotton in a big way from India, the mills found Indian cotton unsuitable. Lesser staple length meant that the fibre broke frequently. To avoid the high costs that were likely to go into fresh innovation, the colonial government introduced and promoted American cotton in the country. But these attempts were unsuccessful because it could not cope with Indian conditions.
Although American cotton could not replace Indian cotton, the Britishers replaced the best Indian varieties and succeeded in introducing it in some regions. Ironically, while after partition only 3 per cent of area under cotton was covered by American cotton, it has now risen to 70 per cent. To buck this trend, the technology issue has to be addressed.
A roller-ginning machine best gins Indian cotton, while the charkha is the best spinning option. A roller-ginner is slow and labour-intensive, but produces fabric of better strength, as fibres don't break very often. In the wake of increasing textile exports more centralised ginning is preferred. The charkha is best suited for spinning Indian cotton varieties. Although a time-consuming process, spinning with the charkha could generate more employment by providing a decentralised system of manufacturing.
Unfortunately, after Gandhi few people have tried to promote the charkha or improve it technologically. One important innovation was the 'Amber Charkha', which was developed by a Gandhian, Bholanath, in the 1960s. In recent years, a novel initiative has been started by an ngo called Dastkar Andhra in Chirala village in Prakasham district of Andhra Pradesh. The village has adopted a decentralised system. A 62-year-old woman, Uzramma, leads a team of 41 spinners and weavers.
To facilitate this operation, Vortex, a private company, has designed and developed a machine that consists of an assembly of 21 motorised Amber charkas. The technology has been developed taking into account village-level factors like spinning small lots of cotton of variable quality, meeting the diversity of yarn specifications of small looms and availability of small and low capital costs," says L Kannan of Vortex, who designed the machine. This technology discards a large number of expensive steps like baling, transport of bales etc, says G V Ramanjaneyulu of the Centre for Sustainable Agriculture, Hyderabad.
These are not the only problem areas in this sector.