If all land was given to farmers equally in India?
The farmer’s march which saw 1,00,000 farmers walking hundreds of kilometers across Maharashtra to come to Mumbai has brought agriculture and the plight of the farmers to the urban mindspace. The question is not why are farmers doing this, but the question to ask is: why haven’t farmers done this earlier? Agriculture has been a declining priority for the state since the 1990s. Yet, the emergence of a national movement of farmers hasn’t happened. I argue that even if land reform happens today, we will see a huge improvement in conditions of most farmers, women, rural economy and enable conditions for creation of a national farmers’ movement. This is a radical move but an interesting exercise. I did this as an assignment for my course on ‘Agricultural Livelihoods’ in my Masters’ in Public Policy and Governance during 2016–18 at Azim Premji University.
“For a colonized people the most essential value, because the most concrete, is first and foremost the land: the land which will bring them bread and, above all, dignity.”
― Frantz Fanon, The Wretched of the Earth
The South African minister for Arts and Culture tweeted the above quote on 27th Feb 2018. It was to mark the significant occasion of South African Parliament approving land expropriation without compensation. It comes because whites, who form 8% of the population [1], own 72% of the agricultural land held by individuals.[2]
In India, the situation is similar where 15% of the landowners own more than 55% of the agricultural area. Total number of operational holdings are estimated to be 138.11 million with the total operated area being 159.05 million hectares [3]. The average size of the holding would be 1.18 hectare. Yet, 67% of these are marginal (<1 ha.) with the average size of the land in this category being 0.4 ha. This still excludes the 144 million labourers who do not own land.
I would distribute the land equally between all cultivators and labourers so that each male and female person gets the formal title in their name. There are approximately 263 million workers, so each person would get 0.6 ha [4]. This number is like the number estimated by NSS in 2013 [5]. In case of two workers in a household, this gives 1.2 ha in the household. The major shift will be that all the landless labourers, constituting more than 50% of the agricultural workforce, will get a small parcel of land ownership and the medium and larger farmers will have a drastic reduction in land size.
There will be significant turmoil across the economy in the short and medium term. There will be significant disruption in states like Rajasthan, MP, UP where agricultural households are 70% of total households but lesser in Kerala and Tamil Nadu where they are less than 30%. Land is used as collateral for loans. The government will have to step in to provide credit failure guarantee. It will disrupt cultivation patterns, village hierarchies and value chains. The assumption is that the land redistribution is a one-time event that doesn’t take away the state’s commitment to and people’s faith in property rights. Post land redistribution, there is a restriction on sale of land for a few years to stabilize matters. After that, owners can choose to transfer, sell or lease land as they wish to. All predictions are hazarded based on current patterns, assuming stability soon after the redistribution.
Access to credit is the biggest challenge for landless labourers as they do not have land as collateral. As a result, they are forced to go to moneylenders who use the social structures to charge higher interest rates. People taking institutional credit goes up dramatically as soon as people have even a small plot of land is correlated with land size [6]. One can expect the bank loans to increase significantly at the expense of local moneylenders. Low-interest loans will allow for better capital utilization. Land titles will also allow all agriculturalists to avail of government subsidies like loan waivers, fertilizer subsidies, Andhra Pradesh’s input subsidy scheme, tube well subsidy etc. which have been limited to only the landed agriculturalists till now.
Currently, the landless own less cows, sheep, goats and pigs than landed farmers[ 7]. With land, we can expect an increase in the ownership of these animals to supplement income. However, land redistribution is not going to suddenly provide economic security. Currently, landless earn ~4500 per month, marginal farmers with <0.4 ha earn ~4100 per month whereas marginal farmers >0.4 ha earn ~5200 per month [8]. Based on these numbers, we can expect the earnings of the landless and the smaller marginal farmers to improve. These earnings are less than their consumption expenditure, so the economic status will be precarious, but consumption could rise to the current values of Rs. 6000 per month for marginal farmers >0.4 ha. And a significant number of additional worker households will have some surplus leftover. This rise in consumption of tens of millions at the bottom of the pyramid is going to lead to a significant boom in rural economy and demand for products for their needs. The high-income consumption market will be severely hit. Empirical research shows that land reforms have had a positive impact on “income, consumption and asset accumulation” [9]. In addition, land reforms have benefited the poorest segment of the population the most with substantial increase in human capital.
There is a strong likelihood of small landholders practicing more intensive form of cultivation with more water, fertilizers, pesticides and use of high yielding varieties [10]. The cropping intensity is bound to increase. This is going to create stress on the already stressed groundwater table and have implications on the health of the soil. In terms of productivity, each worker has about 0.6 ha. I would say that the GVO per hectare will converge around Rs. 17000 [11] which means much more productivity than the larger farms. Due to the weak economic conditions, HH will put in pursuit of high value crops which could alter the cultivation patters. Smallholders grow more vegetables than large landowners [12]. This is not the case for fruits where capital intensity and gestation period is higher. Given more labour and small landholdings, a large number of farmers are expected to diversify to vegetable cultivation. This will mean that farmers will look beyond tomatoes, onions and potatoes to other green vegetables which are not produced in sufficient quantities in India.
Farmers who are better resourced with more marketable surplus are better connected to markets and can negotiate for better prices. Poor farmers are sometimes not aware of MSPs and are unable to negotiate for better prices. In addition, the challenges of low surplus, transport, access and capacity to store remain. However, now traders and even large retail chains won’t have the option of excluding the small farmers because the large farmers don’t exist. Due to the great bantwara, all farmers will have similar surplus, probably low, in a region, thus leading to the possibility of more oppression for all of them by the traders. Yet, the fact that some erstwhile better off farmers are in such a situation is a good opportunity for to collectively come together and create collectives which can protect farmers from such exploitation.
Such a grand equalization is going to have a significant change in our social and political structure. Indian agriculture has suffered from declining public investment and focus since liberalization [13]. Given the sheer number of farmers, it is a puzzle. One theory is that the interlinked and cross-cutting class, caste and linguistic divisions have prevented them from being a political force [14]. Dalits are disproportionately a majority in agricultural labour [15]. This step removes the landed basis of caste and class differentiation and puts everyone in the same boat. It may be easier for a national and state level farmers’ movement to emerge to put forward their demands politically [16]. There will be demands to increase MNREGA allocations as most small farmers supplement their income with MNREGA work. Substantial increase in fund allocations for rural credit and agricultural subsidies will be required if it must serve the millions of new beneficiaries. The state will be pressured to invest more in cold storage infrastructure for growing quantities of vegetables and maybe provide MSP for vegetables. Farmers collectives may have increased bargaining power with traders and large retailers pushing for pro-farmer regulations. Increased political voice and greater equality increases the chances of demanding and securing public goods that benefit everyone [17] which lead to better institutions [18].
Traditionally, land is the “basis of political power and social status” [19]. Quite importantly, redistribution gives ownership to 98 million females (37% of owners) as opposed to 17.7 million women landholders (13% of owners) currently. This significantly increases the safety and well-being of women and their children. Land increases wage rates of labour providing additional security. Bina Agarwal’s arguments of welfare, efficiency, equality and empowerment apply to all the landless labourers who would get access to land. They have even more salience for women. Such a redistribution has the potential to change the gender relations in rural India dramatically where women have a much greater say socially, economically and politically.
[1] https://businesstech.co.za/news/lifestyle/189135/south-africas-white-population-shrinks-even-further-in-2017/
[2] https://www.bloomberg.com/politics/articles/2018-03-01/why-land-seizure-is-back-in-news-in-south-africa-quicktake-q-a
[3] Agricultural Census 2010–11
[4] I am ignoring those who own land but are neither cultivators or labourers. Assuming they are cultivators.
[5] NSS Report 571, Chapter 4
[6] Ibid. 13% of landless access loans from bank as opposed to 31% of farmers with <0.4 ha of land.
[7] NSSO, “Key Indicators of Land and Livestock Holdings in India, NSS 70th Round, Jan-Dec 2013”
[8] NSS 2014, “Key Indicators of Situation of Agricultural Households in India”
[9] Deininger, K., Jin, S., & Nagarajan, H. K. (2009). Land reforms, poverty reduction, and economic growth: evidence from India. The Journal of Development Studies, 45(4), 496–521.
[10] Chand et al. 2011. Farm Size and Productivity: Understanding the Strengths of Smallholders and Improving their Livelihoods.
[11] Taking the GVO of 1–2 ha size class assuming that 3 people in a HH work on a farm.
[12] Birthal, P. S., Joshi, P. K., Roy, D., & Thorat, A. (2013). Diversification in Indian Agriculture toward High‐Value Crops: The Role of Small Farmers. Canadian Journal of Agricultural Economics, 61(1), 61–91.
[13] Ramakumar, R. (2012). Continuity and change: notes on agriculture in ‘New India’. A new India? critical reflections in the long twentieth century, 42–70.
[14] Chatterjee, S., & Kapur, D. (2017, August). Six puzzles in indian agriculture. In India Policy Forum 2016 (Vol. 17, p. 13).
[15] https://www.hindustantimes.com/interactives/dalit-farmers-landless-agricultural-labourers-minimum-support-price/
[16] However, what will be the reaction of Dalits towards the landed castes after centuries of marginalization is anybody’s guess.
[17] Cardenas, J. C. (2003). Real wealth and experimental cooperation: experiments in the field lab. Journal of Development Economics, 70(2), 263–289.
[18] Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. Handbook of economic growth, 1, 385–472.
[19] Agarwal, B. (1994). A field of one’s own: Gender and land rights in South Asia (Vol. 58). Cambridge University Press.
