THE ECONOMIC Review 2007, released during the budget session of the State legislature by the Kerala State Planning Board, makes the claim that the GSDP of the State in real terms increased by 8.1 per cent in 2006-07, which is marginally higher than 8 per cent of the previous year. The document says: “What was notable in Kerala during 2007 was that the high growth rate came together with reduced rural distress. The most significant reflection of this was that peasant suicides came to an end in the second half of 2007, Kerala being the first major suicide-affected state to have put and end to this tragic phenomenon.”
The review looks at the first year of the Left Democratic Front Government led by V S Achuthanandan, which came to power in May, 2006. In the previous years the State was reeling under a spate of peasant suicides and according to official figures there were as many as 179 cases reported from the tiny district of Wayanad alone during 2002 to 2006. Two other major districts affected were Palakkad and Kasargode. Hence the first priority of the Government as it took over, was to find a solution to the widespread farmer distress. One of the first steps taken by the Government was to set up a statutory Agricultural Debt Relief Commission, a six-member body with members drawn from peasant organizations, legislative assembly members, judicial officers, etc, empowered to look into the complaints and find redress with the resources made available in the State budget.
The Economic Review noted: Of greater significance is the setting up of a statutory Debt Relief Commission by the State Government, which, brought substantial hope to the distressed peasantry with its formation.
It is a fact that the commission did give rise to a lot of hope among the poor peasants who were reeling under a tremendous burden of mounting debts. In the first few months itself, it had received over 4.76 lakh complaints from peasants all over the State. But the claim that the Government was able to put an end to the suicides among farmers was far fetched, as even during the 2008 summer, a few suicides were reported from Kuttanadu, known as the rice bowl of Kerala. What is distressing about the Kuttanadu suicides is that while so far the suicides were confined to the hill regions, they were now spreading to new areas. (As I finalize this note, a report came from Kasargode that on July 25, 2008, two peasants committed suicide in the district as they were not able to get any support under the government sponsored schemes.)
With a view to keep a tab on the functioning of the Agricultural Debt Relief Commission, this correspondent and a friend, journalist K P Vijayakumar, spent a few weeks monitoring it, during November-December 2007, when the Commission was holding its first sittings. We also checked back with the rural situation, looking at specific cases in order to locate what went wrong in the life of those who were forced to appeal to the Commission. It was a sad spectacle that we witnessed, as the Commission struggled with its limited funds, few staff members and many hurdles of a technical and administrative nature, facing hundreds of highly strung poor peasants waiting for redress of their grievances everywhere they went. The Commission was empowered to write off 75 per cent of the loans amounting to Rs.50,000 taken from cooperative banks, which they had to compensate from funds promised through budgetary provisions. However, they had no authority to provide relief on loans availed from nationalized or private scheduled banks. A large part of the agricultural loans were from the commercial banks and private money-lenders, as the peasants had availed every possible loan from every source available.
Here are a few cases we have studied, watching the Commission’s proceedings, talking to the distressed peasants who came to present their grievances and visiting some of their homes and villages to examine the actual state of affairs that led them to the depths of penury and distress.
The Debt Relief Commission had conducted a series of sittings at the Government Guest House, Kalpetta, headquarters of Wayanad, known as the district that has seen the largest number of peasant suicides during 2002--2007. These sittings were held in the last week of November and the first week of December, 2007.
Annamma Mathai, a 65-year-old woman from Pulpally panchayat in Wayanad, whose husband had died two years ago leaving her a land holding of 2.05 acres and a huge debt, had arrived in the town on the evening of November 29, as she had received a letter from the Commission to be present personally the next day. She was cultivating ginger and pepper in her small holding and as the products normally used to fetch reasonable returns, it was sufficient to keep the family going. Still, it left them nothing as savings because of seasonal fluctuations in prices. However, pepper vines were hit by a fast spreading disease wiping off all the plants. Her husband Mathai took a loan of Rs. 25,000 from the Nadavayal branch of South Malabar Gramin Bank to revive his farming operations. But he was unable to repay the loan and after his death, the total amount she owed to the bank had reached Rs. 42,000 leaving her no way to escape debt trap.
Annamma was the 52nd person in the queue and after a few hours’ waiting on an empty stomach --she had had no breakfast-- she was ushered into the presence of the Commission. Her files were examined and the Commission after consultations with bank officials, gave its verdict: The interest and penalty interest will be waived, she will have to pay the principal amount.
She was standing there thunder-struck, no words coming out of her mouth. Then after the lapse of a few moments, she managed to say through her tears: “Sir, where do I find the money, I have nothing…”
Moments later, she was seen moving out of the building, her head low and her frail figure swaying like a reed in the heavy Wayanad wind blowing outside.
A large number of peasants who came to the Commission were small-holding farmers whose small loans had become huge debts with penal interest as they were unable to repay the loans. But what kept them from repaying these small loans? Expert studies have been made by various agencies which came to the conclusion that non-remunerative agricultural practices, continuous price fluctuations in the market which left farmers with no savings, heavy debts owing to non-farming activities like expenses on weddings, widespread diseases of the plants, etc, as reasons.
We went to a few villages to see what actually took them to debt trap and such deep penury. One of the villages visited was Poozhithode, a small hamlet in the ward four of the eastern hill panchayat of Chakkittappara, in Kozhikode district. It is practically an inaccessible place as there are no roads; one has to walk three kilometres to reach the place. Here we met Vettappala Chinnamma, a 68-year-old woman, who lives in a dilapidated two storey building, with her sister. Chinnamma came almost fifty years ago to this remote village from Ranni in South Kerala as her family came to the north in search of a better livelihood. Land was cheap and plenty and her father had 5.5 acres of forest land converted into farm lands. They had planted areca-nut palms in the land.
Areca-nuts are spices used as an ingredient in many products and hence depend solely on global markets. There were times when it fetched very good prices, but recently there has been a major drop in prices and demand that left many farmers in distress and their plantations remained uncared for. Chinnamma’s was a two-member family with 5.5 acres of rich agricultural land, in which stood 3500 areca-nut palms, all of them headless wonders by then. When diseases hit, they had no resources to care for the palms and with no income from the land, they were almost starving. The areca-nut palms were all destroyed by the disease that had spread in the region making it a graveyard of areca-nut palms. These are long and lean plants which bear gold-colored areca-nuts with minimum care for the palms, but once the disease hits, the only way out is to replant them and for a plant to grew and bear nuts it takes a few years’ time and an infusion of heavy investment.
Chinnamma had the land but no resources to replant them. She was surviving only because of the Pubic Distribution System which is still widespread and quite effective in Kerala. Her ration card entries revealed the story of how misfortune came to take control of her life: Till May and June 2007, she was not lifting any rice from the PDS outlet. Then came the season of plant disease and ever since, from July to November, the time of our visit, the entries said she had received five kg of rice every month.
This village has many such cases of sudden misfortune hitting them like a bolt from the blue. Poovathumalil Kuttappan, an active CPM worker, has five acres of land with 3000 areca-nut palms, but the contagious disease destroyed his entire plantation. He made an effort to revive his fortunes, taking loans from various sources to replant and fight the disease. He had taken a loan of Rs. 15,160 from the Chakkittappara Service Cooperative Bank and another of Rs. 85,000 from the Union Bank of India, and was facing revenue recovery proceedings from both.
Poozhithode is classic case of an entire village going to dogs: It has an area of 88 hectares of land, and there were as many as 29 peasant families with small and medium holdings there. In the last week of November 2007, there were only six families remaining as all others had left the village looking for means for survival elsewhere. It was not lack of hard work, or physical resources or land that made their life miserable. It was the unpredictability of a peasants’ life, its total lack of any social security cover even as they solely depended on the vagaries of a global market and an equally unpredictable climate and spreading plant diseases that made them flee from the place they had lived for generations. Peasants complained that the diseases were now becoming more and more common and frequent, and many suspect it could be the impact of a changing climate patterns, irregular rainfall and excessive dependence on chemical fertilizers and pesticides.
While diseases and poor prices destroyed life in area-nut plantations, it was a global drop in prices that brought hardship to villages in Wayanad where coffee is grown. In the first week of December a visit to Kambalakkadu, a small town that smells of coffee and renowned for its coffee market, gave a picture of what went wrong with this global brand. It was here we met Sarojini, a worker in a coffee plantation at Kozhinjakkadu, in Kaniyampatta panchayat. She lives in a small hut with her two children; her husband had abandoned her two years ago. She had received Rs. 60 for a day’s work in the plantation besides four idlis, three of which she had saved three for her children.
The plantation was in bad days and there were no permanent workers any longer. Sarojini got work for three days a week. In a way, she was lucky compared to Adivasi women who got a pay of only Rs. 50 a day, if at all they had work.
The present economics of coffee production is hopeless for small and medium growers, says James, a small grower here. The coffee prices were falling and expenses for cultivation were growing. He had three acres of coffee but recently had to sell 35 cents of land to meet pressing burdens. His family of four survives on the coffee grown in the remaining 2.65 acres of land. Last year his total yield was 30 bags of coffee, each bag containing roughly 54 kg of beans. Processed, it would yield 30 kg of coffee kernel per bag, which fetches Rs. 70 per kg. Considering the expenses he incurred in maintaining the plants including the manual work, fertilizers, etc, he points out that it works out to a loss of around Rs. 60,000 per acre. At the same time, the Nescafe Classic coffee, a major brand, is sold at Rs. 68 per pouch of 50 grams in the retail outlets.
The Government policy of coffee procurement monopoly for the Coffee Board had done damage to the growers as the prices offered by the Board were quite low compared to open market. After a series of agitations, the growers were allowed to sell in the open market which, during the season of price hike, helped them. In fact in 1994-95, the local prices had touched a record of Rs. 120 per kg, but later on it fell sharply and during 2002-03, it touched the lowest benchmark of Rs.15. Last year it stood at Rs. 70, way below the boom period prices.
A third major crop that was examined during the study was pepper, an important spice grown widely in Wayanad. Pepper is historically known as black gold because of its vast demand in the world market even from the Roman times. Pulpally, known as the base of Pazhassi Raja who resisted the British East India Company in 18th century in a series of heroic battles, has been the centre of pepper trade and till a few years ago, when the plants were hit by a debilitating disease even as the prices started to crash, it was a prosperous area. In its best of times, there were as many as 540 Mahindra jeeps in this small village; one of the largest congregation of such vehicles in a small village in India. However, in the past five years this village had seen as many as 124 farmer suicides, the largest number in any Kerala village.
What brought a spate of misery here is a double tragedy: The crashing prices combined with a sudden spread of new diseases that destroyed not only the pepper vines but its supporting plants like murikku, a local variety of soft wood tree bearing bright red-colored flowers in summer. Pepper can be replanted easily but without the supporting plant, it just can’t survive. The effort by State and Central Government organizations and farm officials to revive the pepper cultivation in Pulpally is yet to take off as the entire village looks like a graveyard of pepper vines, the dried and withered supporting plants remaining like ghosts.
The sudden decline to penury and destitution has had a tremendous psychological impact on the village population, and local doctors say that there has been a sharp increase in the incidence of psychological problems and disorders. Many people have left the village, leaving behind their lands uncared for, in search of jobs in Karnataka, and women have left for the sweatshops in Tirupur and other places.
So what we saw in the villages in the last weeks of 2007 was something dramatically different from the picture described in the Economic Review report, 2007. The Government’s actions had indeed raised high hopes but the limitations imposed by the restricted operation of the Commission had put a brake on its effectiveness.
The Government in its efforts to bring some succour to distressed farmers, had decided to take over debts up to Rs. 100,000 in the case of peasants who committed suicide. It has helped a number of families who were left without any means of subsistence after their breadwinners had taken the easy way out. The Central Government package of taking over loans for agricultural purposes from nationalized and scheduled commercial banks, announced in the budget 2008, has also helped ease the situation to an extent. The Economic Review reveals that as many as 248 loans availed by the deceased farmers with liabilities up to Rs. 100,000 had been written off by commercial banks and the total amount was to the tune of Rs. 76.67 lakh. In addition, the cooperative banks had written off 487 loans of the deceased farmers, worth a total of Rs. 153.26 lakh by May 31, 2007. The total loans taken over in the both categories came to 885 involving a total amount of Rs. 2.30 core.
It is a fact that compared to the gloomiest days in recent past, things seem to be looking up now. There are many factors that helped ease the tensed situation. First, there is a minor revival of world market prices for a variety of cash crops raising hopes once again; secondly, the debt relief efforts by State and Central Government agencies seem to have arrested the trend of mass despair; third, there is a substantial increase in paddy procurement prices from Rs. 6.30 to Rs. 9 this year; and the implementation of the National Rural Employment Guarantee Scheme is somewhat effective in the poorest districts of the State, contributing to this trend.
But these are temporary and piecemeal measures whose effects could be wiped off once the prices dip again and the official aid programmes are withdrawn. What we need urgently to develop seem to be a long-term strategy that will ensue regular, remunerative prices for the farmers, a social security net for those who face sudden reversal of fortunes owing to the over-dependence on global markets, and an effective and farm-based science and technology development programme that would help address the widespread problems of diseases, erratic climate conditions, changing farming practices, etc.
(Courtesy:www.infochangeindia.org, August, 2008.)
Showing posts with label Agriculture. Show all posts
Showing posts with label Agriculture. Show all posts
Saturday, August 9, 2008
Monday, July 21, 2008
Will Corporate Do-gooders Save the World and its Poor?
BILL GATES is now a philanthropic messiah and his speech at Davos where he elaborates on his new concept of creative capitalism is his new manifesto. It could enthuse people and it could perhaps even solve many of our problems with the help of corporate do-gooders.
Having worked in and reported on economic and development issues of some of the poorest parts of the world, I feel the devil could always be in the details. Once the former Indian prime minister, Rajiv Gandhi, whose youthfulness and commitment to the cause of the poor reminds me of the Bill Gates of today, had pointed out that of every 100 rupees the government spent on the welfare of the poor only 15 actually reached them. The rest disappeared into some black-holes that divide the governments/philanthropists/ NGOs and international aid agencies from the really needy people who live far away.
So what seem to be the real problems is not the lack of resources or lack of willingness of the rich to pay for the benefit of the poor. It is the sheer chasm that divides both these worlds, quite unbelievable but absolutely true.
Bill Gates speak about a number of projects launched by the corporate world for bringing better resources and benefits to the poorer sections of our world. One of the projects he speaks about is the new initiative for bringing the African coffee growers in direct contact with the major Corporations in the business so that their returns would be doubled.
I am not familiar with the African scenario, but I have seen the life and experiences of Indian coffee growers, mainly in Wayanad, a district which has seen the largest farmer suicides in Kerala, a south Indian state afflicted by widespread farm distress in recent past. During 2002-2006, this tiny district had reported as many as 179 farmer suicides, according to the Economic Review 2007, released by the Government of Kerala.
Coffee has been a major crop here, most of the plantations started by the British planters who came here in 19th and early 20th centuries when India was a British colony. Now the major plantations are owned by big companies while there are a large number of small and medium growers who solely depend on coffee for survival.
As a journalist, I went to the place during November-December 2007 to find out what went wrong with their life and why there were so many suicides in these villages. It was a distressing situation: coffee is highly dependent on global market prices and small and medium farmers who cultivate it in a few acres of land, find it hard to withstand price dips and they have no resources to wait till the prices recover. They have to sell out even at huge loss because they are, in most cases, heavily indebted to banks, money-lenders, etc.
Here is the economics of coffee production for small growers:
Malana James, a grower with 2.65 acres of coffee in Kaniyampatta panchayat, Wayanad, got 30 bags of coffee beans in the 2007 season from his plants. Each bag contains 54 kg of beans and when processed he gets 30 kg of coffee kernel from each bag. And the amount he got for one kg of coffee kernel in 2007 was just Rs. 70.
He sells in the open market, and the major corporates procure it. The prices keep fluctuating every year, every season: it was as high as Rs. 120 for a kg in 1994-95 and then it dropped to as low as Rs. 16 in 2002-03. He said last year he lost around Rs. 60,000 on his small plantation.
At the same time the value-added coffee sells in the markets, at prices astronomical compared to the prices farmers get. Nestle India’s Nescafe Classic, a premium brand, is sold at Rs. 68 per pouch containing 50 grams.
I have experienced similar situation in most of the crops that depend on global markets. There is an obscene level of price differences, the small growers being fleeced like anything. But the corporates failed to ensure even minimum price stability for the growers, even in the days of this acute farm distress and mass suicides. It was the federal and state governments who did some fire-fighting operations with the institution of a debt relief commission and higher budget outlay, etc, and taking over of the debts of those who committed suicide so that their families need not keep running from pillar to post to pay off the debts left behind by their dead bread-winners.
I am not ruling out that corporates may have a say or a role, but can they really bring about a change? I doubt it, because their philanthropic role has always been conspicuous by its absence where it really matters: that is among the most backward parts of the world where people are committing suicide because of debt, destitution and lack of any support at the time they really need some.
Having worked in and reported on economic and development issues of some of the poorest parts of the world, I feel the devil could always be in the details. Once the former Indian prime minister, Rajiv Gandhi, whose youthfulness and commitment to the cause of the poor reminds me of the Bill Gates of today, had pointed out that of every 100 rupees the government spent on the welfare of the poor only 15 actually reached them. The rest disappeared into some black-holes that divide the governments/philanthropists/ NGOs and international aid agencies from the really needy people who live far away.
So what seem to be the real problems is not the lack of resources or lack of willingness of the rich to pay for the benefit of the poor. It is the sheer chasm that divides both these worlds, quite unbelievable but absolutely true.
Bill Gates speak about a number of projects launched by the corporate world for bringing better resources and benefits to the poorer sections of our world. One of the projects he speaks about is the new initiative for bringing the African coffee growers in direct contact with the major Corporations in the business so that their returns would be doubled.
I am not familiar with the African scenario, but I have seen the life and experiences of Indian coffee growers, mainly in Wayanad, a district which has seen the largest farmer suicides in Kerala, a south Indian state afflicted by widespread farm distress in recent past. During 2002-2006, this tiny district had reported as many as 179 farmer suicides, according to the Economic Review 2007, released by the Government of Kerala.
Coffee has been a major crop here, most of the plantations started by the British planters who came here in 19th and early 20th centuries when India was a British colony. Now the major plantations are owned by big companies while there are a large number of small and medium growers who solely depend on coffee for survival.
As a journalist, I went to the place during November-December 2007 to find out what went wrong with their life and why there were so many suicides in these villages. It was a distressing situation: coffee is highly dependent on global market prices and small and medium farmers who cultivate it in a few acres of land, find it hard to withstand price dips and they have no resources to wait till the prices recover. They have to sell out even at huge loss because they are, in most cases, heavily indebted to banks, money-lenders, etc.
Here is the economics of coffee production for small growers:
Malana James, a grower with 2.65 acres of coffee in Kaniyampatta panchayat, Wayanad, got 30 bags of coffee beans in the 2007 season from his plants. Each bag contains 54 kg of beans and when processed he gets 30 kg of coffee kernel from each bag. And the amount he got for one kg of coffee kernel in 2007 was just Rs. 70.
He sells in the open market, and the major corporates procure it. The prices keep fluctuating every year, every season: it was as high as Rs. 120 for a kg in 1994-95 and then it dropped to as low as Rs. 16 in 2002-03. He said last year he lost around Rs. 60,000 on his small plantation.
At the same time the value-added coffee sells in the markets, at prices astronomical compared to the prices farmers get. Nestle India’s Nescafe Classic, a premium brand, is sold at Rs. 68 per pouch containing 50 grams.
I have experienced similar situation in most of the crops that depend on global markets. There is an obscene level of price differences, the small growers being fleeced like anything. But the corporates failed to ensure even minimum price stability for the growers, even in the days of this acute farm distress and mass suicides. It was the federal and state governments who did some fire-fighting operations with the institution of a debt relief commission and higher budget outlay, etc, and taking over of the debts of those who committed suicide so that their families need not keep running from pillar to post to pay off the debts left behind by their dead bread-winners.
I am not ruling out that corporates may have a say or a role, but can they really bring about a change? I doubt it, because their philanthropic role has always been conspicuous by its absence where it really matters: that is among the most backward parts of the world where people are committing suicide because of debt, destitution and lack of any support at the time they really need some.
Monday, May 12, 2008
Kanjikuzhy Leads the Way for Rural Kerala
Travels in Vasco da Gama Country --part two
By N P Chekkutty
IT WAS at Kanjikuzhy, a small village on the Alapuzha coast, that I met Saswathan, a 75- year-old farmer. We were on a mission to check out what goes on in villages as Kerala grappled with the difficult task of negotiating with forces of globalization and maintaining an egalitarian society that ensured minimum livelihood to its people. Kanjikuzhy is a panchayat on the Arabian Sea coast, tucked between Muhamma in south and Mararikkulam North in the north. It has a predominantly farming economy supported by other traditional trades like coir products. Most of the 1200-odd coir unit owners are part-time agriculturalists also. Kanjikuzhy, at the same time, is at the centre of new economic transformations that were brought in by globalization and its beaches are now booming health tourism spots and its coir products highly prized items exhibited in multinational retailing chains all over the world.
On the highway, we saw the decently decorated outlet run by the Kanjikuzhy Panchayat Primary Development Society (PDS) which displays all kinds of fruits, vegetables and other farm items besides a variety of coir products. The farm products are collected by the society from the village farmers who supply them on a regular basis. They get paid in cash and no middlemen are involved. Saswathan had come there to sell his vegetables. He looked happy as he got around Rs. 200 for the few items he had carried to the retailer in the off-season. He was one of the scores of farmers in the village who regularly sold produces in the PDS outlet, who accepted everything the peasants had to offer, even those items usually discarded when they sell to private businesses. Saswathan said the PDS outlet accepted not only banana, but its leaves and fiber too; besides all kinds of vegetables, coconut, melons, etc. The day’s fixed price is displayed on the board and there is down payment in cash.
Santhosh, a pleasant-looking young man in his early thirties, is the president of the primary development society (PDS) for vegetables and he gave an account of how they built it up and how it functions. The panchayat had only a few families in farming as it s a predominantly coastal region focusing on coir an cottage industries, and it was only a decade ago that they decided to attract youngsters into farming activities in a big way. They organized groups of farming communities in each ward and started planting seeds in leased lands. It was a political movement as the community leaders were worried about the way farming was becoming a “lost career” in Kerala.
It was a success, asserts Santhosh; and Saswathan agrees. Production started booming and then the question was how to sell all the vegetables and fruits they produced. It is a perishable item and traders used to undercut farmers when production was in plenty. In the past there were scores of small private vendors who used to set up their stalls on the highway, took the products from farmers at their own terms and the prices were fixed at their own convenience causing much hardship and losses to cultivators.
It was then the idea of marketing came in. Dr T M Thomas Isaac, now finance minister of Kerala, who represents Mararikulam which includes Kanjikuzhy in the Assembly, gave the lead by initiating and supporting the effort to organize what is now widely known as the Mararikkulam Marketing Company Ltd, a society registered for production and marketing of local items. They got support from UNDP and Union Government’s rural development ministry for developing infrastructure. Now the company has its own production units making a variety of items like jams, fruit juice, notebooks, soaps, umbrellas, pickles, fish and other marine products, coconut and coir products, etc. They employ a number of local people in various units, most of them women and their various products are marketed throughout the state in the ‘Mari’ brand-name.
I went to see Saswathan’s family, who lives a kilometer away from the PDS sales outlet. It is a small thatched house, and he lives there with his wife and younger son. He has three children and the eldest son is a toddy-tapper and he works a dozen coconut trees which gives him a daily income of around Rs. 400. He said toddy, the natural brew from coconut palms, is much in demand, and he works on his trees twice a day: in the mornings he brings the brew down as the earthen pot gets filled up in the night, and in the evenings, he has to work again tapping the tender leaves for excellent yield. “It is like milking a cow,” said Saswathan who also used to work as a toddy-tapper in his younger days.
Saswathan said he has been able to get a decent income from his two-acre plot in which he cultivates paddy, vegetables and bananas. He said he goes by the organic farming methods though when there is a severe attack of pests he has to apply chemical pesticides. For manure, most of the peasants here depend on natural sources like compost, ash, cow dung, etc.
The village has around 80 full-time farmers now and they are divided into various groups focusing on different farming operations. Paddy cultivation is carried out as a group activity as it helps them sort out the acute problem of labor shortage, as it is a labor intensive activity as the sowing and harvesting has to be done in a few days’ time based on the agricultural calendar. There are two types of paddy based on the time it takes to harvest; the virippu needs only four months to get ready for reaping, and the mundakan, a more hardened variety, would require ten months to mature. The self-help groups carry out the operations in unison and all members -- generally a group has 15 to 20 members-- are eligible for an equal share. All members have to take part in the operations and if anyone opts out they would have to pay a fine, said Santhosh.
The self-help method has taken deep roots in this village, with palpable impact on the lives of people here. Already there are as many as 242 self-help groups in this tiny village: 36 in coir, the most important activity in this coastal village, paddy-16, floriculture- nine, coconut 11 and the rest in a variety of other activities in trade, industrial production, etc. Since the PDS sales outlets were opened in February, 2007 with a view to help producers get maximum income and keeping middlemen out, the private vendors have practically gone out of business.
The elimination of middlemen who were fleecing the producers had the greatest impact on the coir sector. In this village almost all houses has a coir-making machine, locally known as thari, which produces various kinds of coir products like yarn, mats, carpets, packing materials, etc. Women and children work on the machines in their spare time and men also help them out. But the coir products are generally exported and the business was monopolized by a group of firms known as depots who were private outlets who used to collect these items from the small manufacturers and supplied them to exporters. Four years ago the struggle against this exploitation reached a critical stage when Dr Thomas Isaac and others launched the coir PDS which took over the collection of coir items for a more transparent business model. Dr Thomas Isaac said the Coir PDS, which started its operations in 2003, had done a business of over Rs. 22 crore, which meant that more than Rs. 2 crore was additionally made available to the producers as the middlemen used to take ten percent of the proceeds. In fact the struggle against the strangle-hold of the depots who controlled the coir trade was a long and difficult one. Almost all the small producers were indebted to them as most had taken money as advance, and then the struggle had to be waged on a global level with direct communication to the global outlets and consumers groups, through a campaign over the internet about how the original producers are being fleeced by middlemen. That had a great impact as the exporters, under pressure, started negotiating with the small producers through the PDS in coir sector, said Dr. Isaac.
As a people’s initiative, Mararikulam experiment is a grand success. However, it depends on the volunteers who are dedicated to a political and social cause. Jalaja, the block panchayat president, and Santhosh, who heads a successful PDS, are examples of the selfless volunteers who are leading these efforts. But it is an island of hope in a sea of desperation, as in most other panchayats in the district the Mararikkulam example is not being followed. The reason is a lack of leadership and enthusiasm.
Can’t you convert this into a professionally run business, I asked Santhosh. He said it would be disastrous. The Mararikkulam example is strong because of its political content. Once a bureaucratic setup comes into place, this unique experiment would simply go astray, he feared.
Mararikkulam looks like a promising example for the people everywhere to emulate, provided they have such an excellent leadership as this village has. But that is not the case everywhere and in most places even local politicians seem to be working as agents of the big money business in their effort to grab lands and farms. Still, there are efforts to copy the Kanjikuzhy model and in the neighbourhood panchayats of Muhamma, Aryad etc, are setting up similar groups, mainly in the coir sector.
(This is the second of a three-part series on Kerala. for part one see blog archive, February 2008. The final part will examine the impact of global economy in the cash crops in the Kerala interior.)
Courtesy:infochangeindia.org
By N P Chekkutty
IT WAS at Kanjikuzhy, a small village on the Alapuzha coast, that I met Saswathan, a 75- year-old farmer. We were on a mission to check out what goes on in villages as Kerala grappled with the difficult task of negotiating with forces of globalization and maintaining an egalitarian society that ensured minimum livelihood to its people. Kanjikuzhy is a panchayat on the Arabian Sea coast, tucked between Muhamma in south and Mararikkulam North in the north. It has a predominantly farming economy supported by other traditional trades like coir products. Most of the 1200-odd coir unit owners are part-time agriculturalists also. Kanjikuzhy, at the same time, is at the centre of new economic transformations that were brought in by globalization and its beaches are now booming health tourism spots and its coir products highly prized items exhibited in multinational retailing chains all over the world.
On the highway, we saw the decently decorated outlet run by the Kanjikuzhy Panchayat Primary Development Society (PDS) which displays all kinds of fruits, vegetables and other farm items besides a variety of coir products. The farm products are collected by the society from the village farmers who supply them on a regular basis. They get paid in cash and no middlemen are involved. Saswathan had come there to sell his vegetables. He looked happy as he got around Rs. 200 for the few items he had carried to the retailer in the off-season. He was one of the scores of farmers in the village who regularly sold produces in the PDS outlet, who accepted everything the peasants had to offer, even those items usually discarded when they sell to private businesses. Saswathan said the PDS outlet accepted not only banana, but its leaves and fiber too; besides all kinds of vegetables, coconut, melons, etc. The day’s fixed price is displayed on the board and there is down payment in cash.
Santhosh, a pleasant-looking young man in his early thirties, is the president of the primary development society (PDS) for vegetables and he gave an account of how they built it up and how it functions. The panchayat had only a few families in farming as it s a predominantly coastal region focusing on coir an cottage industries, and it was only a decade ago that they decided to attract youngsters into farming activities in a big way. They organized groups of farming communities in each ward and started planting seeds in leased lands. It was a political movement as the community leaders were worried about the way farming was becoming a “lost career” in Kerala.
It was a success, asserts Santhosh; and Saswathan agrees. Production started booming and then the question was how to sell all the vegetables and fruits they produced. It is a perishable item and traders used to undercut farmers when production was in plenty. In the past there were scores of small private vendors who used to set up their stalls on the highway, took the products from farmers at their own terms and the prices were fixed at their own convenience causing much hardship and losses to cultivators.
It was then the idea of marketing came in. Dr T M Thomas Isaac, now finance minister of Kerala, who represents Mararikulam which includes Kanjikuzhy in the Assembly, gave the lead by initiating and supporting the effort to organize what is now widely known as the Mararikkulam Marketing Company Ltd, a society registered for production and marketing of local items. They got support from UNDP and Union Government’s rural development ministry for developing infrastructure. Now the company has its own production units making a variety of items like jams, fruit juice, notebooks, soaps, umbrellas, pickles, fish and other marine products, coconut and coir products, etc. They employ a number of local people in various units, most of them women and their various products are marketed throughout the state in the ‘Mari’ brand-name.
I went to see Saswathan’s family, who lives a kilometer away from the PDS sales outlet. It is a small thatched house, and he lives there with his wife and younger son. He has three children and the eldest son is a toddy-tapper and he works a dozen coconut trees which gives him a daily income of around Rs. 400. He said toddy, the natural brew from coconut palms, is much in demand, and he works on his trees twice a day: in the mornings he brings the brew down as the earthen pot gets filled up in the night, and in the evenings, he has to work again tapping the tender leaves for excellent yield. “It is like milking a cow,” said Saswathan who also used to work as a toddy-tapper in his younger days.
Saswathan said he has been able to get a decent income from his two-acre plot in which he cultivates paddy, vegetables and bananas. He said he goes by the organic farming methods though when there is a severe attack of pests he has to apply chemical pesticides. For manure, most of the peasants here depend on natural sources like compost, ash, cow dung, etc.
The village has around 80 full-time farmers now and they are divided into various groups focusing on different farming operations. Paddy cultivation is carried out as a group activity as it helps them sort out the acute problem of labor shortage, as it is a labor intensive activity as the sowing and harvesting has to be done in a few days’ time based on the agricultural calendar. There are two types of paddy based on the time it takes to harvest; the virippu needs only four months to get ready for reaping, and the mundakan, a more hardened variety, would require ten months to mature. The self-help groups carry out the operations in unison and all members -- generally a group has 15 to 20 members-- are eligible for an equal share. All members have to take part in the operations and if anyone opts out they would have to pay a fine, said Santhosh.
The self-help method has taken deep roots in this village, with palpable impact on the lives of people here. Already there are as many as 242 self-help groups in this tiny village: 36 in coir, the most important activity in this coastal village, paddy-16, floriculture- nine, coconut 11 and the rest in a variety of other activities in trade, industrial production, etc. Since the PDS sales outlets were opened in February, 2007 with a view to help producers get maximum income and keeping middlemen out, the private vendors have practically gone out of business.
The elimination of middlemen who were fleecing the producers had the greatest impact on the coir sector. In this village almost all houses has a coir-making machine, locally known as thari, which produces various kinds of coir products like yarn, mats, carpets, packing materials, etc. Women and children work on the machines in their spare time and men also help them out. But the coir products are generally exported and the business was monopolized by a group of firms known as depots who were private outlets who used to collect these items from the small manufacturers and supplied them to exporters. Four years ago the struggle against this exploitation reached a critical stage when Dr Thomas Isaac and others launched the coir PDS which took over the collection of coir items for a more transparent business model. Dr Thomas Isaac said the Coir PDS, which started its operations in 2003, had done a business of over Rs. 22 crore, which meant that more than Rs. 2 crore was additionally made available to the producers as the middlemen used to take ten percent of the proceeds. In fact the struggle against the strangle-hold of the depots who controlled the coir trade was a long and difficult one. Almost all the small producers were indebted to them as most had taken money as advance, and then the struggle had to be waged on a global level with direct communication to the global outlets and consumers groups, through a campaign over the internet about how the original producers are being fleeced by middlemen. That had a great impact as the exporters, under pressure, started negotiating with the small producers through the PDS in coir sector, said Dr. Isaac.
As a people’s initiative, Mararikulam experiment is a grand success. However, it depends on the volunteers who are dedicated to a political and social cause. Jalaja, the block panchayat president, and Santhosh, who heads a successful PDS, are examples of the selfless volunteers who are leading these efforts. But it is an island of hope in a sea of desperation, as in most other panchayats in the district the Mararikkulam example is not being followed. The reason is a lack of leadership and enthusiasm.
Can’t you convert this into a professionally run business, I asked Santhosh. He said it would be disastrous. The Mararikkulam example is strong because of its political content. Once a bureaucratic setup comes into place, this unique experiment would simply go astray, he feared.
Mararikkulam looks like a promising example for the people everywhere to emulate, provided they have such an excellent leadership as this village has. But that is not the case everywhere and in most places even local politicians seem to be working as agents of the big money business in their effort to grab lands and farms. Still, there are efforts to copy the Kanjikuzhy model and in the neighbourhood panchayats of Muhamma, Aryad etc, are setting up similar groups, mainly in the coir sector.
(This is the second of a three-part series on Kerala. for part one see blog archive, February 2008. The final part will examine the impact of global economy in the cash crops in the Kerala interior.)
Courtesy:infochangeindia.org
Thursday, April 17, 2008
Food Crisis Hits Kerala: A Summer of Discontent in God's Own Country
Facing an acute food crisis, Kerala seeks higher rice quota for its public distribution system, but the Union Government refuses to budge.
SUMMER IS the festival season in Kerala. As April comes with its scorching heat and the ripening fruits, farmers are busy harvesting paddy in what is known as puncha season and by the time Vishu celebrations arrive by the middle of the month, granaries are full and every face radiant with a happy smile…
Well, to set the record straight, this is how it used to be, when the summer harvest festival is celebrated on the day of Utharayanam, or the northern solstice, the day sun starts moving to the northern hemisphere.
But this season, instead of celebrations what one comes across is the heart breaking stories of farmers committing suicide, even as the paddy in their fields, ripe for reaping, remain uncut. In the past three weeks there were three reports of rice cultivators taking their life in various parts of Kuttanadu and Kottayam, the two main rice growing areas in southern Kerala, where an unprecedented crisis has gripped the farm sector. Simply put, it is a crisis of shortage of man-power to carry out the farming operations of harvesting and threshing on a time-bound basis as they need to be completed before the summer rains hit, on the one hand; and the unwillingness of the farm workers and their powerful trade-unions to allow the machines to take over, taking into consideration the potentially huge losses faced by farmers.
Farmers in south Kerala say the 83-year old Eeeravettikkttu John, who hanged himself on April 5 as he failed to harvest his paddy, had faced immense financial losses as most of his crop remained in the fields. Earlier, two others also had committed suicide in the same area where the harvesting should have been completed weeks ago. Now what remain in the fields are broken stacks of paddy, most of the grain lost and destroyed in untimely rains. Even the hay appears to be useless, unfit as cattle-feed.
The present tragedy of farmers in Kuttanadu is a man-made tragedy. It is one of the most fertile areas for rice cultivation and the yield is excellent and one can go up to three plantings a year. Around 30,000 hectares were sown in Kuttanadu this summer harvest season and as rice cultivation is a time-bound, labour intensive operation, shortage of labor has always been a big issue. The farm-hands are well organized and they are politically active as the heirs of many revolutionary struggles from the days of Punnapra-Vayalar uprisings in the forties that gave deep roots to Communist party in these farming regions.
In those revolutionary days, workers and peasants marched together, but now they are finding themselves at loggerheads. The area under rice cultivation has been going down alarmingly, making cultivation a loss-making affair, and the number of active farm-hands has also dropped much faster. The result is acute shortage of farm-hands in the peak season, making use of machines inevitable. But the farm hands’ unions refuse to accept it and insist that they should have a monopoly on all farm operations. They say they were not opposed to the use of machines per se, they cold be used in emergency situations, but they insist that such use should be cleared by their unions to avoid job loss. It means that every farmer, in case he finds no farm-hands to work his farms, has to apply to the trade unions for permission to bring in machines.
As usual this year too there were disputes and haggling over the permission to import machines into Kuttanadu, the farmers insisting on their use and labor unions refusing to accept their demands. Every year it is a committee chaired by the district collector which
settles these disputes and finds a solution to avoid crop loss.
But this year rains came a few weeks early and that unsettled every calculation. Thousands of hectares of ripe paddy remained in the fields and were completely destroyed. According to the State Government, the total loss of crops could be around 30,000 hectares all over the State, the deadliest hit coming to Kuttanadu, Kottayam region. The total losses, according to figures submitted by the State to the Central Government, were around Rs. 200 crore.
The government swung into action, but quite late. The authorities made every effort to bring in harvesting and threshing machines to Kuttanadu from Tamil Nadu in the past few weeks, but most of the machines are now busily engaged in fields of Karnataka and Andhra Pradesh, where it is the peak of harvesting season.
As frantic calls were made to Tamil Nadu for more machines to be made available for Kerala, the machine owners there refused to oblige. They said when they had sent machines weeks ago, they were stopped and sent back by the unions in Kuttanadu. “Why should we sent the machines there when we have much work here itself and also in other states,” they ask.
But the pro-CPM farm-hands’ union, KSKTU (Kerala State Karshaka Thozhilali Union) refused to accept responsibility. “We have not stopped any machine coming here,” said KSKTU state secretary C K P Padmanabhan. He, however, accepted that there may be some stray cases where such incidents had taken place as farmers forcibly brought machines to deny work to farm hands.
“There is a clear calendar for sowing and harvesting which has been in practice for so many generations,” said K P Devadas, an expert on Kerala’s farming calendar and weather cycles, who pointed out that as the monsoon hits Kerala first, it has to sow first and reap first. Once this calendar is upset, the entire farming operations could be upset. He felt it was wrong to accuse the early rains for this season’s tragedy as summer rains, quite unpredictable by nature, were experienced even by mid-March even in recent past.
The cycle of accusations and counter-accusations continue unabated, even as the rice production in the state goes down in an alarming manner. According to the State Department of Economics and Statistics, there has been a drastic decline in both area under rice cultivation and its annual production. According to the recent figures announced by the Government, the drop in area under rice cultivation was a whopping 63 per cent in a 44- year period from 1961-02 to 2005-06. The rice production which stood at 13.40 tonnes in 1981-82 had gone down to 6.30 tonnes by 2005-06, registering a decline of around 50 per cent in 24 years.
Still, demand for rice keeps rising as rice is the staple food for Malayalees. The present annual demand is to the tune of three million tonnes a year and as the rice supply has declined from its own fields, the state has been depending largely on imports from Tamil Nadu, Andhra Pradesh and other states. Now the Central Government has reduced its rice quota by around 80 percent owing to poor off-take from PDS. With the steep rice in food prices in markets all over the world, the price of rice a kg has shot up from Rs. 14 a few months ago, to Rs. 21, sending alarm signals.
Then came the statement from Kerala’s Food Minister, CPI’s C Divakaran: “The shortage of rice is going to be a perennial problem. So why not think of changing our food habits”, he said and suggested meat and eggs as an alternative. As the CPI leader found himself at the receiving end for his innovative suggestion, some commentators even comparing him to Marie Antoinette, the French queen who wondered why people can’t take cakes if bread was not available, beat a hasty retreat and blamed the Centre for causing the shortage.
The saddest part of the events of this summer of discontent in Kerala is that all these years, farmer suicides were confined to its eastern hill belt, where cash crops, mainly dependent on the global market are grown, is now spreading to other parts too. Rice had been a stable crop, though with reduced income for farmers, but there has never been any case of rice growers taking the extreme step. Now in a tragic turn of events, even Kuttanadu, the rice bowl of Kerala, joins the trail of farmer suicides that link the entire rural India, in a sordid drama of unhappy peasant lives.
Tuesday, March 18, 2008
Another Season of Tragedy Hits Kerala’s Rice Cultivators
In Kutttanad, farmers have to request powerful trade-unions for allotment of farm-hands.
SUMMER RAINS are not unusual in Kerala. Farmers know when the rains could come and they always had their own traditional contingent plans to save the crops. Yet, in the past few days rains have played havoc in the rice bowl of Kerala, Kuttanad, and other rice growing areas like Trissur, Kottayam, Palakkad and some parts of Malabar.
The government in its initial response, has said that in Kuttanad alone losses to the farmers were as much as Rs. 16 crore while it is around Rs. 11 crore in Trissur. The total loss all over Kerala is now being assessed and when all the figures are in, the losses could run into a substantial amount this season.
It is a heart-breaking situation for peasants in Kerala. The state’s agricultural sector is now in deep crisis and in the past few years, hundreds of farmers have committed suicide as they were trapped in a vicious debt crisis. Even the Indian Government took notice of this serious situation and had announced a series of measures to help save the farmers from Vidharbha to Wayanad, known as the peasant suicide belt in the country.
But the tragedy of Kuttanad farmers this season is different, it is mainly a man-made crisis thanks to over-politicization of the farm operations. In the summer puncha season, farmers have to harvest their crops before the summer rains set in, and hence the summer schedule is always a hectic one. This season, they had planted rice in around 26,000 hectares in Kuttanad, and in the past few weeks harvesting was over in as much as 15,000 hectares. What was left for harvesting there was an area of around 11,000 hectares.
But the farmers were facing an acute shortage of farm-hands as the few weeks in March are critical for their operations. The farm workers are highly organized and the Kerala State Karshaka Thozhilali Union (KSKTU) which owes allegiance to the CPM is quite strong and they do not allow any type of machines for harvesting, threshing and other activities. The Government also has put severe restrictions for bringing in machinery for farm operations. This season as the farm-hands shortage hit the operations holding up harvesting and other activities, peasants had been requesting farm-hands’ unions for permission to make use of machines, but they resisted and physically stopped them from being used in the fields.
The result was a delay in harvesting operations. Even the rice that had been harvested lay in the fields when the rains hit suddenly, flooding the entire region. Now the peasants accuse the farm-workers union of delaying the operations and the unions deny they were responsible. They claim that only where the peasants forcibly brought in the machines that they used force to stop them…
It is a sad drama indeed, where the farmers who invested so much of their money and effort are not able to harvest their crops because farm-hands are not available and still they can’t use machines instead. It is a perfect case of dog in the manger, it neither eats nor does it allow the cow to eat…
This has been going on in Kuttanad and other parts of Kerala for decades now. No machines, say the left politicians and workers unions. When they ask for supply of farm workers, they are asked to wait: there is a system where workers are allotted to each farmer by the trade union office. And often rains don’t accept this schedule fixed by politicians and it plays havoc. Net result has been that many harried peasants left their traditional vocation and there has been a drastic decline in Kerala’s rice cultivation. It has now reached a nadir and then comes the sharp rise in food prices…
And how do the Kerala politicians and Government officials respond to this rice shortage? They accuse the Federal Government of not providing sufficient food supply to the State!
Friday, December 7, 2007
Vanilla and the World Market
Vanilla: Spicy Beans Gone Sour
By N P Chekkutty
Vanilla is a spicy bean that brings back the memories of the foolish peasant who killed the goose that laid golden eggs: as the vanilla prices skyrocketed, peasants everywhere in South India took to it in a big way, even cutting off their rich traditional crops, only to be rudely shocked as they took a beating in the next season.
Vanilla is grown in the lush green tropical lands of South India, mainly in Kerala and the Nilgiri region of Tamil Nadu and Karnataka, and it was hailed as a magic plant that would bring instant riches as the price of the raw beans reached as high as Rs. 3850 a kg during the 2002-03 season. In the season before, it had fetched around Rs, 130 a kg, and owing to sudden increase in international demand, the prices soared many times. This spice, grown in Madagascar and Indonesia, is an essential ingredient for ice-creams,
cakes, biscuits and beverages, giving them the mouth-watering flavours. The vanilla
prices shot up when the crops in Madagascar failed almost completely late in 2001. As
supplies went short, the international buyers who have a monopoly over extraction of vanilla flavours from dry beans, sent their agents scurrying all over the South and South-East Asian countries, widely known for their variety of spices. It was then the peasants in Kerala and other South Indian States had a windfall of profits.
But the dream turned sour and shockwaves started coming in when the price of
vanilla beans slumped to as low as Rs. 50 a kg in the last season, driving many farmers to a debt trap. There were thousands of small and medium farmers who had completely shifted to vanilla as a monocrop, abandoning their traditional varieties of crops like rubber, coconut, cocoa, tea and coffee, hoping to reap a rich harvest.
This collective shift to the vanilla bandwagon was not confined only to growers. There were many banks, including a number of pubic sector banks, who abandoned all caution and pumped in huge amounts of money to the vanilla business, handing over massive loans as advance to the growers who needed cash to cut off their ripe plants of other varieties to make way for vanilla. In fact some banks sent their representatives to remote villages pursuading farmers to take loans and plant vanilla, resulting in a massive increase in their non-performing assets in some areas of Kerala.
“It was foolish to nure such unrealistic hopes about a single crop, which were bound to crash,” points out Abhay Jacob, a senior farm journalist in Kerala, who had warned against the en-masse shifting of cropping pattern, as prices had often showed such huge fluctuations in international markets. He said that thousands of hectares of ripe crops were pulled out to make way for vanilla in the 2002-03 season as farmers were hoping that the prices would go higher and higher. He said that there were rumours then that the use of synthetic vanilla, a substitute for the organic variety, would be banned on health grounds and as a result, the demand for vanilla beans from the international food industry would only go up.
But the market reacted differently. As the price of natural vanilla went absurdly high, the multinational food, beverages and ice-cream companies, who are its main consumers, turned to synthetic and semi-organic varieties for flavours. That saw the dmand for naturl vanilla showing a sharp decline in the next season.
“It was a case of wrong understanding of the global market trends,” says P S Sreekantan Thampy, senior officer at the Spices Board, Kochi, which is the national agency for the promotion of spices trade in India. He said that right from the beginning the Spices Board had warned the farmers against shifting en-masse to vanilla as it was a risky move. Vanilla is a plant that is best as an intercrop along with other crops, and it would give handsome returns in three years.
Thampy said the current market price of vanilla was not really bad as they ensured a decent profit to cultivators. What has been shattered is the unrealistic dreams of easy money. With a proper marketing system and fresh investments for developing new value added products from the spice, it could bring excellent profits to the growers and investors, he said.
Traditionally, the farmers were planting vanilla as an intercrop with rubber, coconut, and vegetables. With a low investment of around Rs. 30 a plant, it fetched a comfortable return of around Rs. 130-150. These leafy plants need good shade, plenty of water and natural manures, no need for much pesticides and fertilizers and the real effort on the part of the farmer is during the season of pollination, as the plants need artificial pollination. Each plant has to be individually pollinated early in the day and each healthy plant could give as much as two to three kg of ripe beans during a season in three years time.
As the farmers burnt their fingers with huge unsold stocks last season, there was a hue and cry about the farmers being let down by the authorities. The Central Government even urged the Spices Trading Corporation of India, a public sector undertaking, to absorb the stocks.
“But we can’t absorb all those unsold stocks as we cannot incur losses beyond a point,” said an official at the Corporation who said that they could step into the market only when the prices go dangerously below the normal level threatening the entire agricultural sector.
“But the case with vanilla was different,” points out Abhay Jacob. It was a deliberately engineered hysteria that misled the growers to disaster. It was also a case of drying the haysack while the sun shone: during those days there were firms who sold planting material --saplings of one metre-- for as high as Rs. 135 while it had cost only Rs. 2 to 8 in the previous years.
It was sheer madness in the heydays of vanilla craze. There were plantation-owners who kept a round-the-clock watch as thieves roamed about the villages to carry off with plants as even the saplings could fetch a fortune. “There were some people who even put up electric barbs around their farms simply to protect this green diamond in their backyard,” recalls Abhay Jacob who hails from a rich farming village near Kottayam.
But vanilla remains a good and profitable crop for growers and investors. With a long-term stratgey and proper investments, it could be a money-spinner as Vanilco, a producer-promoted company, has proved in the past one year.
The Vanilla India Producers Company Ltd, (Vanilco) was registered at Kochi in October last year with individual farmers and their primary societies as members. Vanilco is the first experiment in farm-level marketing and processing, under a new legislation introduced by the Union Government in 2002. Vanilco is involved in the procurement and processing of vanilla beans and is exploring new ways to develop value-added producuts for Indian markets.
“In the last season, when we had just entered the market, we procured around 50 tonnes of vanilla beans at Rs. 250 a kg,” said M C Saju, an official with Vanilco. Vanilco has started processing the beans at its factories in Kerala and Tamil Nadu, and has tied up with Indian Institute of Technology, Mumbai, to develop new methods for extraction of flavours. It has also found bulk buyers for the flavours with Amul and Milma who are using the natural vanilla for their ice-creams and other products.
Saju said the domestic market itself is growing. What was needed were new technologies for development of value added products in India, as Madagascar offers over a dozen different items for various segments of buyers, both commercial and household. For this, fresh investment has to be directed to this spice. In such a scenario, India will have to import vanilla beans as its produce will not be sufficient to meet the huge market demands, he pointed out.
The rising demand is reflected in the procurement charts at Vanilco. Compared to last year’s 50 tonnes, Vanilco has already procured 130 tonnes in the first two months of the season. This year they target to procure 200 tonnes.
The market intervention by Vanilco has proved that vanilla growers need not be at the mercy of international agents who used to control the markets. With a strategy of deferred payments, Vanilco was able to offer a price of Rs. 250 while the open market rates (cash down) offered by the global buyers were around Rs 150.With new researches on for developing more value-added products in India , vanilla could be the bean that will offer a spicy taste, both for consumers as well as growers.
By N P Chekkutty
Vanilla is a spicy bean that brings back the memories of the foolish peasant who killed the goose that laid golden eggs: as the vanilla prices skyrocketed, peasants everywhere in South India took to it in a big way, even cutting off their rich traditional crops, only to be rudely shocked as they took a beating in the next season.
Vanilla is grown in the lush green tropical lands of South India, mainly in Kerala and the Nilgiri region of Tamil Nadu and Karnataka, and it was hailed as a magic plant that would bring instant riches as the price of the raw beans reached as high as Rs. 3850 a kg during the 2002-03 season. In the season before, it had fetched around Rs, 130 a kg, and owing to sudden increase in international demand, the prices soared many times. This spice, grown in Madagascar and Indonesia, is an essential ingredient for ice-creams,
cakes, biscuits and beverages, giving them the mouth-watering flavours. The vanilla
prices shot up when the crops in Madagascar failed almost completely late in 2001. As
supplies went short, the international buyers who have a monopoly over extraction of vanilla flavours from dry beans, sent their agents scurrying all over the South and South-East Asian countries, widely known for their variety of spices. It was then the peasants in Kerala and other South Indian States had a windfall of profits.
But the dream turned sour and shockwaves started coming in when the price of
vanilla beans slumped to as low as Rs. 50 a kg in the last season, driving many farmers to a debt trap. There were thousands of small and medium farmers who had completely shifted to vanilla as a monocrop, abandoning their traditional varieties of crops like rubber, coconut, cocoa, tea and coffee, hoping to reap a rich harvest.
This collective shift to the vanilla bandwagon was not confined only to growers. There were many banks, including a number of pubic sector banks, who abandoned all caution and pumped in huge amounts of money to the vanilla business, handing over massive loans as advance to the growers who needed cash to cut off their ripe plants of other varieties to make way for vanilla. In fact some banks sent their representatives to remote villages pursuading farmers to take loans and plant vanilla, resulting in a massive increase in their non-performing assets in some areas of Kerala.
“It was foolish to nure such unrealistic hopes about a single crop, which were bound to crash,” points out Abhay Jacob, a senior farm journalist in Kerala, who had warned against the en-masse shifting of cropping pattern, as prices had often showed such huge fluctuations in international markets. He said that thousands of hectares of ripe crops were pulled out to make way for vanilla in the 2002-03 season as farmers were hoping that the prices would go higher and higher. He said that there were rumours then that the use of synthetic vanilla, a substitute for the organic variety, would be banned on health grounds and as a result, the demand for vanilla beans from the international food industry would only go up.
But the market reacted differently. As the price of natural vanilla went absurdly high, the multinational food, beverages and ice-cream companies, who are its main consumers, turned to synthetic and semi-organic varieties for flavours. That saw the dmand for naturl vanilla showing a sharp decline in the next season.
“It was a case of wrong understanding of the global market trends,” says P S Sreekantan Thampy, senior officer at the Spices Board, Kochi, which is the national agency for the promotion of spices trade in India. He said that right from the beginning the Spices Board had warned the farmers against shifting en-masse to vanilla as it was a risky move. Vanilla is a plant that is best as an intercrop along with other crops, and it would give handsome returns in three years.
Thampy said the current market price of vanilla was not really bad as they ensured a decent profit to cultivators. What has been shattered is the unrealistic dreams of easy money. With a proper marketing system and fresh investments for developing new value added products from the spice, it could bring excellent profits to the growers and investors, he said.
Traditionally, the farmers were planting vanilla as an intercrop with rubber, coconut, and vegetables. With a low investment of around Rs. 30 a plant, it fetched a comfortable return of around Rs. 130-150. These leafy plants need good shade, plenty of water and natural manures, no need for much pesticides and fertilizers and the real effort on the part of the farmer is during the season of pollination, as the plants need artificial pollination. Each plant has to be individually pollinated early in the day and each healthy plant could give as much as two to three kg of ripe beans during a season in three years time.
As the farmers burnt their fingers with huge unsold stocks last season, there was a hue and cry about the farmers being let down by the authorities. The Central Government even urged the Spices Trading Corporation of India, a public sector undertaking, to absorb the stocks.
“But we can’t absorb all those unsold stocks as we cannot incur losses beyond a point,” said an official at the Corporation who said that they could step into the market only when the prices go dangerously below the normal level threatening the entire agricultural sector.
“But the case with vanilla was different,” points out Abhay Jacob. It was a deliberately engineered hysteria that misled the growers to disaster. It was also a case of drying the haysack while the sun shone: during those days there were firms who sold planting material --saplings of one metre-- for as high as Rs. 135 while it had cost only Rs. 2 to 8 in the previous years.
It was sheer madness in the heydays of vanilla craze. There were plantation-owners who kept a round-the-clock watch as thieves roamed about the villages to carry off with plants as even the saplings could fetch a fortune. “There were some people who even put up electric barbs around their farms simply to protect this green diamond in their backyard,” recalls Abhay Jacob who hails from a rich farming village near Kottayam.
But vanilla remains a good and profitable crop for growers and investors. With a long-term stratgey and proper investments, it could be a money-spinner as Vanilco, a producer-promoted company, has proved in the past one year.
The Vanilla India Producers Company Ltd, (Vanilco) was registered at Kochi in October last year with individual farmers and their primary societies as members. Vanilco is the first experiment in farm-level marketing and processing, under a new legislation introduced by the Union Government in 2002. Vanilco is involved in the procurement and processing of vanilla beans and is exploring new ways to develop value-added producuts for Indian markets.
“In the last season, when we had just entered the market, we procured around 50 tonnes of vanilla beans at Rs. 250 a kg,” said M C Saju, an official with Vanilco. Vanilco has started processing the beans at its factories in Kerala and Tamil Nadu, and has tied up with Indian Institute of Technology, Mumbai, to develop new methods for extraction of flavours. It has also found bulk buyers for the flavours with Amul and Milma who are using the natural vanilla for their ice-creams and other products.
Saju said the domestic market itself is growing. What was needed were new technologies for development of value added products in India, as Madagascar offers over a dozen different items for various segments of buyers, both commercial and household. For this, fresh investment has to be directed to this spice. In such a scenario, India will have to import vanilla beans as its produce will not be sufficient to meet the huge market demands, he pointed out.
The rising demand is reflected in the procurement charts at Vanilco. Compared to last year’s 50 tonnes, Vanilco has already procured 130 tonnes in the first two months of the season. This year they target to procure 200 tonnes.
The market intervention by Vanilco has proved that vanilla growers need not be at the mercy of international agents who used to control the markets. With a strategy of deferred payments, Vanilco was able to offer a price of Rs. 250 while the open market rates (cash down) offered by the global buyers were around Rs 150.With new researches on for developing more value-added products in India , vanilla could be the bean that will offer a spicy taste, both for consumers as well as growers.
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