Chakrabarti CritiqueInclusiveGrowth 2014
Chakrabarti CritiqueInclusiveGrowth 2014
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of Political Economy
Saumya Chakrabarti
Abstract: Diversification of agriculture and allied production processes intended for the
high-value domestic and export markets create the scope for intervention of big capital in
agriculture through variety of contracts. However, this intrusion of capital in the fields of
agricultural production and distribution displaces the petty production-based rural non-farm
economy (RNFE), having a symbiotic relation with the traditional subsistence agriculture. The
change in the cropping pattern in favour of high-value-crop and diversion of resources toward
the modern animal husbandry initiate an inclusion of the relatively advanced and asset-rich
parts of agriculture and allied activities into the growing global economy, but it breaks the
close links between the subsistence agriculture and petty RNFE. Furthermore, the population
engaged in urban food retailing is also displaced by the intrusion of the supermarket chains.
Last but not the least, if crop-diversification is undertaken through large-scale substitution
of basic cereal production, it seriously affects the micro- and macro-food-security leading to
immiserization of the rural and urban poor.
Key words: crop-diversification; firm–farm contracts; rural non-farm economy; food security
1. Introduction
Agriculture is a vital development tool for achieving the Millennium Development Goal
that calls for halving by 2015 the share of people suffering from extreme poverty and
hunger. That is the overall message of this year’s World Development Report (WDR),
the 30th in the series. Three out of every four poor people in developing countries
live in rural areas, and most of them depend directly or indirectly on agriculture for
their livelihoods. This Report provides guidance to governments and the international
community on designing and implementing agriculture-for-development agendas that
can make a difference in the lives of hundreds of millions of rural poor. (World Bank
2008, xiii)
The target of this note is to address the issue of “inclusive growth” from a critical
standpoint. It is argued in the orthodox literature that the ongoing course of
globalization can be a harbinger of a growth process which is inclusive in nature.
Thus, globalization not only induces growth of national income and brings in
prosperity in the lagging least developed countries (LDCs), but also ensures an
overall uplift of the standard of living of the vast majority of the poor who live
in these countries. However, we, on the contrary, argue that this very project of
“globalization and inclusive growth” is mired with contradictions. Our objective
in this article is to bring out such incongruities by investigating a major policy
prescription that is supposed to ensure broad-based growth by linking the local
economies, in particular, agriculture with the global market.
The orthodox school argues that the significant progress in the spheres of trade,
finance, industry, and other services in the LDCs is due to the fact that these sectors
of the developing world have achieved considerable extent of global connectivity.
This integration with the global market is thought to bring in substantial gains
also for the population engaged with these so-called modern sectors. Contrarily,
it is contemplated that, by and large, the agricultural sectors of the LDCs remain
outside this globalizing world, and hence, due to this lack of global connectivity,
the third-world agriculture lags behind. Furthermore, as the vast majority of the
people of the developing world have to live on this sector, they are unable to come
out of the poverty trap. Consequently, a program of “inclusive growth” cannot
neglect the issue of inclusion of the third-world agriculture into the globalizing
modern market-economy. This global integration is supposed to be the solution
of the dual problems of lagging agriculture and also impoverishment of the vast
majority of the third-world population. In fact, this integration of the third-world
agriculture is considered to be the new panacea for inclusive growth.
In this context, the WDR 2008 (World Bank 2008) has been introduced with
the title “Agriculture for Development.” Its fundamental proposition is that,
agriculture of the LDCs should be so designed that it could engender growth, and
more importantly, this growth could be broad-based in nature. The World Bank
President observes that “[t]oday, rapidly expanding domestic and global markets;
institutional innovations in markets, finance, and collective action; and revolutions
in biotechnology and information technology all offer exciting opportunities to use
agriculture to promote development” (World Bank 2008, xiii). Thus, the inherent
logic of this WDR 2008 is to attach agriculture with the globalization process
which could ensure access to all these opportunities. It is proposed that, with the
incorporation of the third-world agriculture within the global economy, not only
new growth opportunities are created, but also the benefits of this growth percolate
to the rural poor; and thus, an inclusive growth process is ensured.
However, we critically analyze this claim of the WDR 2008 by interrogating
a very crucial policy prescription proposed by this report. In fact, through
our enquiry, we raise the fundamental question: whether an all-encompass-
ing inclusive growth is at all possible. We try to show that the phenomena of
inclusion and exclusion operate side by side. Thus, contrary to the orthodox
position, we argue, the growth process ensured through an inclusion of certain
parts of the local economy within the expanding global market invariably creates
exclusion somewhere else. Exclusion and inclusion are the two moments of the
same process, i.e., the process of generation of economic growth through global
(capitalistic) accumulation and integration. In our following analysis, we try to
show that, specifically, an inclusion of certain parts of the third-world agriculture
may generate exclusion and immiserization (and even eviction) within the broader
rural and urban economies of the LDCs.
[f]ar-reaching changes in domestic and global markets are creating big opportunities
for farmers and agribusiness entrepreneurs. The demand for high-value primary and
processed products is rapidly increasing, driven by rising incomes, faster urbanization,
liberalized trade, foreign investment, and advancing technology. These developments
are expanding market opportunities, which is important for faster agricultural and
non-farm growth and for greater employment and rural incomes . . . (World Bank 2008,
118; emphasis added)
agro-food exports from developing countries, worth about $138 billion in 2004. (World
Bank 2008, 12)
Agricultural exports diversified significantly in the last two decades, particularly into
high-value fresh and processed products, fueled by changing consumer tastes and
advances in production, transport, and other supply-chain technologies . . . Continued
growth of these high-value exports will require efficient value chains, particularly
domestic transport, handling, and packaging, which make up a large share of the final
costs. (World Bank 2008, 128–29)
In fact, the argument is that the traditional subsistence crop farming is no more
profitable as, on the one hand, costs are steeply rising due to withdrawal of the
state supports and, on the other, prices are not that remunerative in the absence
of “support-prices” and also due to increased global competition. There are
serious ecological costs as well. Nonetheless, both the domestic and international
“higher-value” markets for the high-value commodities (both primary and
processed products) are expanding very fast which is creating a unique opportunity
for the third-world agriculture, because a large part of the developing world has
comparative advantage in these items. Many of the LDCs have economic and
agro-climatic conditions that are favorable for production of HVC and modern
livestock products. But most of the HVC, especially fruits, flowers, and vegetables,
and the livestock products are highly perishable and hence require sophisticated
“supply chain” consisting of modern handling, grading, storing, processing,
transportation, and quick delivery mechanisms. The advancement of technology
and entry of big players in a globalized world have made this modern supply chain
commercially available:
Rising incomes, urbanization, greater female participation in the workforce, wider media
penetration—all are driving the demand for higher-value products, semiprocessed and
processed products, and convenience foods. They are also increasing consumer attention
to food quality and safety. Diets are globalizing too, with local consumer preferences
influenced by international tastes. These trends open new markets for a wide range of
higher-value agricultural products and propel the evolution of the marketing system in
many developing countries, with the entry and rapid growth of supermarket chains and
the food processing and food service industries . . . For many developing countries, the
supermarket revolution began in the early to mid-1990s. By the early 2000s, retail food
sales in supermarkets exceeded 50 percent of total retail food sales in many countries
in Latin America and in major urban centers elsewhere. Accelerating the expansion:
significant foreign direct investment by multinational supermarket chains in developing
countries, either directly or through joint ventures with local firms. Changing consumer
demand is also driving the growth of the food processing and food service industries.
Processed foods account for about 80 percent of global food sales, estimated at
$3.2 trillion in 2002. Although spending on processed foods is still low in developing
countries ($143 per capita per year in lower-middle-income countries and $63 per
capita in low-income countries), it is growing fastest in these countries—28 percent a
year in lower-middle-income countries and 13 percent a year in low-income countries.
“Eating out” is also becoming popular. For example, spending on food services now
accounts for 22 percent of food budgets in Brazil and Indonesia and 15 percent of urban
food spending in China. (World Bank 2008, 124–25)
Hence, it is argued that in the presence of all these demand- and supply-side
supports, extensive HVC and modern livestock farming have become feasible and
profitable for the LDCs, and the agricultural sectors of many of the developing
countries should be reoriented to capture these opportunities. If the expanding
domestic and international markets for the primary and processed HVC and
livestock products could be captured by the third-world agriculture by using
the modern supply chain, growth could be generated, and the fruits of this
growth would percolate to the rural poor. Thus, to reiterate, a reorientation of
the third-world agriculture and allied activities is proposed to be necessary to
attach it with the global market so that a process of “inclusive growth” could
be engendered. Diversification of production toward the HVC and advanced and
high-value livestock products is thus argued to be an instrument of “inclusive
growth” in a globalizing world.
However, the crucial point in this course of global integration of the “diversified”
agriculture and allied activities is that the opportunities of expanding “higher-value
market” for the HVC and livestock products could be realized only through an
appropriate utilization of the modern supply chain, i.e., only through the use of
modern processing, storing, transportation, and delivery mechanisms. Thus, the
fundamental question is how to get the access to these modern facilities and
thereby how to integrate the diversified third-world agriculture with the expanding
global market. Let us look at the experiences of many of the developing countries.
But before going into this account and the subsequent analyses on that, let
us introduce a very critical political-economic aspect of this whole debate. The
prescription of “diversification” toward the HVC and modern livestock products
not only comes from the World Bank, but from the USA itself. Crop-diversifica-
tion and “Evergreen Revolution” have been considered as a crucial area, so far as
the Indo-US bilateral relations are concerned. Let us quote at length,
And together, we can resist the protectionism that stifles growth and innovation. The
United States remains—and will continue to remain—one of the most open economies
in the world. And by opening markets and reducing barriers to foreign investment, India
can realize its full economic potential as well. As G20 partners, we can make sure the
global economic recovery is strong and is durable. And we can keep striving for a Doha
Round that is ambitious and is balanced—with the courage to make the compromises
that are necessary so global trade works for all economies.
Together, we can strengthen agriculture. Cooperation between Indian and American
researchers and scientists sparked the Green Revolution. Today, India is a leader in using
technology to empower farmers, like those I met yesterday who get free updates on
market and weather conditions on their cell phones. And the United States is a leader in
agricultural productivity and research. Now, as farmers and rural areas face the effects
of climate change and drought, we’ll work together to spark a second, more sustainable
Evergreen Revolution.
Together, we’re improving Indian weather forecasting systems before the next
monsoon season. We aim to help millions of Indian farmers—farming households save
water and increase productivity, improve food processing so crops don’t spoil on the
way to market, and enhance climate and crop forecasting to avoid losses that cripple
communities and drive up food prices.
And as part of our food security initiative, we’re going to share India’s expertise
with farmers in Africa. And this is an indication of India’s rise—that we can now
export hard-earned expertise to countries that see India as a model for agricultural
development. It’s another powerful example of how American and Indian partnership
can address an urgent global challenge. (The Indian Express 2010; emphasis added)
the entry of big capital in the stages of handling, storing, processing, transportation,
and retailing of the primary and processed HVC and livestock products. The specific
character of perishability of these products necessitates the entry of sophisticated
supply chain replacing the traditional mechanisms that were appropriate for the
basic traditional crop economy. Furthermore, high-value domestic and international
markets impose stringent food-quality and food-safety norms. Adherence to such
global standards is possible only with the use of modern capital-intensive techniques.
Thus, product-diversification toward fruits, vegetables, flowers, and agro-fuel
feedstock and modern livestock, on an extensive scale, have been commercially
viable with the intervention of modern capital in the areas of food processing, food
service, and food marketing. In fact, in many cases, the very process of extensive
crop-diversification and livestock production has been driven by the entry of big
capital. To capture the opportunities of expanding, high-value market capital has
entered in large scales in food processing, retailing, and other services.
However, as the modern supply and retail chain is appropriate for the HVC
cultivation and modern livestock production and as it is much more efficient than
the traditional indigenous processes, the latter has been replaced with the former.
Thus, large-scale diversification of agriculture and allied activities has opened
up scope for replacement of traditional supply and retail chain with the modern
one through the intervention of big capital capable of reaping the economies of
scale, reducing transaction costs through vertical integration of different stages of
production and distribution and maintaining the global standards.
agricultural and allied production and distribution. Let us now turn to the probable
effects of diversification supported by the expansion of high-value markets and
complemented with the modern supply and retail chain provided by big capital.
First, we look at the income and employment inducing effects.
As both primary and processed diversified outputs are remunerative, the
farmers who are able to undertake this diversification gain significantly. The WDR
2008 reports that “(p)articipation in modern supply chains can increase farmer
income by 10 to 100 percent (Guatemala, Indonesia, Kenya). Recent studies of
contract farmers show that they have significantly higher incomes than other
farmers.” (World Bank 2008, 127). On the other hand, as HVC and livestock
production is much more labor-intensive compared to the traditional crops, it
enhances the employment generation potential of the third-world agriculture and
allied activities. A sizeable part of surplus labor could be utilized in these modern
farming activities. Moreover, even those farmers, mostly the small and marginal
ones, who are not able to participate in HVC cultivation can have the advantage of
being employed in others’ farms. Thus, it is noted that
are generally kept out of such “contract farming.” Consequently, the asset-poor
farmers are excluded from these processes of diversification, and the benefits
are generally appropriated by the wealthy ones. Hence, we may have increasing
inequality within agriculture:
Second, it is seen that even the small processing firms are unable to compete
with the large modern ones. Moreover, the supermarkets prefer to collect
the processed food products from the large processing companies having the
capacity for bulk production. Large firms are also preferred for long-term stable
contracts. Thus, small, labor-intensive food-processing firms are replaced with
large corporations increasing concentration in food-processing sector. On the
other hand, it is also observed that the supermarket revolution creates large-scale
displacement of the petty retailers. Although initially the supermarkets enter into
the large cities, gradually they spread their operations to rural towns. Similarly,
though supermarkets start their business with processed food, they increasingly
target the fresh food market as well (World Bank, 126). This gradual expansion of
supermarket chain may cause mass eviction of the petty retailers:
Some studies have found that smaller processing firms were left out of the supply chain,
with medium-size and large processors preferred for long-term contracts. The number
of small retail stores often declined with rising market share for supermarkets—with
implications for employment. In urban Argentina, from 1984 to 1993, the most intense
period of supermarket takeoff, the number of small food shops declined from 209,000
to 145,000. (World Bank 2008, 127)
Rural non-farm enterprises are transforming the employment structure in rural areas.
Most enterprises are small, with 80–90 percent relying exclusively on family labor . . .
In Sri Lanka, the average number of workers in a rural non-farm enterprise is 2.4, with
79 percent of firms having only one or two people. In Tanzania, 58 percent of the firms
are one-person enterprises, and in Bangladesh 45 percent are . . . (World Bank 2008,
209–10)
Contract farming itself ensures use of modern inputs and modern farm services
creating diversion of purchasing power in favor of “big city” products and thereby
initiating substantial leakage of potential demand away from the labor-intensive,
non-farm sector. Crop-diversification may induce agricultural output and income
growth; it can also act as a boost to formal non-agricultural sectors, but it does not
necessarily guarantee increased demand for local non-farm products.2
It has been noted in the literature that there is a very close relation between the
small farming–based agriculture engaged in traditional crop farming and the labor-
intensive RNFE. In fact, there is mutual interdependence between the two sectors
through demand-side as well as supply-side channels (Radhakrishna 2002; World
Bank 2008). Small and marginal farmers both consume and use in production
the local non-farm products (implements, raw material as well as farm related
services) and simultaneously provide the RNFE with basic food items and other
agro-products used as raw materials. Consequently, with crop-diversification, if
agriculture shifts away from traditional food crop production, it may adversely
affect the vast non-farm economy as many of the demand- and supply-side
channels may get constricted/blocked.
When the small and marginal farmers get involved in the process of crop-
diversification as a survival strategy, they have to face great hurdles/uncertainties
(Sen and Raju 2006) due to the lack of access to modern inputs, technology, and
knowledge, and, most importantly, due to the lack of access to market and modern
supply chain. This creates the scope for intervention by the big capital. Only huge
investments in collection, transportation, storage, processing, packaging, and,
finally, retailing could effectively realize the potentials of crop-diversification
(Rao, Birthal, and Joshi 2006; Sen and Raju 2006).3 Hence, the intrusion of big
capital in this elaborate chain of activities becomes imminent either through spot
contracts or through the integrated institution of contract farming.4 The diversified
HVC and modern livestock products are siphoned off for “big city” consumption
and/or for exports, and on the other hand, modern inputs and modern farm services
are introduced into the agricultural sector. The same channel could even be used
to sell “big city” products in rural areas. Thus, non-farm sector faces challenge
from the introduction of modern industrial commodities. The insertion of capital
displaces the non-farm population, only a part of which could be internalized into
the agricultural modernization process (see Chakrabarti 2005; Chakrabarti and
Kundu 2009; Chakrabarti, Kundu, and Nandi 2011, for different theoretical and
empirical dimensions related to these issues).
Agricultural diversification may also jeopardize macro-, micro-, and, especially,
local- and household-level food security. It could really be a problem for the petty
producers of agriculture and allied sector—producing high-value-adding products
(shifting away from basic cereals) as also of the non-farm sector getting displaced
Endogenously created
Export of HVC surplus population
through eviction of
RNFE
Capitalistic
formal RNFE
industry
Large farms
producing high Basic “food”
value crops under produced by mostly
Contract Farming small farmers.
Diversification of
AGR. & allied sector
statistics are available from the National Sample Survey Organization (NSSO),
Government of India. We also take corresponding data for net state domestic
product (ndp), ndp from agriculture (ndpagr), and, most importantly, calculate
the values for the Simpson Crop-Diversification Index (sdi); all these data are
collected from the Centre for Monitoring Indian Economy (CMIE, Economic
Intelligence Service). Corresponding dataset for ndpagr as a share of ndp (ndpagr_
ndp) is also calculated. We convert all the nominal values into real ones through
appropriate deflation.
With these data, simple pooled regressions are run using ordinary least squares
(OLS) method with robust standard errors. The question that is addressed is
whether the Crop-Diversification Index, sdi, can adversely affect the rural informal/
unorganized manufacturing activities, i.e., vaumrl and wkumrl, respectively,
controlling for the state-level aggregate output, agricultural output, and urban
informal/unorganized manufacturing activities. Our above-mentioned hypothesis
is supported by the following two pooled regressions (the second one is run for
the major 15 states of India, though the first one is an all-India exercise). Diver-
sification of agriculture adversely affects the activities of the RNFE, even after
controlling for the state-specific aggregates:
Regression 1. regress vaumrl on vaumur, ndpagr_ndp, ndp, sdi; with robust standard
errors (for all states and union territories of India)
Dependent variable:
vaumrl
vaumur -0.3374872**
(0.1355174)
ndpagr_ndp 665.328*
(350.9548)
ndp 0.0226779***
(0.0031033)
sdi -474.3701*
(253.9845)
Constant 131.2802
(143.9889)
R2 0.6783
No. of observations 85
Notes: 1. Robust standard errors are in parenthesis.
2. ***, **, and * denote levels of significance at 1%, 5%, and 10%, respectively.
Regression 2. regress wkumrl on wkumur, ndpagr_ndp, ndp, sdi; with robust standard
errors (for major 15 states of India)
Dependent variable:
wkumrl
wkumur -1.483466***
(0.4711782)
ndpagr_ndp 945885.9
(2331159)
ndp -5.618437
(7.69523)
sdi -2915967**
(1368462)
Constant 2302342
(1578384)
R2 0.4322
No. of observations 45
Notes: 1. Robust standard errors are in parenthesis.
2. ***, **, and *denote levels of significance at 1%, 5%, and 10%, respectively.
Now we turn to the next issue of impact on food security due to production-
diversification in agriculture and allied sectors. That diversification may lead to
erosion of micro-food-security especially for the small and marginal farmers could
easily be hypothesized, given the following observations. Lanjouw and Shariff
(2004) note that marginal expenditure on local products is about 80 percent in all
Asian countries surveyed. Of this, 45 percent is spent on local food. The remarks
of the NSSO report 424 (National Sample Survey, Government of India) could
also be noted in this context: Proportion of growers’ consumption out of own
produce is found to be 64 percent for rice, 69 percent for wheat, 53 percent for
jowar and bajra, and 68 percent for maize considering India as a whole. For each
of these crops, the proportion of growers’ consumption of “other cereals” from
home produce works out to about 55–65 percent at the all-India level. Similarly,
NSSO report 474 points out that the proportion of all rural households consuming
only from home-grown stock is relatively high for rice (24 percent) and wheat
(30 percent), and it is also noted (NSSO report 512) that in rural areas the
households self-employed in agriculture shows the lowest percentage of seasonal
inadequacy of food. All these indicate that a major objective of traditional food-
crop-based agriculture is self-consumption. The farmers depend for food to a large
extent on their own production. Hence, market-driven crop-diversification may
generate serious problems for micro-food-security.
It is evident from Table 1 that crop-diversification is bound to affect the food
security of low-income earning farmer households who spend a large part of their
income on basic food items such as cereals, pulses, etc. It is clear from the table
that with falling income (monthly per capita consumer expenditure (MPCE)), the
share of expenditure on basic food rises consistently and just a reverse trend is
observed for the high-value items.
Across the Indian states, we find an interesting observation from the subsequent
diagram and the corresponding correlation matrix. We find out that poorer the
state, larger the share of total expenditure of the farmer households on cereals—
the basic food crop. Hence, we find once again that the poor largely depend on the
basic crop rather than the high-value items (Figure 2). Consequently, a process
of large-scale crop-diversification may lead to a major food-security problem, as
mentioned earlier.
Furthermore, the corresponding correlation coefficients are highly significant,
as shown in the box Correlation 1.
Crop-diversification not only erodes the (micro-)food-security of small and
marginal farmers and of those engaged in RNFE, it may also create a significant
loss of macro-food-security by shifting resources from subsistence crop production
toward HVC and modern livestock. The expanding market for primary and
Table 1 Monthly Per Capita Consumer Expenditure (MPCE) (along with the Corresponding Shares
(%) over Two Groups of “Food” Items for Farmer Households across Different MPCE Classes
(All-India) (in Rs) (January–December 2003)
Cereals, cereal substitutes, gram, 75.05 88.18 96.86 103.76 108.93 114.45
pulses, and their products (61.61) (57.59) (55.13) (52.18) (49.38) (47.01)
Vegetables, fruits (fresh), fruits 17.88 24.76 29.19 34.19 39.19 44.19
(dry), beverages, refreshments, and (15.55) (16.84) (16.61) (17.19) (17.76) (18.15)
processed food
Cereals, cereal substitutes, gram, 119.1 126.1 130.97 137.8 145.23 158.53
pulses, and their products (44.65) (42.92) (39.94) (36.33) (32.69) (27.87)
Vegetables, fruits (fresh), fruits 49.22 54.49 63.41 74.14 87.79 52.07
(dry), beverages, refreshments, and (18.45) (18.54) (19.34) (19.55) (19.76) (18.68)
processed food
70
60
50
40
30
20
10
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Correlation 1. Correlations of poverty: rural rate (pov_rl_rt) and overall rate (pov_tot_rt)
with the share of cereal in total expenditure of farmer households (sh_crl_texp) for 18
major Indian states, at 1% level of significance
sh_crl_texp
pov_rl_rt 0.6974***
pov_tot_rt 0.7198***
(Joshi et al. 2004). This diversion of resources away from subsistence crop
cultivation may adversely affect the macro-food-security of a country and may
lead to immiserization for the net buyers of food. It particularly affects the small
and marginal farmers, the poor engaged in the RNFE, and the urban poor engaged
in the informal activities. And it has been found that the basic cereal production
is a key determinant of the level of poverty in the LDCs. Thus, it is noted that
“increasing staple crop productivity usually reduces poverty overall, because in
addition to the urban poor, more than half of poor rural households are typically
net food buyers” (World Bank 2008, 32).
6. Concluding Remarks
and petty RNFE. Thus, inclusion of a part of the rural economy into the expanding
global market creates exclusion and eviction elsewhere. Furthermore, the
population engaged in urban food retailing is also displaced by the intrusion of
the supermarket chains. Last but not the least, if crop-diversification is undertaken
through large-scale substitution of basic cereal production, it seriously affects the
micro- and macro-food-security leading to immiserization of the rural and urban
poor as well.
The overall “balance sheet” owing to diversification of agriculture and allied
activities toward HVC (horticulture, agro-fuel feedstock, etc.) and animal
husbandry products can be represented succinctly as below (Figure 3):
Inclusion:
• Farmers’ income rise
• Rise in employment at the production stage
Exclusion:
• Exclusion of asset-poor farmers
• Crop substitution → Exclusion in production as HVC is more modern input dependent
compared to subsistence crop
• Crop substitution → Net exclusion in processing as HVC processing less labour-intensive
compared to subsistence crop
• Net exclusion in retailing as supermarkets replace small shops
• Immersization of net buyers of subsistence crop
Acknowledgements
Notes
1. In fact, in various studies, it is found that the regions practicing intensive HVC cultivation in India
have concentrated in urban and semi-urban areas (Rao, Birthal, and Joshi 2006). This corroborates
our claim that there is a close link between diversification of agriculture and urban economy.
2. Thus, the impact of diversification as pursued by the big farmers is undoubtedly contractionary
for the non-farm sector engaged in petty production. We can refer in this regard to a study on
Africa where small and very big farm growth is found to generate identical local growth multipliers
indicating the inability of big farms to boost the local non-farm activities (Haggblade, Hazell, and
Brown 1989).
3. Production, especially processing of HVC, seems to be more capital-intensive even across Africa.
In fact, Haggblade, Hazell, and Brown (1989) report that activities like oil extraction, sugar
production, tea drying, and packaging are often performed in rural areas by large-scale enterprises.
WDR 2008 notes that “[m]ost food products in this new agriculture are perishable, and quality and
safety standards are tighter, thus increasing the vertical integration of food systems . . .” (World
Bank 2008, 58).
4.
The horticulture revolution, unlike the green revolution, has been driven largely by the
private sector and the market. This has implications for the organization of value chains, with
specialized agribusinesses and supermarkets increasing their share in these markets, especially
in the urbanized countries. Grades and standards make it more difficult for smallholders acting
alone to participate in these markets, giving rise to contract farming and collective action by
producer organizations . . . (World Bank 2008, 59)
5. In fact, crop-diversification may even lead to land alienation adversely affecting micro-food-
security and hence reducing the scope for participation in local non-farm activities (West Bengal
Human Development Report 2004). In this context, we can note the observation that
(t)his high-value revolution and export expansion are also changing the structure of employment
in agriculture. In Chile the reforms of the 1970s were accompanied by an increase in agricultural
wage workers to 68 percent of the agricultural workforce, a percentage that has been rising
since 1990 and currently exceeds that for wage workers in the nonagricultural economy. The
proportion and rate of increase of wage workers in the agricultural labor force are highest in
regions enjoying the export-oriented horticultural boom . . . (World Bank 2008, 208–9)
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