Monday, September 30, 2013

Market Failure and Primary Producers

There are two factors that affect the lives of farmers - Lack of financial planning and Information Asymmetry. Let us roughly cash flow of the marginal farmer (as owner or tenant or share cropper who cultivates agricultural land up to 2.5 acres) that will fall into low-income households. The cash out flow of the household is throughout the year and peak-out during festive season, marriage or birth) and bad patches (accident/death) in the family. The farmer gets cash inflow with sales of produce only. Hence, the borrowings of the farmer limits the growth option for the household.

Let us take an excerpt from the paper - Why Don‘t We See Poverty Convergence? by Martin Ravallion  - "Banerjee and Duflo (2003) provide a simple but insightful growth model with borrowing constraints. Someone who starts her productive life with sufficient wealth is able to invest her unconstrained optimal amount, equating the (declining) marginal product of her capital with the interest rate. But the 'wealth poor' for whom the borrowing constraint is binding, are unable to do so. Banerjee and Duflo show that higher inequality in such an economy implies lower growth. However, they do not observe that their model also implies that higher current wealth poverty for a given mean wealth also implies lower growth.."

There is failure of state even in few cases as farmer sold paddy at 900 Rs. to the middleman against the minimum support price of 1250 Rs. This was bought in my notice during a meeting with SHG woman at Khaprakhol block of Balangir District. Hence, the information asymmetry is a definite factor for the problems of primary producers. Let us take the case of Cotton producers at Balangir. Most of the farmers avail credit, fertilizer and seeds from the middlemen. Hence, they are forced to sell their produce to the middlemen. They mostly sell at the price negotiated upon irrespective of the price prevalent in the market. In almost all cases the negotiated price for future output is 10 to 30% lower than the market prices.

Since the cash inflow with the farmers happens only in time of sale post harvesting season. Hence, it is very hard for farmer to negotiate with the creditors, middlemen and even local traders in terms of price of the produce. Farmer is forced to sell the producer soon after the harvest. This phenomenon is called Distress Sell. The lack of holding capacity reveals failure of credit mechanism of government. Through better connected network and information, the middlemen are always able to better estimation of price of the commodity. This price distortion has been brought lower due to reach of mobile phone connectivity. This can be countered by providing loans to hold sale of harvest for few weeks/months and installation of the mini warehouse facility at the GP level.

The market failure is typically attributed to information asymmetries—that lenders are poorly informed about borrowers. But we will go more in the topic of distress sell. Let us see State Wholesale Prices for Onion in Orissa (Rs/ Quintal) [Source - http://agmarknet.nic.in/]


MonthsWholesale Prices (Rs/ Quintal)
April,2013 1500.81
May,20131607.41
June, 2013 1826.3
July, 20132556.19
August, 20134954.79
September, 20134056.14

What we see is the clear evident of the rise of price of Onion to 150-300% soon after harvest season of April and May. So, the actual producers are not getting benefit of the high prices of onion due to distress sell while traders are making money out of the misery of customers. While we talk about food inflation greatly, it has nothing to do with supply demand constraints in India. Its simply linked to hoarding and profiteering. I don't have concrete evidence for this fact, hence will not raise this issue.

Looking from the perspective of the neo -liberal, local traders are managing risk. But, through current practices, we are making agriculture unsustainable and economically nonviable for a small farmer. There are folk idioms like "Des bigade maarwadi, sadak bigade bael-gaadi" prevelant in the rural India. Local traders (often Maarwaris) whatever their motives, have done much to built the market in our country. What we need is inclusion of small farmers as players in the market. It is only by forming networks and communities built on solidarity that marginal farmers can make a difference. The main objective is get the remunerative price for primary cultivators and distress sale should be checked. That will be explored in the future posts through topic like Producer Groups

Wednesday, September 25, 2013

Government Schemes and Development Programmes

Livelihoods Initiative at CMF has complied a list of government schemes that focus on livelihoods promotion, broken down by state that is updated by latest August 2013. I am updating here name of schemes implemented in Odisha.

Social Security
  • Antyodaya Anna Yojana (AAY)
  • Annapurna Scheme
  • Anganwadi Karyakartri Bima Yojana
  • Emergency Feeding Programme
  • State Old Age Pension (SOAP) Scheme
  • National Social Assistance Programme for Social Security Pensions
  • National Old Age Pension Scheme
  • National Family Benefit Scheme
  • Balika Samriddhi Yojana (BSY)
  • Jana Seva Divas - Streamlining of the process of Pension Payment
  • Programme for Care of Older Persons
  • Day care Centre
  • Prevention of Alcoholism and Substance (Drugs) Abuse.
  • Scheme for Welfare of Orphan and Destitute Children
  • Orissa Disability Pension (ODP) Scheme

Welfare
  • Rehabilitation of distressed women
  • Balika Samridhi Yojana
  • State commission for Women
  • MVSN
  • An Integrated programme for Street Children
  • Training & Rehabilitation of Persons with Disability
  • National Programme for Rehabilitation of Persons with Disabilities (NPRPD)
  • "Preservation and Promotion of Tribal Dialects, Culture & Livelihood"
  • Special Programmes for KBK(Kalahandi-Bolangir-Koraput) Districts
  • Multi Sector Development Programme(MSDP)
  • Multi Sector Development Programme(MSDP)
  • Backward Region Grant Fund (BRGF)
  • Gopabandhu Grameen Yojana

Health
  • Janani Express
  • The Integrated Child Development Services (ICDS)
  • Scheme of Awards to Angawadi Worker
  • Kishori Shakti Yojana
  • National Nutrition Mission
  • RevisedNational Tuberculosis Control Programme (RNTCP)
  • National Leprosy Elimination Programme (NLEP)
  • Iodine Deficiency Disorder Control Programme (IDDCP)
  • National Vector Borne Disease Control Programme (NVBDCP)
  • National Programme for Control of Blindness (NPCB)
  • Integrated Disease Surveillance Programme (IDSP)
  • Immunisation Programme
  • Reproductive Child Health
  • National Rural Health Mission (NRHM)
  • Infant Mortality Rate Mission
  • Navajyoti

Livelihoods Promotion
  • UDISHA - The National ICDS Training Programme
  • Women's Empowerment Programme - Mission Shakti
  • Swayamsiddha
  • Support to Training and Employment Programme for Women (STEP)
  • Women's Economic Programme (WEP) - Swablamban (NORAD)
  • Swadhar
  • Supply of Special Aids & Appliances
  • Training Centres for Teachers for Students with Disability:
  • "Orissa Tribal Empowerment and Livelihoods Programme (OTELP) (EAP)"
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
  • National Rural Livelihoods Mission (NRLM)

Education
  • Midday Meal Scheme
  • Special Schools for children with disability:
  • Construction of 1000 new Girls Hostels

Thursday, September 12, 2013

Analyze This !

I saw two vans simply parked around in block office compound at Balangir district. I don't know which department/agency own the vehicles. Both are marked with the sign of UNICEF. And they are rusting like a junk. Our tax money and foreigners aid money, earned though hard work, in this case are hardly put at work. These vehicles are mere extension of wastage of public goods by our government.

Vehicle at Muribahal Block Office
Vehicle at Titlagarh Block Office,

The most reliable way to save an asset at government workplace? Make sure it is used.

End Notes :
*Photographs are taken by personal phone camera in July 2013.
**No offence to the local governance ! :)

Tuesday, September 3, 2013

100 Days @ Balangir

I joined OLM office as YP at Balangir on 27th May 2013. I completed 100 working days today. Let me redirect reader to details of the place where I am working : Balangir District. Balangir/Bolanagir lies in KBK (Koraput Blangir Kalahandi) region and is considered as one of the country's 250 most backward districts. KBK itself has attracted the attention of policy makers, development planners and the poverty critics due to its persistent underdevelopment from last few decades. As per my observation, this place is working with slow/numb administrative activity supported by overt political agitation.

There is no resource block under OLM (Odisha Livelihood Mission) strategy for this financial year 2013-2014 in Balangir. Hence, I have to solely work with ORMAS (Orissa Rural Development and Marketing Society). Motto of ORMAS is simple- Creating competence and values in rural Orissa. ORMAS was constituted to facilitate for a sustainable livelihood of the rural poor by working with SHG clusters. It is very common that government schemes concentrated on the input supply than outputs marketing ; They always look credit, production and market aspect as separate entities. The intervention strategy of ORMAS has been on capacity building, initiation of Micro Enterprises, micro credit linkage and facilitating sales through different channels. Currently, I have been monitoring and learning through interactions about these clusters. I term them as “islands of goodness” amid terrain of poverty.

Understanding of how public systems work at district and state levels is my first priority. I don't want to get caught up in the details of one grand scheme, losing sight of the whole picture. I have been attending few district level meeting and also trying to know at-least the name of various schemes of central and state government. That itself is a huge task.

While it is considered that the most unproductive activity in an IT company (other than negotiating a higher salary with HR) is making powerpoint presentations! No such work is given to me here. I am also not used as a data operator. That is good. I cherish my mentor for this. I do not expect full-time attention of busy mentor but surely office staff help me with various government formalities when required. I try to utilize time by reading reports and news in office. I also count plenty of time wasted/enjoyed in facebook also.

Development of a region or person is a slow process. I have been given full freedom to learn maximum from field visits. Traveling to field never appear hectic to me and a few relaxed days are always there in the office. The words of Marcel Proust, "The real voyage of discovery consists not in seeking new landscapes, but in having new eyes."  are sounding more true than ever. Each day at field gives me new insight about this place. It becomes very inspirational to see few individuals who are successfully fighting the battle for better future. Yet, scenes of extreme poverty and illiteracy breaks the heart.

I am an early adapter but still found it tough to adjust to the climate and culture of this place. I have started to understand Odiya but speaking this language is still not my cup of tea. Sometimes frustration and lethargy creeps in the work schedule but it takes time and resources to build a knowledge base. As they always say, Rome wasn't built in a day !

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Statutory Warning

This Blog is meant purely as a personal diary of a rural manager in making. It exists to record information, experiences and opinions about various issues encountered in the line of duty. Any person, institution and organization mentioned here doesn't assume any liability for its contents. This is not a deliberate attempt to defame anyone. And if you have actually read all that is written in the blog and aren't mad at me, then thanks for your time and patience !
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