AGRI ECONONY

8/6/2019 AGRI ECONONY

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CHAPTER IllAGRICULTURAL ECONOMY OF KERALA - A PROFILE

3.1 Introduction

Kerala has a unique place in the geographical map of India. A narrowcoastal belt lying sandwiched between the western ghats on the east and theArabian sea on the west with an area of 38,863 sq. Kms, (1.1 per cent of thegeographical area of India) and a total population of 3 1.84 million (3.1 percent of India's population-200 I census), the state has all the characteristics ofa distinct geographical unit. It lies betw een 8'18' and 12' 48' North latitudeand 74'22' and 77" 22' E ast longitude. The union territory of Lakshadweep -a cluster of islands 1s situated in the Arabian sea off the co ast of North Kerala.The state of Tamil Nadu borders it on the south and partly on the east, thestate of K arnataka on the North an d partly on the east.

Kerala state although very small in geographical extent comprisesdifferent types of land resource configurations and land use patterns. The stateis quite different in physiography, climate, soil and crops when compared toother states of India. There is multiplicity of natural resource endow men ts inthe state unlike the extensive and monotonous agro-climatic situationsprevalent in other states of India. Kerala is relatively rich in resources whichare needed for agricultural production. Kerala has a hig h bio-mass productionpotential. The state is endowed with solar radiation for 365 days despitecloudy days during the rainy months, average annual precipitation of 300


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cms, 5-6 types of soil, undulating topography alternating with hills andvalleys, altitude ranging from below sea level to soaring 25000m. Like theadversity and richness in land resources, Kerala is better endowed with waterresources also.

Kerala is well known for its biological wealth. Biological scientistsconsider Kerala as a genetic paradise since almost every household is agenetic garden The land, water, flora and fauna of the state provideopportunities for the livelihood security of the people of the state. Kerala'srich wild life offers opportunities for eco-tourism.

Agriculture continues to be the most important and single largest sectorof the state's economy accounting for 21.38 per cent of state's income in2000-2001 and providing livelihood security for vast majority of the people.The sector supports 38 per cent of the workers of the state. It is the rawmaterial base for the traditional industries like coir, cashew, oil mill etc. Mostof the crops grown in the state are of national importance by way of earning/saving of valuable foreign exchange by exportJimport substituion.

In spite of the relative richness in resource endowments and high grossincome per u n~t f land the yield of most of the crops grown in Kerala islower than all India average. Notwithstanding the investment anddevelopment activities which took place during the last few decades the yieldof many of the crops have not improved substantially. In fact the yield ofsome of the crops are showing declining tendencies.

I Government ot Kerala - Econorn~c review 2001 Kerala state planning BoardThlruvanathapuram, p 7


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3.2. Phys iograph ic Divisions a nd Cro pp ing P a t te rnsThe vernacular name for the district Malabar, 'Malayalam ' (the land

of hills)' the ancient name of modem Kerala which properly includes cochin,Travancore and Malabar and is the product of States Reorganization Act(central Act xxxvii) of 1956~. oth Kerala Mahatrnyam and K erololpatti startwith the legend that the Malanad was miraculously reclaim ed from the sea byParasuraman and peopled by him with Brahmans. Ancient K erala was dividedinto five regions (tenais) on the basis of soil formation and topographynamely marutham , (cultivable area) palai (uncu ltivated barren and rockeyregion) K urinji (hilly area) neytal (coastal area) a nd m ullai (pasture land14. Inmodem times Kerala has been divided into three natural physiographicdivisions on the basis of physical features. They are the high land, the lowland and the m ~ dand.

The western ghats which bound Kerala on its eastern side anddominate its topography constitute the high land. While the upper ranges inthese mountainous area are covered by thick forest, the lower ranges havetheir plantations which lay interspersed with forests. Teak, rosewood andother valuable trees grow in these areas which present every where a splendidluxuriance of foliage and flowers. Crops like tea, coffee, cardamom andturmeric abound in the higher elevations while in the sub mountain tracts inand below the ghats are grown crops like pepper, ginger and rubber.

' Malabar yazateer C.A. Innes - Government of Kerala 1997 (First published in 1908-volI&Il page chapter 11.' Census of India 1961 , vol. VII- Kerala part IA (i) general Report.A. Sreedhara Menon (1997) Land and People. The Natural Resources of K erala (ED) 1997K Balachandran Thampi, N.M. Nayar, C.S. Nagar world wide fund for Nature. Keralastate office Thiruvanathapuram, p.302.


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The low land is comprised of the long and narrow coastal belt on thewest with stretches of sand and backwaters. The landsca pe in this area isdominated by e xtensive paddy fields and num erous coconut plantations.

In between the high land and low land is the mid land wh ich presen ts anundulating country covered by laterite soil cut across by rivers. Here may beseen the villages broken intermittently by isolated hills and also the plainsleading to the forest clad uplands. T he area is rich in agricultural productionand a variety of crops including rice, tapioca, banana, pepper, ginger coconut,arecanut and rubber are grown. Considerable variations are observed in thesoil and cropping patterns between the three natural physiographic divisions.These d iv~ sio ns re given in the following table.

Table 3.1Physiographic Divisions of Kerala

Source: Report of the committee on Agro-Climatic zones and cropping pattern.Government of Kerala April 1974,p.3.

-

l a n d s

Low land5.-

The criteria for the natural physiographic divisions of Kerala considersonly one variable namely the altitude above Mean Sea Level (MSL). Henceeach division (highlands, midlands and low lands) would comprise diverseagro-ecological entities and resultant land use patterns. In order to identifyhomogenous agro-climate regions the criteria should include more variableslike climate soil etc. Based on the recommendation of the National

DefinitionRevenue villages lying 250' (76.2m)an d more above MSLRevenue vlllages lying between 25 ' and250' (7.62 m and 76.2m) aboveMSLRevenue vlllages lying below 25'(7.62m) above MSLEE_ - - Total area Area ~ m ' s .18653162313979 % of total48.0041.7610.2438863 100.00


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Commission on Agriculture (1976) on Agro-Climate Zones and theCommittee on Cropping Pattern (Govt. of Kerala), the state has beendelineated into thirteen agro-climate zones on the basis of four principalparameters viz. altitude, rainfall, soil type and topography.

Table 3.2 and Map 1 give an account of the agro-climatic zones ofKerala from 1974 onwards.

Table 3.2Agro- climatic Zones of Kerala

** Lower values show percentage share in the total.Source: Report of the committee on ago-climate zones and cropping pattern, Deparhnent ofAgriculture. Government of Kerala, p.12.


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M ap Yiigro-Clima tic zones of Kerala

' ' : !LACY SOIL , ,' ., i: SkNDY ,-- ' ~ . r h o . .

--.. .. V , l : ) A > '8 ,I..,~


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capacity of the ecological systems. The Kerala state has the distinction ofhaving attained a very high degree of land use with an intensity of cropping of1 3 ~ ~ .he scope for bringing new areas under plough is rather limited withonly a meager four per cent of geographical area.

The soils of the state can broadly be classified into sandy, alluvial,laterite, red black, peaty and forest and hill soils. Of this laterite soils are byfar the most important group found in Kerala and cover the largest area(29%16.Diversity, beauty and economic value are the special characteristicsof the flora of Kerala.

A study of the land use pattern shows that the land put to agriculturaluse has reached a saturation point recording a level of 57.9 per cent. The netarea sown has recently shown a declining trend. The main reasons for this arethe high density of population (819 per sq Krn, 2001 census) and the diversionof land for non-agricultural purposes like construction of houses and creationof infrastructural facilities. A perceptible trend noticed with regard to areaunder cultivation IS the fall in the area under food crops like grains, pulses,cereals etc and the increase in the area under plantation and commercial cropseg:- rubber, tea, coffee etc. Corresponding trends have been noticed inproduction in these fields as well. The following table (Table 3.3) give anaccount of the classification of the area under different land use from 1960-61to 2000-2001.

Report of the Taskforce on Agriculture IXth Plan, State Planning BoardThimvanathapuram, Chapter 1,p. 16.6 Census of India- 1961-vol VII. Kerala part I a(i), General Report, Chapter I, Section 11,pp.1-22.


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Table 3.3Area under the different land u s e classification in Kerala during the period 1960-61 to 2000-01 (Area '000 hectares)

[>anduse 11992.93 / 1993-94 (1994-95~p

2) Ag ricultural statistics (various issues), Dept of Econo mics and Statistics, Govt..of Kerala.

Totalgeographical area 1 3885 1 3885 ; 3885 3885 3885 ; 3885- -Forest 1056 1055 1082 1082 1082 1082Land put to non- 205 275 270 297 301 303agricultural uses --arren and 151 72 8 6 58 55 55uncultivable landPermanentpastures and 45 28 5 2 2 2grazing landLand undermiscellaneous tree 204 132 64 34 34 34I ! I I I3885 388, i 3885 : 3885 3885 ' 3885 ' 3885 : 1885

108232 038.9.83

22.03

-.108230851.51.57

36.7

108232348.41.46

32.4

108231343

1.11

26.85

108231841.93

23.26

-1082 t29.33821615.41

-C---108232728.5.52

19.04

1 0 8 235428.8.25

18.52


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The land use systems of the state present a complex pattern with agreat diversity of trees and field crops. Cropping systems includeintercropping, mixed cropping, sequential cropping and many other forms o fpoly cultures involving a w ide spectrum o f crops like cereals, pulses, tubers,fruits, vegetables, latex and oil yielding tree and annual crops, beverages,continents and spices, sugar crops, forages, medicinal plants, green manurecrops and timber yielding species.

Plantation agriculture is the principal land use activity in the state. Treesincluding p erenn ~alhorticultural crops have formed an integral component of theKerala landscape since early times. In the relatively low lying areas rice and ricebased cropping systems are dominant. Though a poly culture cropping patterninvolving many crops is com mon throughout the state four major crop ping systemscan be delineated. These are rice based cropping system, coconut based croppingsystem, tapioca based cropping system and homestead farming system. In certainisolated parts cropping systems based on banana, arecanut and pepper also exist.Although rubber occupies a dominant position in respect of area it is generallygrown under mono-cultural situations.Rice based Cropping System

Rice the staple food of the people is grown predominantly in the lowlands where water is abundant. One to three rice crops are taken in the sameland in a year depe nding on the a vailability of water. M any c rops like pulses,tubers, vegetables and green manures are often grown in succession with riceduring winterisummer seasons.


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Since the mid seventies agriculture in Kerala had been undergoing astructural transformation in favour of cash crops. Food crops in general andrice crop in particular suffered severe set back in area and production. Eventhough the cropping pattern in general was predominated by perennial cashcrops, as a single crop rice could retain its pride of place by accounting for thelargest area. The area under rice in Kerala touched its peak of 8.85 lakhhectares in 1975-76 with an annual record production of 13.65 lakh tones. Thetrend after mid seventies witnessed a sharp decline in area under the crop to3,47,455 lakh hectares in 2000-2001. Rice cultivation was gradually sinkingin to a high cost low productive small holder crop regime. Production of ricehas declined to 7,50,328 tonnes in 2000-2001 though yield increased from1,520 kgmsha in 1975-76 to more than 2,000 kgmsha in the 90's. It isremaining more or less stagnant at 2,162 kgmsha in 2000-2001 per capitarice production in the state has been reduced from 65 kgms in the 70's to 30kgms in the 90's and to 23.57 kgrns in 2000-2001.Coconut based Cropping System

Coconut is the most important tree crop of the state. The seventies andeighties witnessed a steady and continuous increase in the area as well asproduction and yield. The area which was 6.93 lakh hectares in 1975.76 hasconsistently increased over the years and reached 9.26 lakh hectares in 2000-2001. Production also increased from 3439 million nuts in 1975-76 to 5536million nuts in 2000-2001. Productivity also increased from 4963 nuts perhectares in 1975-76 to 5980 nuts per hectare in 2000-2001. The annualaverage growth in area coverage and yield works out to be 3.37 per cent and


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two per cent. Coconut cultivation in the state is now in the midst of a severecrisis due to the adverse effect on production and yield. Crop diseases likeroot wilt diseases and attack of mite (mandari), increased cultivation inneigbouring states, import of coconut oil at lower rates of duty andfluctuations in the price of coconut etc. adversely affect the income of coconutcultivators in the state. To overcome the crisis, the cultivators practice intercropping. Inter cropping a wide spectrum of crops including woodyperennials is the hall mark of this farming system. The combination of crownarchitecture and the wide spacing adopted in coconut plantations facilitatesuch intercroppmg of perennials like pepper, arecanut, nut mug, clove, cocoaand pineapple and annuals like banana, turmeric, ginger, fodder crops, pulses,oilseeds and many multi-purpose trees.Tapioca based Cropping Systems

Tapioca is a crop of much significance to the state. It is the mostimportant supplementing food crop. Despite this, its area and production havebeen steadily declining. The area of the crop has come down drastically from3.27 lakh hectares in 1975-76 to 1,14,609 hectares in 2000-2001 andproduction from 53,90,2 17 tonnes to 2,586,903 tonnes in 2000-2001. Apositive trend in the case of this crop is a steady improvement in yield from16,491 kgmstha to 22,257 kgmslha during the same period.Homestead farming

93.96 per cent of the holdings of the state are marginal (


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operational holdings is only 0.33 ha7. As a result cultivation in the uplandsinvolves an assertment of trees, shrubs and herbs grow ing together in a sm allarea and f or m ~n g pecial land use systems known as homestead farming.Home gardens (homestead farms) are operational farm units that integratetrees with field crops, livestock, poultry, fish having the basic objective ofensuring sustained availability of multiple crops such as food, vegetables,fruits, fodder, fuel, timber, green leaf manure, medicines, ornamentals,besides generating cash income and employment. (The income per unit ofhomestead farm is higher in Kerala by 1.5 times than the all India average). Inthis type of farm no single crop dominate. Coconut is however an integralcomponent of most of the homesteads in Kerala. An interesting feature of thehome garden system is that more than 80 per cent of the produce generated inthe homestead IS consumed within the family itself and the remaining 20 percent is only disposed off to provide any subsidiary incomes

Other salient tree based land use systems of the state include growingmultipurpose trees either or farm boundaries or as scattered trees in the'fields,growing commercial crops (tea, coffee, pepper etc) under shade trees ortrailed on to them, grow ing comm ercial crops (cardamom ) under the shade oftrees in natural forests, live fences, shelter belts e tc.

Agricultural Census 1995-96 Directorate of Economical and statistics - Government ofKerala, p. 195.X P.K Ashokan an d B. Mohankumar Cropping Systems and their Water use'. Page 200-206.Natural Resources of Kerala (Ed) 1997, K. Balachandran Thampi, N.M. Nayar, C.S.

Nayar - Worldwide Fund for Nature, Kerala State Office, Thiruvananthapuram, pp.200-206.


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92R u b b e r

Rubber is a m ajor crop of the state. It is expe riencing a stead y increasein area and production in the last two and a half decades. It is largely grownas a monocrop. Recently Rubber Board, the agency concerned with itsdevelopment has approved the growing of various intercrops like banana,vegetable etc in rubber plantations during the juvenile phase. Area undercultivation of rubber has increased from 2,06,686 hectares in 1975-76 to4,74,364 hectares 2000-2001, production from 1,28,769 tonnes to 5,79,866tonnes and yield 623 k g m s h a t o 1222 kgsha during the same period9.Instability and fluctuations in the price of rubber is a matter of seriousconcern for the rubber cultivators.Spices an d con diments

Kerala has been the principal producer of pepper, cardamom andarecanut. The area under pepper increased from 108251 hectares in 1975-76to 202133 hectares in 2000-2001, production from 24580 tonnes to 60929tonnes in 2000-2001 and yield from 227 kgm/ha 301 kgm/ha during the sameperiod. The area under arecanut during the period declined from 93042hectares to 87360 hectares, but production has increased from 11387 millionnuts to 87950 tonnes and yield from 148620 n u t s h a t o 22599 nutsha in 1997-98 and declined to 1007 k g m s h a in 2000-2001'~. n the area and productionand yield of spices and condiments wide fluctuations occur due to diseaseslike qulck wilt of pepper, yellow leaf disease of arecanut etc. Still the stateaccounts for CJ6per cent of pepper, 73 per cent of cocoa, 67 per cent ofcardamom, 24 per cent o f arecanut, of production in the country.' Farm Gulde,(Various ssues),Farm Information Bureau, Thimvananthapuram.10 Farm Guide,(Various issues), Farm Information Bureau, Thimvananthapuram


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Horticultural DevelopmentThe agro-climatic endowments in the state are considered to be

suitable for a wide variety of horticultural crops ranging from tropical tosemi-temperate varieties of fruits vegetables and flowers. However there wasno organized effort for tapping the potential with a commercial outlook in thepast. Kerala is the homeland of'a wide variety of banana and plantatain whichhave very wide market potential. The area under banana and other plantatainhas increased from 52351 hectares in 1975-76 to 99412 hectares in 200-2001,production from 395054 tonnes to 731650 tonnes in 2000-2001, and yleldfrom 7556 kgmslha to 9838 kgrniha in 97-98 and declined to 7360 kgms/hal'in 2000-2001.

Thus the land use systems of Kerala present a complex scenario withtremendous diversity of trees and field crops grown in poly cultural systemsincluding home gardens or as sole crops. The cropping intensity is one of thehighest in India. Rice, Coconut, rubber, pepper, tapioca, cashew, banana andother plantations represent 80 per cent of the total cropped area in Kerala. Thecropping pattern of the state has been undergoing drastic changes during thelast few decades. There has been a steady drift towards less labour absorbingland use systems. Rice that occupied the principal position in the croppingpattern of the state had been relegated to the third position. Much of the areaoriginally under rice has been replaced by plantation crops such as coconut,rubber, arecanut or are lying fallow. This shift in land use pattern can beattributed to the ever increasing labour wages, fragmented holdings, non-


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availability of farm labour especially during the peak seasons, high cost ofinputs, besides several socio-economic and socio-cultural factors. This shift inland use pattern further reveals the commercialization of the cropping pattern.Thus the emerging land use pattern even after a decade long persistent effortsthrough legal interventions backed by special incentives1 schemes1promotional measures does not appear to have made any significantdevelopment in arresting the shift in land use from seasonallannual food cropsto perennial cash crops.

Out of the 22.5 lakh hectares of net cropped area 12.5 lakh hectares areunder mono cropping systems comprising rubber, tea, coffee, cashew,cardamom combined with net area under paddy. No inter cropping is possibleunder these crops. Out of the remaining 10 lakh hectares coconut occupiesnearly 9 lakh hectares and the balance 1 lakh hectare is accounted bymiscellaneous crops. It is clear from these figures that most of our traditionalcrops like pepper, arecanut, banana, ginger, turmeric, tapioca, nutmeg, clove,vegetables, minor tubers etc are all mainly grown as intercrops in coconutgardens. Thus it is mainly the coconut gardens which supports the seasonaland annual crops of the state. The prosperity of the agriculture sector and thefarmers particularly the weaker sections is closely linked with thedevelopment of'the coconut based agricultural system.3.4 Trends in the A gricultural Developm ent in Kerala

Kerala state formed in 1956 inherited a very strong agricultural base asstated in the Malabar gazateer, Travnancore state Manual and the Cochin stateManual. Two thirds of the population of Malabar were agriculturists. The


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riotwari d~stricts f the east coast were mainly grain producing districts. TheMalabar district was largely a horticultural one. The average agriculturalholding measured 6.43 acres. According to a census taken in 1827,788 squaremiles of area is estimated to be under rice cultivation, 120 square miles byextensive gardens and enclosures of coconut, areka, jack, and otherproduction trees and the reminder by low hillsI2.

In Travancore out of the total population of 2,901,085 in the year 1931,1,167,451 were engaged in agriculture of which 7,85,190 accept it as theprincipal occupation, 1,18,338 as working dependants and 2,63,923 assubsidiary occupation which comes over 39 per cent of the total workingpopulation'3. Thus Travancore also is pre-eminently an agricultural country. Itis a country of small holdings. The total number of holdings 6 per cent wereless than 20 cents in extend, 26 per cent less than 60 cents, 38 per cent lessthan 5 acres and 95.5 per cent less than 10 acres and only 4.5 per cent are 10acres or more. 77.2 per cent of the value of the total production of the statewas represented by agricultural produce'4. Out of the 31,00,000 acres ofcultivable land 80.65 per cent is subject to some kind of agricultural effort.Rice is the staple food grain and occupied the largest area of 6,63,184acres(2 1.4 per cent).

In Coch~nagriculture supports 51 per cent of the population andagriculture is the predominant occupation of the people as well as their chief

p~''C. A Innes Malahar G azetteer, government of Kerala vol I & I1 page 228-para 3, Part I aDescriptive Mem oir of Malahar, p.228." T.K Velluppillai- The Travancore State Manual vol I general features government ofKerala p 249.14 Ibid., vol 111. Economic Affairs, page I para I.


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means of livelihoodi5. The state's income from agriculture and alliedactivities increased from Rs.18,923.24 lakhs in 1950-51 to 25,102.96 lakhs in1960-61 of wh~ch he share of agriculture alone was Rs.16,884.4 lakhs andRs.2 1,995.68 lakhs respectively'6.Agricultural Development from 1960-1990.

Agriculture in Kerala which has the distinction of having the highestgross income per net cropped area at the very beginning of the plan era couldnot sustain this after. The average gross income generated per hectare inKerala is Rs.3 1,468 while the national average is only ~s .14 ,178 '~ .heaverage growth rate recorded by the Kerala agriculture between 1960 and1990 is estimated to be 1.66per cent as against the national average of 2.7 percent". The sectoral contribution made by the agriculture to the state'sdomestic product declined from 54.6 per cent in 1960-61 to 42.6 per cent in1972-73 and further to 34.47 per cent in 1990-91 in conformity with thenatural trends in the diversification of the economy. The growth rate ofagricultural income in Kerala was not stable, steady, consistent and uniform.In the m ~ deventies it was stagnant. During the 1980's it came out of thestagnancy witnessed in the mid seventies. However this positive trend ingrowth has not been steady and consistent. The reasons are multifold.

I Achuyta Menon (1995) Government of Kerala, The Cochin state Manual. Chapter VIp.340.16 Census of lndla 1961 vol VU Kerala part I A general report, p.211.17 Government of Kerala (1998) Economic Review-Directorate of Economics and Statistics,p.32.I X National Bank for Agriculture and Rural Development (2003), State Focus Paper, Kerala2003-2004. Th~ruvanathapuram, . 12


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The Grow th of Agriculture from 1990's to the MillenniumThe growth rate o f agriculture in Kerala fluctuated from just 0.43 per

cent in 1992-98 to over fou r per cen t in 1997-98 and to 3.73 per cen t in 2000-2001. The pattern of growth shows variations among different crops, regionsand also in relation to the other sectors of the economy. The following table3.4 show s the grow th of agricultural incom e from 1960-61 to 2000-01 and thesectoral contribution to the state's incom e.

Table 3.4Grow th of agricultural income in Kerala from 1960-6 1 to 2000-2001

# 1.66 pe r cent average rate of growth over the period from 1960-61 to 1990-91.Source: 1 . Government of Kerala Agricultural statistics (various issues)Department of Econon~ ics nd statistics- Thiruvanathapuram.2. Government of Kerala - Economic review (various issues), Kerala stateplanning Board-Thiruvanthapuram3. Statistics for Planning (various issues) - Government of Kerala,Department of Economics and Statistics- Thim vanthapuram.4. Nat~onalBank for Agricultural and Rural Development (2003) StateFocus paper Kerala 2003-2004 Thimvanathapuram.


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As noted by many studies the period following mid seventies has beenmarked by a general decline in agriculture. The trend in growth rates of NetState Domestic Product as well as primary sector during 1975-87 were eithernegligible or negative. As summary table 3.5 is presented below.

Table 3.5Trend growth rates of different sectors in Kerala economy

Another notable feature of the development of agriculture in Kerala is

Period I(1965-75)

- -

SecondaryTertiary 4.24--

the increase i n the share of population depending on this sector foremployment and income even though the share of agricultural income in Net

Period 1 Kannan K.P, Pusphangadhan K (1990) Disserting Agriculturalstagnation in Kerala - An analysis across crops-seasons and regions -Economic and political weekly September 1990.Period I1 & 111 K.N. Harilal and K.J Joseph (2000) Stagnation and Revival ofKerala Economy- an open Economy perspective C.D.S working paperNo: 305.

Period I1(1975-87)1.99-0.861.654.06

State Domestic Product is declining. 1991 census reveals that there was a net

Period 111(1987-1997)6.004.576.3 16.96

addition of 1.28 lakh cultivators and 2.03 lakh agricultural labourers in theworking population dependent on agriculture during the decennium ending1991. The cultivators (10.15 lakhs) and agricultural labourers (21.70 lakhs)


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together account for more than 37 per cent of the total working population.According to 2001 census 38 per cent of the total working population isengaged in agr~cultureor their livelihood.

Under agriculture crop sector accounts for the largest share of state'sagricultural income. The balance sheet emerging from the agriculturaldevelopment of the state brings into light the unfinished tasks in agriculturaldevelopment for exploiting its potential. On the production front crop sectorin general shows a sound picture with plantation segment comprising ofrubber, tea, coffee, performing well till recently and the cash crops consistingof coconut, arecanut, pepper, cashew-nut also performing reasonably well.Food crops in general have suffered severe set back in production mainly onaccount of the drastic reduction in area under rice an d tapioca. Thu s over theyears the state has transform ed itself from a producer s tate to a consu mer statewith respect to major agricultural commodities mainly food grains. At thesame time the state continues to remain as a major producer o f comm ercialand cash crops like pepper, cardam om, ginger, turmeric, coco nut, rubber, andcashew. In the production of spices and condiments India is the world'slargest producer, consumer, and exporter with a share of 45 to 50 per cent ofworld's spice trade in volume and 25 per cent by value. 8.5 per cent of India'sexport earnings from agriculture and allied products come from spices whichconstitute 1.24 per cent of the total export earnings during 1999-2000'~.Kerala still holds near monopoly in the export of pepper (93 per cent) ginger

'" Cited In K.V Peter and E.V Nybe dominating global markets- The Hindu survey of IndianAgriculture 2002 p- 87 to 95 .


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(90 per cent), cardamom (47 per cent) coffee (68 per cent) tea (43 per cent)turmeric (30 per cent) coir and coir products (90 per cent).

Table 3.0 presents the cropping pattern of Kerala from 1960-61 to2000-2001. The agricultural sector of the state has undergone drastictransformation. There is an incessant drift from rice based farming systems inthe low lying areas to perennial mono cropping systems. The shift incultivation area was mainly from rice to coconut and banana in the low lyingareas and from tapioca to rubber in the midlands and uplands.

Another ~mportant evelopment in the agricultural front is the decreasein the size of holdings and hence the predominance of the small and marginalholdings leading to marginalisation of agriculture as a full time occupation.The per capita availability of land in the state is ust 0.12 hectares as per thecensus of India 2001. The number and area of operational holdings in Keralaas per 1995-96 Agricultural census is presented in table 3.7. It is reported that85 per cent of coconut, 79 per cent of arecanut, 76 per cent of pepper, 60 percent of cashew. 55 per cent of rubber, 45 per cent of coffee, 91 per cent ofmango and 86 per cent of banana are grown in holdings of less than 2hectares2'.

"I Cited in National Bank for Agriculture and Rural Development (2003), State's FocusPaper, Kerala 2003-2004.


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Table 3.6( ropping pattern of Kerala 1960-61 to 2000-2001

decrease (-)

Annual cash cropsGinger 0.5 0.4Turmeric 0.2 0.2Banana + 1 9 1.7lantalnu 2 . 0 1.5

+Sesamern ~+ Cotton +Su arcane4 4 . 6otal - 3.8

PepperCashew 7 .3nutTotal

Food cropsRiceTapiocaPulsesTotalfood

Note: The data were obtained from various issues of season and crop reports-published by Directorate of Economics and Statistics, Keralagovernment.

Plantation cro scm2.0.2 1.6 1.37 +O. 1733.210.31.945.4

1.3Coffee 0.7 2.0Rubber 5.2 6.1 8.2Total 8.7 10.1 13.5

29.810.01.341.1

1.22.512.718.6

27.88.51.237.5

1.33.016.522.4

18.54.90.824.2

1.222.8015.7021.09

-0.38+2.1+10.5+12.39

17.34.40.622.3

11.503.790.2315.52

-21.70-6.5 1-1.67-29.88


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Another significant indicator of the development of agriculture inKerala is the variations in the consumption of fertilizers (NPK) which was97,531 tonnes in 1980-81, increased to more than 3 lakh tones in thebeginning of 1990's and declined to 1,73,205 tonnes in 2000-2001 recordinga decline (-18 per cent ) over the previous year. The average fertilizerconsumption per Ihaigross cropped area decreased to 57.7 kgms in 2000-2001as against 71.19 Kgs in 1999-2000 which is not in the right direction as it ismuch lower than the national average of 89.90 kgm/ha2'.

Table 3.7Number and Area of operational Holdings in Kerala 1995-96- As per 1995-96Agricultural CensusClass and size ofholdings operationalholdings (lakhs)

Marginal 59.181 93 69(1 to 2 ha)

Semi-medium(2 to 4 ha)Medium 0.21

(4 to 10 ha) 0.31

Note: Figures in italics are percentage to total.

Average size ofholdings (area inhectares)

~~ ~ ~~ 62.98TotalL p-Source: Centre for Monitoring, Indian Economy, September 1998 India'sagricultural Statstics, cited in Farm guide 2003-farm informationBureau Government of Kerala- Thiruvanathapuram. P.ll.

Area (lakhshectares)0.181.362.605.27

9.1153.243.5020.462.4314.201.046.08

55.740.33

1.036.0217.11100


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Based on the above discussions, over the years of agriculturaltransformation four parallel scenarios emerged in the farm front of Kerala.1 . Heterogeneous resource based multiple opportunity endowed crop-

livestock tree composed small and tiny homestead systems.2 . Homogenous single crop dominant small and medium sized crop-livestock

farming systems such as paddy based farming systems in Palakkad,Kuttanad, and Kole and coconut based farming systems in the coastalareas.

3. Mono- crop plantation crop sector of both farmer and estate managementspread over the high ranges, highlands, and of late spilling over to themidlands.

4. Scattering of skill and labour intensive land and water based smallenterprises of an innovative nature requiring high levels of technology andcapital support.

The nature of and extent of interventions and support at the state levelvary between them.

In the above paragraphs we have examined the growth in Keralaagriculture and the changing trends. But it is well admitted that agriculturecan prosper and creatively contribute towards the development of the stateonly if sufficient funds are allocated for the sectoral growth. Fund allocationsare usually decided based on the Five Year Plan strategies. Hence, it isappropriate and timely to evaluate the priorities given for agriculturaldevelopment in the state under the Five Year Plans.


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3.5 Agricul tura l Development UNDER THE Five Ye ar P lans - Stra tegyPlanning is an ongoing process in the overall development of the

nation e m br ac ~n g he expectations of millions o f people f or their socio-economic well being. The five year plans implemented in Kerala attachedconsiderable importance to this sector for accelerating the growth of theeconomy as well as for employment generation. The sectoral strategyapproved under the earlier plans laid emphasis on both vertical and horizontalgrowth in agriculture i.e., the emphasis was on both intensive and extensivecultivation. However from the Sixth Five Year plan onwards the focus is onvertical grow th. The approach o f the various five year plans projected fo r cropdevelopment shows certain general features and uniform pattern in outlookand content. They can be summarized as below.

a) Augmenting the yield of both food crops and commercial cropsthrough ~nfrastru ctural evelopment and better manag ement.

b) Diversification of the production base by integratin g all the land basedactivities with a view to maximize the inco me from the sm all holdings.

c) Attain a high level of nutritional security by promo ting the cultivationof fruits, vegetables and pulses. The following table 3.8 gives anaccount of the total outlays and expenditure for agriculturaldevelopment under the various Five Year Plans.


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Table 3.8Outlays and expenditure on agriculture and allied activities in Kerala- -~,

I !IPlans j Period 'year

1

1lUd 1956-61 87.01LI142.54 36.80

1969-74 258.401974-79 752.84

Annual 1990-9 635.40Annual 199 1-92

1992-97 5460.001997-2002 16100-00 1100.18

1109.002002-2007 24000 (319.28):-* Allocation offer agriculture in 2002-2003 Kerala state budget for 2002-03.

Source: L ) Kerala State Planning Board, Economic Review (various issues),Thiruvanathapuram.

2) Farm guide (Various issues) Farm Information Bureau,Government of Kerala, Thiruvanathapuram.Government support under the five year plans was mostly in the form

of financial assistance for infrastructural development, popularization of newtechnologies, organizing the input delivery system, providing research andeducation support etc. The Ninth Five Year plan of Kerala and the Ninth Five


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Year plan have suggested a paradigm shift in the approach for agriculturaldevelopment. Under the new strategy the emphasis was on the optimalutilization of the biological resources in an integrated manner under aparticipatory approach through improvement in yield and quality. With theintroduction of' decentralized planning and the launching of the people's,planning campaign, the responsibility for planning and implementation ofdevelopment projects in agricultural sector along with the required resourceshave been transferred from the state to the local bodies to usher a newdynamism for revitalizing the agricultural sector of the state. In consequencethe share of the plan outlay for agriculture and allied activities has beenreduced from 13.76 per cent in the Eighth Five Year Plan to 6.46 per cent inthe Ninth Five Year Plan and further to 4.62 per cent in Tenth Five Year Plan.The strategy is one of maximizing the income from a unit of land through asystems approach to resource use and management integrating crop livestockand fisheries. The focus will be on ensuring the livelihood security to thepopulation depending on agriculture, rather than enhancing commodityproduction, especially the income base of the marginal, small farmers andagricultural labourers. For achieving this the natural strengths and advantagesemanating from the favourable resource endowments of the state has to bestrengthened. Further the competitive edge of the state's agriculture has to besharpened through improvement in quality and reduction in cost. The statelevel machinery will have to assume a different role under the newdispensation of Panchayat Raj and play primarily that of a facilitating rolewhich enable the local bodies in discharging their responsibility more


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effectively. To achieve this a specific approach and strategy has been adoptedunder the Tenth Five Year Plan which includes,

b) Shift from crop based approach to an area based approach related tofarming systems and homesteads.

c) Scientific delineation of agro-ecological zones within two years.d) Re-orientation of extension services to utilize the modem

commun~cationechnology to help the farmer become competitive.

e) Improvement of the delivery system to extend modem technologiesand practices like organic farming and appropriate biotechnology.

f) Value addition as the key element of the agricultural developmentstrategy.

3.6 Major C hallenges of Kerala AgricultureAgriculture is intended to become not merely an efficient, eco-friendly

production system capable of meeting the basic demands of the rapidlyincreasing population, but it has to become a major powerful instrument for acomprehensive socio-economic transformation of the state includingimprovement in the quality of life of every individual. The agricultural

economy in Kerala in the millennium and post WTO regime has to face manychallenges. To meet these challenges a development perspective differentfrom that pursued in the past has to be evolved.

Agriculture in Kerala is at cross roads. Production and yield of allimportant crops probably with the sole exemption of rubber is either stagnantor on the decline. Even in the case of rubber the yield realized is far below the


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potential. Thus the vital sector is losing its dynamism and resilience it had inthe past. Most of the crops are affected by diseases like root wilt decease ofcoconut, presence of coconut mite (mandari), quick and slow wilt decease ofpepper, bunchy top decease of banana etc. Value addition and productdiversification is not taking place to the desired level due to the inadequaciesof agro-processing facilities. Wide fluctuations in prices have affected most ofthe crops. Integration of the domestic economy with that of the globaleconomy and its subsequent commitments made to international communityvia the WTO commitments have adversely affected the prices and income ofthe farming community of the state especially of the farmers producingarecanut, pepper. coconut, rubber, tea, coffee, etc. The fall in prices nowbeing experienced is all pervasive and as a result even the advantage of mixedcropping followed by the state of Kerala in the form of high degree ofresilience to meet adverse conditions has dissipated. High cost of productiondue to higher wages and high cost of land is another limiting factor. Thusagriculture in Kerala is facing a serious crisis with the maladies of low yleld,high cost of production, and increasing international competition resulting inlower prices and farm income. The review of the agriculture made in thischapter helped to identify the basic features, issues and problems of Keralaagriculture.3.7 Issues and Problems of Kerala Agriculture

Basic and unique features of Kerala agriculture are:1. Predominance of cash and commercial crops


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2 . Market oriented agriculture with emphasis in export or imports u b s t ~ t u t ~ o n .

3. Wide variety of crops - seasonal, annual and perennial4. Preponderance o f perennial crops with long gestation period and heavy

investment5. Prevalence of mixed farming and intercropping6 . Existence o f high value spice crops7. Dispersed settlement pattern w ith homestead cultivation and backyard

system of livestock keeping.8. High pressure o f population on land resulting in tiny holdings9. co-existence of well organized plantation sector, unorganized small

farming sector and subsistence food crop sector and10.Emergence of large number of part-time farmers and increasing

number o f absentee farmers.24 25Based both on the findings of various studiesz2,reports23, ask force ,

and on our own analysis of the agricultural scenario o f the state a number ofbasic problem s and important issues were identified wh ich include,

" Pillai P.P (1994) Kerala Economy- Four decades of development, Institute Planning andApplied Ec on om ~c s esearch John Matthai Foundation University of C alicut.K.P. Kannan K. Pushpangadhan (1990) Dissecting Agricultural stagnation in Kerala Ananalysis across crops seasons and regions working paper No: 238 Centre for Developme ntStudies, Thiruvanthapuram2 Report of the Swaminathan Commission on Kerala Agriculture (2003).24 Governm ent of Kerala, Report of the Taskforce on Agricultural Infrastructure 1997-2002IX th Five Year Plan, State Planning Board

'5 Governm ent of Kerala, Report of the Taskforce on Field Crop s 1997-2002 IXth Five YearPlan, State Planning Board.


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1. Failure to formulate a policy and strategy suitable for KeralaAgriculture and to design and develop appropriate technology andinfrastructure to meet the special requirements of small farmers.

2. Absence of scientific and systematic crop planning consistent with landcapability and ecological sustainability.

3. Damage to the ecological foundations essential for sustainedagricultural advance such as land, water, forests, and bio diversity.

4. Low level of investment both public and private.5. Mismatch between production and post harvest technologies and

between production and market demand due to lack of marketing andprocessing facilities and linkages with industries.

6 . Lack of cost effectiveness and efficiency of production, the basicprincipal of globalization resulting in an unequal trade bargain in thepost W 1 0 regime.

7. Absence of systematic programmes for the replanting of perennialplantation crops.

8. The fiscal policy of the state is not conducive to agriculturaldevelopment.

9. Increasing incidence of pests and deceases for crops10.Fast and continuous decline in the size of holdings and emergence of

large number of part time and absentee farmers.11. Failure to evolve a price support mechanism to ensure stable and

remunerative prices.


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12.Emergence of new social values downgrading agriculture and farmingcommunity in social status and prestige.

These threats, issues and problems both internal and external can bechallenged and solved through integrated attention to regulation, educationand social mobilization through Panchayati Raj institutions, restructuredresearch strategies, farmer owned and controlled extension services, inputdelivery system and technical resource centers for monsoon management andwater security etc. Measures have to be adopted and implemented by thegovernment in this direction to recognize and develop agriculture as a worthwhile occupation, capable of ensuring a decent living with dignity and socialstatus to farmers. The vitality and dynamism of Kerala agriculture has to berestored and regained through the judicious use of scarce resources of land,water, rural manpower and technology with focus on increasing productionand yleld in a planned manner. Efforts must also be made to optimize farmincome through value addition. Possibilities of economic incentives, massiverehabilitation programme for coconut , cashew, pepper and social securitymeasures may be explored.

Thus the outlook of the future of the economy of the state would

depend largely on the measures that would be taken to sustain the tempo ofdevelopment achieved in the agricultural sector and to make agricultureglobally competitive. For this a supportive agricultural policy and public andprivate investment in potential areas viz. minor irrigation, horticulture,storagelmarket yards, water shed development, agro-processing,


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intercropping, multi-storied cropping, organic farming, mixed farming etcneed to be enhanced.

One of the ingredients for agricultural development is the timelyavailability of agricultural credit. Realising the importance of agriculturalcredit the Brit~shgovernment and subsequently the government of Indiaappointed various committees and commissions with the sole purpose ofstrengthening the agricultural credit delivery system. In the second chapter ofthis thesis we made a comprehensive look into the relatedcommission/committee reports. In the succeeding chapter an attempt is madeto examine the institutional framework for agricultural credit-specifically toKerala state and also to assess the flow of agricultural credit in the state.

Documents

AGRI ECONONY