Policy impacts on land use and agricultural practices in North-West India. Nick Milham
Policy impacts on land use andagricultural practices in North-West India ACIAR CSE/2006/132 Nick Milham WCCA/FSDC September 2011
What to do when policy seems to have gone wrong?- when ‘successful’ policy begins to show undesirable outcomes
Profound, policy induced, change- major beneficiary of the Green Revolution Table 1: Trends in Crop Area in Punjab YearCrop 1960-61 1980-81 2000-01 2004-05 ‘000 ha ‘000 ha ‘000 ha ‘000 haRice 227 1,183 2,611 2,647Wheat 1,400 2,812 3,408 3,482Maize 327 382 165 154Cotton 446 648 474 509Pulses 903 341 61 40Oil seeds 185 248 87 91Sugarcane 133 71 121 86Total 3,621 5,685 6,927 7,009Source: Government of Punjab
Policy Environment since the 1960sCapital Land Water- machinery subsidies - restriction on farm size - cost unrelated to use - no restrictions on use high intensity Favours crops land with high waterFertiliser uses and energy inputs- subsidised Punjab Farming System - highly mechanized Energy Favours high N - rice/wheat system - large subsidy on electricity using crops - input intensive - small subsidy on diesel - stubble burningCrop prices- MPS- procurement (rice & wheat)- export restrictions OUTPUTSPrice risk - High rice and wheat production - Excessive water useremoved - lower - Self sufficiency goal - Electricity supply problemsbut secure prices - Affordable food for the poor - Pollution from stubble burning
Policy Success Enormous expansion in productivity food grain production; India now self-reliant in cereals Low and stable consumer prices (at least until recently)
But!– productivity now low by world standards– consumer prices may be rising in real terms– water consumption high and groundwater supplies being depleted– soil fertility declining and fertiliser rates excessive and rising– energy (electricity and diesel) demand is high– rice stubble largely burned in the field >> air pollution and on-farm productivity consequences– subsidy programs very costly to government
How to address the stubble burning problem? Subsidise technology like the Happy Seeder?Q: Would it work?A: Yes!Q: Is there a better way?A: Principles, politics and practicality
Add a new program to address theproblems of the existing program?– entrench the existing arrangements– add to the budget cost to government– impose efficiency costs on the economyThe Policy Principles Answer:– probably “No”
Modelled impact With Subsidies Without SubsidiesHappy Seeder used No YesRice (ha) 3.93 2.28Wheat (ha) 4.2 4.2Maize (ha) 0.27 1.92Soybean (ha) 0 0Net farm income (Rps) 152,898 132,999Rice stubble burned (t) 24 0Nitrogen (kg) 533 478Electricity (kw hrs) 1,496 1,557Diesel (L) 1,644 941Water (ML) 81.4 60Casual labour (hrs) 279 635Note: Total farm area 4.40 hectares; total cropped area 4.20 hectares.
Lessons Changes in policy settings can have very large effects on farm production systems and their environmental and social outcomes. When problems emerge, look closely at existing policy settings before considering additional arrangements – a good solution may be there!