Thursday, January 4, 2018

The farm story repeats...

I have lamented here and here at the daunting challenge posed by India's agriculture. Indian Express has this article on the increased jeera cultivation acreage in Gujarat following record prices this year. Consider this,
Prices of jeera (cumin seed) hitting record Rs 21,000 per quintal levels at Gujarat’s Unjha market... In a year marked by low realisations for most agricultural commodities — be it cotton, groundnut, potato or tobacco —... jeera has been an exception... The above spike in prices has led farmers in Gujarat to plant 3.48 lakh hectares (lh) under jeera in the current sowing season, which extends from November to early December. This area, which is subject to upward revision, is significantly more than the 2.79 lh of last year. All the major growing districts have recorded higher coverage: Patan (from 40,700 to 68,100 hectares), Banaskantha (from 64,900 to 67,800 hectares) and Ahmedabad (from 12,400 to 19,800 hectares) in north/central Gujarat; Porbandar (from 12,100 to 23,200 hectares), Rajkot (from 4,900 to 22,000 hectares) and Devbhumi Dwarka (from 4,800 to 20,400 hectares) in Saurashtra; and Kutch (from 23,200 to 29,600 hectares)... Ram Patel has sown jeera in seven out of his 10-bigha holding this time. Last year, he grew the crop only on three bigha, while dedicating the remaining seven bigha for mustard (six bigha make a hectare). Jeera is extremely sensitive to weather fluctuations, making its cultivation riskier relative to wheat, chana (chickpea) and dhaniya (coriander), which are the other major rabi season crops in Gujarat. Overcast skies or dew at the time of maturity — jeera is harvested from February to March — can sometimes even lead to complete crop loss.
It is unlikely that policy actions can nudge farmers away from such herding based on previous year's prices.

The binding constraint against shifting in response to such trends is unlikely to be information. After all a farmer is likely to have seen several such cycles in his lifetime. It is more likely a deep behavioural bias that attaches excessive weight to the immediate experience over the less immediate experiences. Accordingly, the high incomes from the past season weighs so heavily on the mind of the farmers that they are willing to gloss over the memories of pain from earlier experiences of market cycles. What can be done to overcome this cognitive bias?

I would say precious little. Unless the farmer's state of poverty is alleviated, information supply will remain largely ineffective. This excessive preference most likely is a result of poverty and the desperation and insecurity arising from it. The farmer behaves like a poor person who fancies lottery tickets. It is the prospect of the windfall and the perceived favourable odds that make them take the bet.

This is a cautionary note for those who are bought into the story that providing (some even claim to want to sell) information to farmers or the poor can be a solution to many of their deep underlying reasons for distress. They are most likely to be disappointed.

Update 1 (06.01.2018)
A comment informs that the Agriculture Department of the Government of Andhra Pradesh succeeded with an information and awareness campaign to moderate the extent of cotton crop sown this year based on an assessment that cotton is not likely to do well this year.

Now there is a difference between good old public information campaigns (effectively done) and nudging  privately with information. The post was in the context of the latter, and did not make the distinction. Privately providing information as a nudge to farmers is qualitatively different from a massive public information campaign that targets the farmers as a collective. With the latter, mobilising a few influencers (or a platform like farmers groups) can swing the collective resolve towards the change.

So let me reiterate - privately nudging individual farmers with information to shift entrenched patterns or behaviours is unlikely to be effective especially given the (cognitively biased) perceptions of costs and benefits associated with status quo and change.

The problem with the standard information and awareness campaigns of government is that in systems with weak state capacity they are generally executed badly in a routine manner and to that extent becomes ineffectual. In the instant case, I have little hesitation that the outstanding individual heading the State's Agriculture Department made the difference.


G Sai Prasad said...

Govt action does make a difference. An example is the effort of GoAP in
moderating the extent of cotton crop sown this year.

Based on assessment that Cotton is not likely to do well this year,
the Agri Dept took up information campaign to dissuade farmers
from taking up the crop excessively.

The effort was successful, as numbers prove.
I think a proactive approach by Govts would help.
(Details can be obtained from Mr B Rajsekhar, Principal Secretary Agriculture, AP.

Gulzar Natarajan said...

Thanks sir for the comment. I'm updating the main post. There may be a subtle difference between the two.