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Lease Farming in Kerala

Lease Farming in Kerala

The Land Reforms Act in Kerala rendered tenancy invalid and prohibited the creation of future tenancies in the state. But tenancy still exists. It is a consequence of the simultaneous increase in two categories of people, ?those who have land but are unable to cultivate? and ?those who have the labour and skills, but have no lands or not enough lands of their own to cultivate?. This paper examines some micro level studies on tenancy in Kerala, more specifically, its prevalence across locations and crops, characteristics of lessors and lessees, the terms of lease and the income derived from lease cultivation. It argues for institutionalised arrangements for the expansion of lease cultivation, rather than sterner measures to check it. Among other factors, large-scale entry of self-help groups into the lease market to take up lease cultivation, often bringing hitherto fallow lands into production, prompts such a positioning.

Lease Farming in Kerala Findings from Micro Level Studies

The Land Reforms Act in Kerala rendered tenancy invalid and prohibited the creation of future tenancies in the state. But tenancy still exists. It is a consequence of the simultaneous increase in two categories of people, “those who have land but are unable to cultivate” and “those who have the labour and skills, but have no lands or not enough lands of their own to cultivate”. This paper examines some micro level studies on tenancy in Kerala, more specifically, its prevalence across locations and crops, characteristics of lessors and lessees, the terms of lease and the income derived from lease cultivation. It argues for institutionalised arrangements for the expansion of lease cultivation, rather than sterner measures to check it. Among other factors, large-scale entry of self-help groups into the lease market to take up lease cultivation, often bringing hitherto fallow lands into production, prompts such a positioning.

K N NAIR, VINEETHA MENON

IIIII
IntroductionIntroductionIntroductionIntroductionIntroduction

K
erala’s land reform, which intended to place agricultural land in the hands of the tillers and ensure a dwelling place for the hutment dwellers,1 was expected to usher in a more equitable society and accelerate agricultural production. However, after three decades and more of land reforms, it is now recognised that not much redistribution of land took place; what happened was only the transfer of ownership2 of land from the former lessors to the lessees. The protracted delay in the land reforms legislation following its initial conception and discussions3 allowed many large landowners to dispose of their lands or register them as smaller units within the land ceiling in the names of relatives, or devise strategies to circumvent the act using provisions like exemption to plantations. The objective of distributing land to the tillers of the soil was only partly net since the bulk of the former tenants who benefited from land reforms were people who had no direct dependence on land for their livelihood. Further, agricultural labourers who directly worked on land for their livelihood did not benefit much from the land redistribution since they got only hutment dwelling rights and very little cultivable lands.4 Nevertheless, the fact that several intermediate and lower castes in the state came into possession of land, resulting in some socio-economic mobility among them, has created an overall impression of the success of land reforms in the state.

Although the Land Reforms Act in Kerala prohibited the creation of future tenancies in the state (as per Sections 72 L, 73 and 74) and rendered tenancy legally invalid, it has reemerged. The post-land reform period has witnessed a significant shift in the ownership of land, from households who have a primary interest in agriculture as a source of livelihood to those who have no particular interest in agriculture. There has also been a proliferation of small and marginal holdings due to the breakup of joint families and a consequent partitioning of households. While on the one hand, the average size of holding has been declining rapidly, intergenerational inequality in the distribution of land declined. An access to agricultural land through the market mechanism has become increasingly difficult for the poor due to the rapid increase in land values as land became a speculative good rather than a factor of production. The period has witnessed a significant shift in the cropping pattern in favour of tree crops from seasonal and annual crops. This, in turn, has resulted in a reduced demand for agricultural labour. There has also been a simultaneous reduction in the supply of both hired and family labour in agriculture due to the rapid expansion of education and occupational diversification of labour. On the part of landowners, there has been an increasing tendency to convert paddy lands to the cultivation of other crops and for non-agricultural purposes, as rice cultivation has become a losing proposition with labour scarcity and cost of labour becoming prohibitive. Although the real and money wages of agricultural labourers have increased over time, their number of days of employment has been declining due to the shift in cropping pattern and the reduction in labour use, adversely affecting the livelihoods of agricultural labour households. Even some segments of the cultivator households with small and marginal holdings failed to make their living from cultivation of their own lands. It is as a consequence of the simultaneous increase in the numbers of two categories of people, “those who have land but are unable to cultivate” and “those who have the labour and skills, but no lands or not enough lands of their own to cultivate”, that the expansion of a lease market has come about in Kerala, with the former category of people leasing out their lands to the latter for lease cultivation.

One would expect to get an insight into the extent to which the land lease market has developed in the state from the landholding surveys conducted by the National Sample Survey Organisation. According to the 37th round of the NSS (1981-82) 6.7 per cent of the operational holdings is leased in land. This is far lower than the figure (15 per cent) reported for the country as a whole. In terms of area, 2.6 per cent of the operated area was leased in Kerala, whereas for the country as a whole it was 9 per cent. The data for the early 1990s (from the 48th round) showed that 5.2 per cent of the holdings, accounting for 2.9 per cent of the operated area, were leased-in land. The corresponding figures for all-India were 7.2 and 8.3 per cent respectively. Thus in both Kerala and all-India while the percentage operational holding leasing-in land has slightly declined, the share in operated area has shown a marginal increase. The data for a recent year (2003) available from the 59th round of the NSS showed that out of the estimated 2.1 million farmer households in Kerala, 6.6 per cent leased-in land during the kharif season and 5.35 per cent during the rabi season.5 From this report, the extent of land leased-in as a percentage of the operated area is not available: however, it provides information on the nature of agricultural activity carried out in the leased land. This clearly shows that the leased lands are put to intensive cultivation compared to owned land, in which a good part has been devoted to the raising of orchard including tree crops.6

The state level data from sources such as the NSS must have considerably underestimated the prevalence of tenancy in the state.7 Apart from the fact that tenancy is illegal and most of the contracts are oral, and tenants and landowners may not necessarily report their lease arrangements, the concepts and methods used in such surveys are also not very appropriate to capture some of the location-specific characteristics of tenancy in the state resulting in the underestimation of its prevalence. Coming to the concept and methods used in the 59th round, the following aspects needs to be kept in mind: (1) the data was collected for kharif and rabi season separately: but lease cultivation is widespread in the cultivation of annual crops (like banana) and crops that last for two to three years (like pineapple and betelvine). It is not clear, how far the NSS survey has captured such lease arrangements. (2) The leasing in of land by self-help groups are widespread in the state, and such lease arrangement falls outside the preview of NSS sampling, since it concentrates only on households.8 Because of the above limitations of the state level data, for a meaningful assessment of the tenancy situation in the state, one will have to look at the evidence available from micro level surveys and studies.

The purpose of this paper is to assemble and analyse some of the micro level data available on tenancy. More specifically, the paper will examine the prevalence of tenancy across locations and crops, characteristics of lessors and lessees, the terms of lease, the income derived from lease cultivation, and in the light of the analysis to indicate the possible institutional arrangements for expansion of lease cultivation.

IIIIIIIIII
Description of the StudiesDescription of the StudiesDescription of the StudiesDescription of the StudiesDescription of the Studies

The micro level studies from which we have drawn data and information for this paper were carried out by different researchers with different objectives and methodology. Table 1 summarises, a few of the characteristics of these studies. It may be interesting to highlight the nature of information and data available on tenancy from these studies. Cheriyan’s study provides information on lease cultivation of betel vines, banana and tapioca. John, while examining the crop rotations in an area where traditional crops were coconut, rice, tapioca and banana, but where crop shift towards coconut and rubber as well as cultivation of vegetables is visible, gives information on tenancy for these crops. Latha and Madhusoodhanan on the other hand, while looking at the aggressive conversion from paddy to banana, give insights in the tenancy for banana cultivation. From Nair et al’s study, we have village level estimates of the prevalence of tenancy, terms of lease, etc. Veron’s study does not provide

Table 1: Selected Characteristics of the Micro Level StudiesTable 1: Selected Characteristics of the Micro Level StudiesTable 1: Selected Characteristics of the Micro Level StudiesTable 1: Selected Characteristics of the Micro Level StudiesTable 1: Selected Characteristics of the Micro Level Studies

Author Study Location Crops Grown Objectives Methodology

Cherian (2004) Contiguous rice lands spread over Coconut, rice, betelvine, To study the prevalence of tenancy Household survey covering 125 three panchayats in Pathanamthitta rubber, tuber crops. in wetlands, economic viability of tenants and 80 landowners selected district falling in the mid-land zone of lease cultivation, the linkage on the basis of random sampling in the state. between lease market and the study area during the year labour market. 1999-2000. The study also used qualitative research methods like PRA.

John (2004) Seven panchayats in Kottayam Rubber, coconut, rice, To study the cost and returns to Survey of 490 vegetable growers in district: two in the mid-land, tapioca, vegetables, banana. vegetable and other seasonal the study area selected on the basis and five in the mid land-low land and annual crops cultivated in of cluster sampling during the zone. the rotated and non-rotated farms, year 2002. and the influence of price and non-price factors (including land tenure) on the economic viability of cultivation.

Latha and Two panchayats in Trichur district Coconut, arecnut, rubber, To study the process of Household survey (2002-03)

Madhusoo-falling in the high land-mid land zone. banana, rice, vegetables. commercialisation in banana of about 90 banana cultivators each dhanan (2004) The data was collected from the cultivation and the role of selected from the two watersheds cultivators of wetlands in two various factors including using random sampling during micro watersheds. land tenure in the sustainability 2002-03. of cultivation.

Nair et al (2004) One panchayat in the high land Coffee, pepper, vegetables, To study the consequences Survey of 10 per cent households in district of Wayanad. tuber crops of the fall in agricultural the study village using stratified prices, and the coping strategies random sampling with amount of of farmers and labourers to land owned and main source of the situation. household income as the variables for stratification during the year 2003.

Veron (1999) One panchayat in mid-land area in Rubber, coconut, To study the relationship Qualitative research methods. Ernakulam district. pineapple, vegetables, between commodity market banana, paddy, tapioca and cultivation practice, with and other tuber crops. pineapple as a case study.

Economic and Political Weekly June 30, 2006

48th round) showed that 5.2 per cent of the holdings, accounting

estimates of the prevalence of tenancy; however, it provides insights into the process of working of the lease market. Together these studies allow us to draw some useful insights on the tenancy situation.

IIIIIIIIIIIIIII
Prevalence of TenancyPrevalence of TenancyPrevalence of TenancyPrevalence of TenancyPrevalence of Tenancy

The estimated prevalence rates of tenancy (percentage of lease holding to total) in the various study locations and for different crops are given in Table 2. It is evident from the data that the prevalence of tenancy for different crops reported by the various researchers in the locations far away from each other in the state is very high. Further, for one location, for which estimates similar to large-scale surveys are made, the figure is far higher than that available from macro surveys. The prevalence rates thus reported by different authors are a clear indication that they are high in all parts of the state in the seasonal and annual crops.

One of the studies (Omana Cheriyan) has provided data to understand the development of tenant cultivation in the state since 1990s. Her data on the distribution of tenant farmers by length of tenure showed that above 62 per cent of them entered into lease cultivation only in the 1990s (Table 3). Further, those who took up lease cultivation owned only small plots of land and they leased in only small plots of land. Those households who were tenants before 1970 owned a higher extent of land compared to those who entered into tenancy in the post-1970 period. The latter group of tenants were the beneficiaries of land reforms who came into ownership of small plots of land.

John has highlighted the development of lease cultivation in his study area in recent years with special reference to vegetable cultivation. In the earlier phases of development of the cultivation of this crop, there was paddy-vegetable rotation at first, which changed to one crop paddy in May-September, followed by two seasons vegetables or banana. Crop rotation has practically disappeared from many fields now, with farmers abandoning paddy and the paddy lands, which were owned by people who have no primary interest in cultivation are kept fallow as a response to the rise in cost of cultivation. Such fallow lands are leased in by agricultural labourers and marginal farmers for cultivation of vegetables. John found in his study that tenancy is an important factor influencing crop rotation.

IVIVIVIVIV
Lessors and LesseesLessors and LesseesLessors and LesseesLessors and LesseesLessors and Lessees

These studies provide only limited information on the characteristics of lessors and lessees. Cheriyan’s analysis of the socioeconomic situation of the lessors reveals that about 80 per cent owned less than two hectares of land with a better socio-economic background. Children of a good proportion of the lessor households are employed in other countries and remittance constitutes the financial base of these households. Only very few of the lessors evince interest in farming; cultivation for them is not for livelihood, but for keeping their rights over land. In addition to the migration factor, other studies have identified the scarcity and increasing cost of hiring agricultural labourers and the lack of viability of paddy cultivation as few other reasons for landowners leasing out their land.

These studies have brought out some important characteristics of the tenants. In the study locations, the percentage of pure tenants (who have no own land for cultivation) are seen to be very high-ranging, from 46 per cent in John’s study to 70 per cent in Cheriyan’s study. Another interesting aspect noted is the widespread practice of agricultural labourers leasing in land (Table 4).

Two of the studies have provided data on the land ownership position of the tenant households. As we noted earlier Cheriyan’s study shows that most of the tenants owned only small plots of land. Another study (Nair et al) has furnished data on the distribution of leased-in land according to the size distribution of operational holdings. It clearly shows that there is a concentration of the tenants holdings in the bottom size groups, meanwhile a concentration of leased-out land in the higher size groups is also there (Table 5).

About 23 per cent of the lease holdings above one acre accounted for about 58 percent of the leased land. Latha and Madhusoodhanan also report that in their study area, the percentage of banana plants planted in the leased-in land to total banana planted was found to be higher in the higher categories of banana planters, thereby indicating that the practice of lease

Table 2: Estimated Prevalence Rates of Lease CultivationTable 2: Estimated Prevalence Rates of Lease CultivationTable 2: Estimated Prevalence Rates of Lease CultivationTable 2: Estimated Prevalence Rates of Lease CultivationTable 2: Estimated Prevalence Rates of Lease Cultivation

Author Nature of Percentage Average Size Average Size Information of Tenant of Owned of Leased-in on Tenancy Holdings Area Area to Total

Cheriyan Pertains to 52 22 13 betel vines, banana and tapioca only

John Vegetables and 61 Not available Not available

banana Latha and Only for banana Madhusoodhanan 42 Information available in terms of no

of plants. 46 per cent of the plants were cultivated in leased land

Nair et al Data on number of 27.6 132 105 tenants, by size of holdings. No cropsspecific information on tenancy

TableTableTableTableTable
3: Distribution of the Number of Tenant Holdings3: Distribution of the Number of Tenant Holdings3: Distribution of the Number of Tenant Holdings3: Distribution of the Number of Tenant Holdings3: Distribution of the Number of Tenant Holdings
by Length of Tenure with Average Size of Ownedby Length of Tenure with Average Size of Ownedby Length of Tenure with Average Size of Ownedby Length of Tenure with Average Size of Ownedby Length of Tenure with Average Size of Owned
and Leased-in Areaand Leased-in Areaand Leased-in Areaand Leased-in Areaand Leased-in Area

Year of Origin No of Tenant Average Size of Average Size Holdings Owned Area (cents) Leased-in Area (cents)

Up to 1970 18 (14.4) 52.3 19.7 1971-1980 8 (6.4) 15.6 17.1 1981-1990 22 (17.6) 15.3 14.5 1991-2000 77 (61.6) 17.0 11.0 Total 125 21.68 13.25

Notes: Figures in brackets denote to total. 100 cents = 1 acre.

Table 4: Percentage of Pure Tenants and Percentage ofTable 4: Percentage of Pure Tenants and Percentage ofTable 4: Percentage of Pure Tenants and Percentage ofTable 4: Percentage of Pure Tenants and Percentage ofTable 4: Percentage of Pure Tenants and Percentage of
Tenants with Agricultural Labour as the main OccupationTenants with Agricultural Labour as the main OccupationTenants with Agricultural Labour as the main OccupationTenants with Agricultural Labour as the main OccupationTenants with Agricultural Labour as the main Occupation
as Reported in Different Studiesas Reported in Different Studiesas Reported in Different Studiesas Reported in Different Studiesas Reported in Different Studies

Author Percentage Tenants with of Pure Tenants Agricultural Labour as the Main Occupation (Per Cent)

Cheriyan 70 35 John 46 46 Latha and Madhusoodhanan 60 48 Nair et al 65 39

cultivation has become more intensive in the higher size categories of planters. Veron also reports similar pattern for pineapple cultivation. This involvement of the relatively better-off farmers along with the poor subsistence farmers raises the question of subsistence versus commercial leasing of land for cultivation; we will return to this question in a subsequent section.

VVVVV
Terms of LeaseTerms of LeaseTerms of LeaseTerms of LeaseTerms of Lease

We have put together the terms of lease9 available from the different studies (Table 6). The important points emerging from this data can be summarised as follows: (1) There is considerable spatial variation in the rent levels, presumably due to land quality variations and the demand for land on lease (2) Fixed rent and payment in cash are the dominant practices, except in one study [Nair et al 2004] that reports both fixed rent and crop share.

(3) Rent is fixed per plant and per acre, the payment is effected at the time of planting/leasing/at the time of harvest on an equal basis. The duration is usually one crop year.

These studies have also provided some insights into the changes in the practices in land leasing. According to John’s study, in the 1980s and early 1990s rent was fixed on an area basis, which changed in recent years to fixation per mound or per plant. So long as the payment of rent is prompt, the same tenant is permitted to cultivate the land. They are allowed to dig ponds for irrigation, but not to make any permanent constructions like motor sheds. The tenants are expected to clear the mounds/pits before the time for land preparation for the next crop. Latha and Madhusoodhanan have reported considerable increase in the rent for five-year period, the rent per plant increased from Rs 6 to Rs 12 in one watershed and Rs 10 to Rs 15 in another watershed. In her study area, apart from soil quality, proximity to assured water supply is an important factor that contributed to the differences in the rent levels. Unlike other studies, Nair et al’s study reveals crop sharing as the dominant form of lease arrangement (27 per cent of the sample lessees operated with fixed terms, 48 per cent with crop share and the rest with no clear terms). This may be because of the high rise in the cultivation of crops like ginger and banana and the need to share the risk between the landowners and tenants.

VIVIVIVIVI
Income from Lease CultivationIncome from Lease CultivationIncome from Lease CultivationIncome from Lease CultivationIncome from Lease Cultivation

Estimates of the income from tenant farming, available from two of the studies show that it is advantageous to both lessees and lessors. Cheriyan’s estimates of the cost of cultivation and income from the two crops – betelvine, banana – reveal (Table 7) that the income accrued from tenant cultivation is very attractive, especially if one takes into account the cost of imputed family labour. According to these estimates, the income from betelvine cultivation is more than fourfold compared to that from banana and can be planned in such a way as to effectively use idle family labour during the lean months when demand for hired labour is low, although this cultivation requires capital and constant supply of family labour.

John’s estimates (Table 8) clearly show that the cultivation of paddy is losing proposition, but that the rotation of paddy and vegetables could make the cultivation of paddy economically

Table 5: Distribution of Leased-in Land according to theTable 5: Distribution of Leased-in Land according to theTable 5: Distribution of Leased-in Land according to theTable 5: Distribution of Leased-in Land according to theTable 5: Distribution of Leased-in Land according to the
Number of Holdings and Average Area (in cents)Number of Holdings and Average Area (in cents)Number of Holdings and Average Area (in cents)Number of Holdings and Average Area (in cents)Number of Holdings and Average Area (in cents)

Size of Holding No of Average Area of Average Area of
Holdings Leased-in Land of Owned Land
0-10 15 9 29
11-50 36 37 155
51-100 44 88 119
101-200 13 167 62
201-300 5 300 385
301 and above 10 400 160
Total 123 105 132

Table 6: Terms of LeaseTable 6: Terms of LeaseTable 6: Terms of LeaseTable 6: Terms of LeaseTable 6: Terms of Lease

Author Crop Rent Mode Frequency Duration Remark
of Payment of Payment
Cheriyan
Betelvine Rs 11,000 per acre Cash At the time of leasing One year Sanction to dig irrigation pond
Banana Rs 9,000 per acre Cash 50 per cent at planting One year
80 per cent at harvest
Tapioca Rs 3,500 per acre Cash At planting One year
John
Banana Per plant (Rs 12) Cash 50 per cent at planting Rent varied across panchayats
80 per cent at harvest One year depending on the quality of
soil
Vegetable Rs 4,000 to Rs 6,000 Cash At leasing One season The leasing-in takes place
(crop rotation) per acre after a paddy crop
Vegetable Rs 16,000 to Cash At leasing One year Three-season vegetable;
(without crop Rs 20,000 per acre allowed to dig ponds, but not
rotation) allowed to instal pump sets
Latha and Madhusoodhanan
Banana Rs 12 to Rs 15 per plant Cash 50 per cent at planting One year
50 per cent at harvest
Nair et al
Fixed rent Banana Rs 15 per pit Cash 50 per cent at planting One year
50 per cent at harvest
Ginger Rs 6,000 per acre Cash At planting One year
Tapioca Rs 3,000 per acre Cash At planting One year
Crop share Banana
Ginger 50 per cent of the produce
Tapioca Kind At harvest One year Landowner provides
One year fertiliser and seed
One year
Economic and Political Weekly June 30, 2006 2735

more viable that income from banana and vegetable cultivation high. He has derived the net income from the cultivation of paddy, banana and three types of vegetables grown in his study area by estimating the gross income and deducting from it, the cost of inputs (including the hired and imputed value of family labour and rent for land). The results clearly indicate that the income from lease cultivation of banana and vegetables are very attractive. It also confirms the prevailing view that the cultivation of paddy is a losing proposition. Both John and Cheriyan have highlighted that the income from lease cultivation has helped small tenants acquire small plots of land and to move up in the socio-economic ladder as owner cultivators and accumulate surplus that is diverted for educating their children. The recent spurt in lease cultivation by self-help groups is also a reflection of the reasonable returns from this activity and the opportunity it offers to the group members in utilising their idle labour.

VIIVIIVIIVIIVII
Tenancy in Commercial CultivationTenancy in Commercial CultivationTenancy in Commercial CultivationTenancy in Commercial CultivationTenancy in Commercial Cultivation

Banana and ginger are two other crops in which commercial lease cultivation is found to exist on a significant scale. In both these crops, in years when prices are on the upswing, the lessees could realise significant profits. However, the cultivation of these requires access to capital for investment and the ability to take risks. Both these commodities are susceptible to wide fluctuations in prices and loss due to natural calamities and incidence of pests and diseases. The entry of agricultural labourers or marginal and small farmers in the lease cultivation of such commercial crops that require access to capital for initial investment and ability to take risks caused by the fluctuations in the market prices has been limited. The prevailing crop insurance system does not cover crop loss in lease cultivation. This further limits the entry of poor agricultural labourers and small holders into such cultivation and commercial cultivation of such crops has been restricted to those who can afford relatively larger investments and are able to take risks. The studies by Nair et al and Latha and Madhusoodhanan brought this out clearly. In their study areas about 30 per cent of the tenants were having non-agricultural occupations as their main source of income.

Agencies like the Kerala Horticultural Development Programme (KHDP) promoted by the state have also been instrumental in altering this situation by making loans available under certain schemes for such commercial cultivation. According to the data collected by Latha and Madhusoodhanan, 61 per cent of the banana farmers in one watershed, and 44 per cent of farmers in the other watershed studied have availed KHDP loan for the cultivation of banana. Under the KHDP scheme, loans are available without collateral of land or other assets to farmers who are organised into self-help groups, provided the group on the advice of the KHDP field officer recommends the loan as per norms fixed for the purpose. A landless agricultural labourer can, thus, avail up to Rs 25,000 as a loan from the nationalised bank for raising banana if he has minimum of five cents of land and grows a minimum of 300 banana plants. In the event of failure to repay the loan before the next planting season, the group has the liability to make the repayment. John also has reported similar facilities of KHDP utilised by the vegetable farmers. Likewise, in Cheriyan’s study area, agricultural labourers and small farmers are able to avail loans for the cultivation of betelvine from nationalised banks through the NABARD scheme meant to promote this cultivation.

Under a similar scheme, KHDP provided loans also for the promotion of pineapple cultivation.

Veron’s documentation of different aspects of the commercial cultivation of pineapple (1999) shows how this commercial crop has emerged as an important part of agriculture in the 1990s and its nature and characteristics that have contributed to this. Three types of cultivators are involved in pineapple cultivation: owner cultivators, tenant cultivators, who have taken this up as a commercial enterprise, and small-scale lease cultivators, who are either agricultural labourers, or marginal farmers who have taken this up as a part of their livelihood strategy. Issues like crop rotation, intercropping, labour requirements and its characteristics, skills needed, nature of land tenure, market for the crop and security of land lease due to the nature of intercropping, are influencing significantly the incidence and nature of tenancy in pineapple cultivation, other than one’s ability to take risks and make large investments. This explains why pineapple, a crop requiring year-round availability of labour and is more labourintensive than paddy, has made a place for it in Kerala’s agriculture, while paddy is losing out due mainly to security of agricultural labourers. The fact that there is no peak demand for labour in pineapple cultivation and that it ensures continuous employment throughout the year have ensured that unlike in the case of paddy, rural labourers are available for raising this crop. The role of leaseholders in this cultivation has been significant as KHDP estimates have shown: about 30 per cent of the pineapple production in Veron’s study area –Vazhakulam – was by leaseholders. The following excerpt from his study is very revealing of the situation in pineapple cultivation:

These people (leaseholders) are often middle class cultivators such

as salaried employers, with little land of their own. Leasing has

evolved particularly for this crop because pineapple cultivation

is very profitable and therefore enables lessors to demand a

Table 7: Income from Lease Cultivation of Betelvine andTable 7: Income from Lease Cultivation of Betelvine andTable 7: Income from Lease Cultivation of Betelvine andTable 7: Income from Lease Cultivation of Betelvine andTable 7: Income from Lease Cultivation of Betelvine and
Banana in Three Contiguous Paddy FieldsBanana in Three Contiguous Paddy FieldsBanana in Three Contiguous Paddy FieldsBanana in Three Contiguous Paddy FieldsBanana in Three Contiguous Paddy Fields

(Rs per Cent)

Items Betelvine Banana

Gross income 1,934 523 Cost A (paid out cost) 577 125 Cost B (paid A+rent paid) 692 219 Profit of the tenant operator 1,242 304 Return for imputed family labour 812 169 Profit 430 145

Source: Omana Cheriyan (2004).

Table 8: Income from Tenant Cultivation for Paddy, Banana andTable 8: Income from Tenant Cultivation for Paddy, Banana andTable 8: Income from Tenant Cultivation for Paddy, Banana andTable 8: Income from Tenant Cultivation for Paddy, Banana andTable 8: Income from Tenant Cultivation for Paddy, Banana and
Vegetables in Kaduthuruthy Block PanchayatVegetables in Kaduthuruthy Block PanchayatVegetables in Kaduthuruthy Block PanchayatVegetables in Kaduthuruthy Block PanchayatVegetables in Kaduthuruthy Block Panchayat

(Rs per 10 Cents)

Name of1234 56 7 Crops

Paddy (in (20) 75 15 15 18 45 52 rotated farms) (2.1) (7.6) (1.6) (1.70) (2.0) (5.0) (5.7) Paddy in -122 -105 -170 -140 -150 -177 -152 non-rotated (-15.0) (-12.4) (-21.7) (-17.9) (-19.2) (-23.4) (-20.3) farms Banana 3580 – 3375 3765 3770 3500 3740

(55.9) (54.0) (59) (57) (56) (57.5) Bittergourd 3015 – 2970 3825 3345 3560 3405

(50.0) (49.0) (56.9) (52.2) (54.9) (53.8) Cowpea 1655 1870 1450 2445 2045 2120 2005

(35.8) (40) (31.7) (46) (40) (42) (40.7) Snakegourd 305 470 110 905 545 545 565

(9.0) (13.8) (3.4) (23.8) (15.0) (15.7) (16.2)

Note: Figures in brackets indicate profit as a percentage of gross income. Source: K K John, 2004.

relatively high rent and to achieve adequate returns from the land. (The annual rent for land on rubber plantation varies betweenRs 2,000 and Rs 6,000 per acre: for paddy land it may be up to Rs 8,000 due to the higher productivity there.) Moreover lessors of rubber plantations where leasing for pineapple cultivation is most widespread, do not have fear of losing land in legal battles with former leaseholders, who may refer to the invalidity of tenancies under Kerala Land Reform Act of 1970. In any caselease arrangements unlike for other crops are naturally termlimited for pineapple intercropped on rubber plantations; intercropping must be discontinued for ecological reasons after four years, at which time, the rubber trees are fully grown and serve as an unmistakable mark of landownership [Veron 1999:137].

With the rapid expansion of the market for pineapple in other regions of the country, the production of this crop in the state expanded from Vazhakulam to the adjoining areas at first and subsequently to the rest of the state. Since the landowners and labourers in other regions did not have the necessary skill and knowledge for the cultivation of this crop, its initial spread beyond the study areas owes itself to lease cultivation. However, with the spread of knowledge and skills in raising this crop, owner cultivators also started cultivating this as an important crop. Despite this, lease cultivation remains widespread in the cultivation of this crop since the raising of the crop requires continuous monitoring and supervision of various cultivation operations that makes it difficult for part-time farmers to undertake this cultivation.

In the lease market that has, thus, taken root in the state and become widespread albeit subtly, rules and regulations are very often flouted. Some of the crops under commercial cultivation require heavy irrigation during summer months and this contributes to water scarcity and conflicts between different claimants for water. In the area studied by Latha and Madhusoodhanan, for instance, banana cultivation on converted paddy lands has been very indiscriminate. They write:

for the past few years, about 4.8 ha of three crop paddy land in Pulathuparambu area is being leased out by a single absentee landlord to at least 18 farmers who plant altogether 14,270 banana at an exorbitant lease rate of 28-32 per pit, inclusive of water cess. He has installed a private lift irrigation scheme in Manali river and operates a private water market. Another aspect is that many of the tenants are his erstwhile agricultural labourers. Moreover, nobody even raises the question whether he pays water cess to the government for the water drawn from the river.

The studies by John and Cheriyan also refer to unregulated water extraction taking place as part of the terms of lease. It is difficult to decide from the studies cited, how widespread are the private water firms that Latha and Madhusoodhanan refer to and how intense is the water extraction for irrigating these crops but available information certainly suggests the urgency of investigation on this issue and legislation to control and monitor water use, especially in the context of the recent severe droughts that several parts of Kerala have experienced. The traditional cultivation practices are also replaced by such practices involving intensive use of fertiliser and pesticides with adverse consequences on the health of the soil as also of human beings. John too has highlighted the unhealthy cultivation practices including heavy use of fertiliser for increasing yield levels in commercial cultivation. Although these cultivation practices increase crop yields and incomes, they are highly soil-exhausting and are likely to adversely affect the sustainability of agriculture. In the context of pineapple cultivation, Veron has made a similar observation.

Apart from the indiscriminate cultivation practices that are potentially deleterious to the environment, there are socio-economic consequences like the banana farmers losing control over seed material and having to import seeds from places like Tamil Nadu to meet the large-scale demands during the planting season, women losing jobs and income increasingly as banana cultivation has no place for them, and the banana farmers getting into a perpetual process of indebtedness, unable to cope with the price fluctuations.

VIIIVIIIVIIIVIIIVIII
Summary and ConclusionsSummary and ConclusionsSummary and ConclusionsSummary and ConclusionsSummary and Conclusions

Analysis of the micro data assembled from a few studies conducted in different parts of the state by various researchers has revealed the following findings: (1) the prevalence of tenancy reported in these studies are much higher than the situation revealed by large-scale surveys; (2) tenancy arrangements are confined to seasonal and annual crops like banana, vegetables, pineapple, ginger, etc. It is found largely in the paddy lands, and to a limited extent, in garden lands; (3) while agricultural labourers and sub-marginal farmers are numerically dominant in tenant farming, there exists also the participation of larger landholders and persons with non-agricultural activity who take up this as a commercial proposition; (4) the terms of leasing are characterised by fixed rent, (except in one location where both fixed rent and crop share exists) paid in one or two instalments with the normal duration of lease for one crop year. There is some amount of variation in the rent rates across locations reflecting the differences in land productivity and the demand for land for lease cultivation; (5) though the prevailing rent rates for cash crop cultivation are high, the tenants have realised reasonable returns from the lease cultivation.

In the light of these findings, it is important to examine the prospects for the expansion of lease farming in the state. In a situation in which the fallowing and underutilisation of land have become widespread, and the income from agriculture10 has been on the decline in recent years, expansion of lease farming would definitely result in improving the performance of agriculture and generation of income and employment opportunities for the poor. The scope of the activity has been widened with the large-scale entry of self- help groups to take up lease farming. In this context, it is the responsibility of the state to formulate an appropriate policy framework11 in promoting small-scale lease farming (and not large-scale contract farming). Such a policy framework would ensure not only the fixity of tenure and the lessors’ right over land, but also spell out local level mechanisms to organise contracts between the lessors and lessees, making available the relevant information on the availability of land for lease, its quality, etc, to potential tenants. The panchayats, which have already involved in supporting the self-help groups to take up lease cultivation, could play a leading role in this process; they could expand the scope of lease farming by creating a land bank that would function as an intermediary between those who want to lease out their lands and those who want to lease in. Such land banks could also work out an insurance scheme for leaseholders to get a compensation for crop failure due to natural calamities or fall in incomes due to sharp fall in prices.

m

Email: knn@cds.ac.in

NotesNotesNotesNotesNotes

[We acknowledge our gratitude to the authors of the micro level studies,Omana Cheriyan, K K John, A Latha and C G Madhusoodhanan and Rene

Economic and Political Weekly June 30, 2006

Veron whose works have provided the basic data on which this paper is based. We are also thankful to D Narayana and Santhakumar for their valuable comments on an earlier version of the paper and to P R Gopinathan Nair for his valuable editorial inputs. This paper has been prepared as part of anongoing research project on Institutional Changes and Livelihood Strategies under the NCCR North-South Research Partnership.]

1 A hutment dweller is a landless person who occupies the hut in the landbelonging to a landowner. The act enables the dweller to purchase theland surrounding to his hut up to three cents in corporation, five centsin minor municipalities and 10 cents in panchayat areas. The compensationto which the landowner is entitled, when purchase of the dwellers isallowed is 25 per cent of the market value. Of this 25 per cent, the dwellersis envisaged to contribute only half the share in 12 annual instalmentsand balance is paid from the hutment dwellers benefit fund constitutedby the government.

2 The most significant aspect of the 1970 Act was to abolish landlordismand tenancy. Since 1970, 37 per cent of the net sown area has beentransferred to 1.3 million former tenants. Most of these are small holders (89 per cent are with holdings below 2.5 acres and 67 per cent, withholdings below 1.25 acre). However, relatively big cultivators with morethan five acres of land, who formerly had belonged to the privileged classof Kanamdars have received about 64 per cent of the transferred area[Franke 1993; Herring 1983]. Most of the land was not transferred toactive farmers. Many of the new landowners were supervising tenantswho employed labourers and sub-leased land. The Kerala Land ReformsSurvey of 1968 revealed that in small holdings (2.5 to five acres), 76per cent of the labour was hired and only 24 per cent of the agriculturalwork was carried out by family labour. Even in marginal holdings belowone acre, 47 per cent of the labour was hired. It appears from this thata major portion of the land has not been passed to the actual tillers ofthe soil, the agricultural labourers.

3 Although the comprehensive land reforms act was formulated by the EMSministry in 1956, it could not complete the legislation since the governmentwas dismissed by the centre in 1959. The next government (Congressled) diluted the initial proposals and came out with an act in 1963. Thiswas subjected to a series of modifications in the subsequent years andthe final version, the Kerala Land Reforms Act (Amendment) 1969 cameinto effect from January 1, 1970. The act envisages (1) vesting ingovernment all the rights, title and interest of the landowners andintermediaries over the holding held by the cultivating tenants; (2) thefixity of occupation to the ‘kudikidappukars’ and the conferment of theright to purchase at concessional rates, the small extent of land in andaround their hutment; and (3) ceiling of landholdings and takeover ofthe distribution of surplus lands. For a discussion of the evolution of landtenure in Kerala, see T C Varghese (1970) and for an assessment of landreforms in the state, see Raj and Tharakan (1983).

4 For a review of these arguments see Nair and Menon (2004).

5 The NSS 59th round on some aspects of farming in India (2003) containsonly limited information on landholding and the available informationis not comparable with that available from the landholding surveys. Thefocus in the 59th round was on farmer households where a farmer was defined as a person who operated some land (owned or taken on lease)and was engaged in agricultural activities on that land during the last365 days. See for details, government of India (2005).

6 The relevant data from the 59th round on the percentage distribution ofland possessed by the type of agricultural activity for different categoriesof land possessed are given below:

Type of Cultivation Owned and Leased Otherwise Total
Season (kharif) Possessed Land Land Possessed
Cultivation 23.71 77.26 18.25 26.49
Orchard 75.22 22.44 80.84 72.47
Others 1.07 0.30 1.0 1.04
Estimated no of
households (00) 21,483 1,455 361 21,922
Season (Rabi)
Cultivation 22.6 73.25 15.16 24.81
Orchard 76.37 25.36 83.80 74.81
Others 1.02 0.70 1.04 0.38
Estimated no of
households (00) 21,503 1,176 218 21,824

Source: GOI (2005).

7 The agricultural census conducted by the state government and the surveyson landholdings conducted by the National Sample Survey Organisationare the two important sources of data on size distribution of ownershipand operational holdings. Of this, the former source hardly provides dataon tenancy, where as the latter provides estimates of the incidence oftenancy and the terms and conditions of lease. Data on terms of lease clearly points toward the existence of concealed tenancy in the state. InKerala, about 40 per cent of the land leased-in was from relatives withoutspecific terms. For a discussion of the incidence of tenancy across statesin India see C S Murty (2004). Considerable under-reporting of tenancyby large-scale surveys were also reported in micro level studies conductedin other parts of India. See for example, H Laxminarayan and S S Tyagi(1977) and S K Sanyal (1972).

8 According to the data available from the state Kudumbashree Mission,about 3 lakh households belonging to 31,841 SHGs spread over 862panchayats were involved in this activity in 2004. The total land leasedin by them during the year was about 46,000 acres.

9 The terms of lease by SHGs are the same as those applicable to individuallessees. After meeting the paid out cost (including rent, cost of purchasedinputs including hired labour). The remaining income is shared by thegroup members on an equal basis. The Kudumbashree programme andthe grama panchayats have been supporting the SHGs with credit andextension services to take up lease farming.

10 For discussion of the recent trends in agricultural incomes in the statesee Jeromi (2005).

11 We are not proposing any reform in the tenancy contracts, throughmeasures of land reform, as discussed in recent literature (see the Specialissue of the Journal of Agrarian Change on Land Reforms in DevelopingCountries, January-April (2004). Given the nature of socio-economictransformation taking place in the state, and the increasing importancegiven to the neoliberal policies, the old arguments for radical reforms of the land market is unlikely to materialise.

ReferencesReferencesReferencesReferencesReferences

Cheriyan, Omana (2003): ‘Changes in the Mode of Labour due to Shift inthe Land Use Pattern’, KRPLLD Discussion Paper No 81, Centre forDevelopment Studies, Thiruvananthapuram.

Franke, Richard (1993):Life Is a Little Better: Redistribution as a DevelopmentStrategy in Nadur Village, Kerala, West View Press, Colorado.

GoI (1988): ‘A Note on Some Aspects of Operational Holdings: NSS 37thRound (1982) and Results on Some Aspects of Operational Holdings:NSS 37th Round (1982)’, Sarvekshana, Vol 12, No 1, Issue No 36, National Sample Survey Organisation, Department of Statistics, Ministryof Planning, Government of India.

  • (1997): ‘Land and Livestock Holdings Survey, NSS 48th Round (January-December 1992), Report, Operational Landholding in India, 1991-92’,Salient Features, NSSO, Report No 407, Department of Statistics,Government of India.
  • (2005): ‘Some Aspects of Farming, NSS: 59th Round, January-December2003, Report No 496, National Sample Survey Organisation’, Departmentof Statistics, Ministry of Planning and Programme Implementation,Government of India.
  • Herring, J Ronald (1983): ‘Land to the Tiller’, The Political Economy ofAgrarian Reforms in South Asia, Oxford University Press, Delhi.

    Jeromi, P D (2005): ‘Agriculture Sector in Kerala and Issues Relating toCredit’, RBI Staff Studies, Department of Economic Analysis and Policy,Reserve Bank of India, Mumbai.

    John, K K (2004): ‘Crop Rotation in Kerala: A Case Study of KaduthuruthyBlock’, KRPLLD Discussion Paper No 94, Centre for DevelopmentStudies, Thiruvananthapuram.

    Laxminarayan, H and S S Tyagi (1977): ‘Tenancy: Extent and InterstateVariations’, Economic and Political Weekly, 12: 22, May 28.

    Latha, A and C G Madhusoodhanan (2004): ‘Sustainability of CommercialBanana Production in Watershed-based Agricultural Development: ACase Study of Two Micro Watersheds’, KRPLLD Discussion PaperNo 95, Centre for Development Studies, Thiruvananthapuram.

    Murty, C S (2004): ‘Large Farmers in Lease Market: Are Marginal FarmersAffected?’ Economic and Political Weekly, July 17-23, Vol 39, No 29.

    Nair, K N, Vineetha Menon and Antonoyto Paul (2004): ‘Livelihood Riskand Coping Strategies: A Case Study in an Agrarian Village, Cherumad’,unpublished manuscript.

    Nair, K N and Vineetha Menon (2004): ‘Reforming Agriculture in a GlobalisingWorld: The Road Ahead for Kerala’, NCCR-IP6 Working Paper No 3.

    Raj K N and P K M Tharakan (1983): ‘Agricultural Reforms in Kerala andIts Impact on the Rural Economy: A Preliminary Assessment’ in A KGhosh (ed), Agrarian Reforms in Contemporary Developing Countries(31-90), Groom Helm, London.

    Sanyal, S K (1972): ‘Has There Been a Decline in Agricultural Tenancy’,Economic and Political Weekly, 7: 19, May.

    Varghese, T C (1970): ‘Agrarian Changes and Economic Consequences’,Allied Publishers, Bombay.

    Veron, Rene (1999): ‘Real Markets and Environmental Change in Kerala,India: A New Understanding of Crop Markets on Sustainable Development’,Ashgate Publishing, England.

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