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Chapter 2

A General Introduction to the Agrarian Economy of Andhra Pradesh

1 Introduction: Agriculture in the overall EconomyAndhra Pradesh is predominantly an agricultural economy, where agriculture and allied activities contribute a major share-approximately 24 per cent (Rs 47683 crore at 1999-2000 prices)-in the gross state domestic product (GSDP) and about 62 per cent of the total work force of the state directly depends on agriculture alone for their livelihood [Statistical Abstract of Andhra Pradesh 2007]. The total geographical area of the state is about 274.40 lakh hectares of which the average net sown area for the period 2004-07 is 104.68 lakh hectares (nearly 38 per cent of the total geographical area). The per capita availability of net sown area comes to be about 0.14 hectare for the same period. 1.1 Diversification of the economy away from agriculture, particularly in terms of income originating in agriculture.

Over the past three and a half decades, there have been significant changes in terms of income originating in different sectors of the state. As is seen from Table 1, the agriculture and livestock sector contributed approximately 48 per cent of the total GSDP during 1970-73, however, this share declined sharply to 35 per cent during 1987-90 and further to a meager 15 per cent in 2004-07. The manufacturing sectors share in the GSDP increased with a slow but steady pace over the years. In 1970-73 the share of the manufacturing sector which was 13 per cent, increased to approximately 17 per cent during 1987-90 and further to 21 per cent during 2004-07. There has been a phenomenal growth in the share of the service sector in total GSDP over the period; its share increased from 28 per cent in 1970-73 to 42 per cent in 1987-90 and further to 50 per cent in 2004-07. Thus, we can see that most of the decline witnessed in the agriculture sector has been appropriated by the service sector.Table 1

Share of Different sectors in GSDP at 1999-2000 prices (Rs. in lakhs)

1970-73% in total GSDP1987-90% in total GSDP2004-07% in total GSDP

Agriculture & Live stock165419548.2584253695635.1674289786715.1324

Primary Sector201934558.9111294870240.875552443328.8481

Secondary (or manufacturing) Sector44760413.0581120416016.6921397570020.7608

Tertiary (or Service) Sector96083628.0308306109142.4329964996750.3913

GSDP3427785100.007213953100.0019150067100.00

Source: Computed from State Domestic Product Back Series (1960-61 to 1998-99), DES, Hyderabad and Statistical Abstract of Andhra Pradesh 20071.2 Occupational pattern in Andhra Pradesh Diversification much less marked in terms of workers dependent on agriculture. There has, however, been not much change in the occupational pattern of the state (Table 2). This development gains significance particularly in the case of agriculture, where the share in GSDP has been on a drastic decline. The percentage of total workers engaged in agriculture has shown only a marginal decline over the years. As observed from Table 2, around 70 per cent of the total workforce in Andhra Pradesh engaged in agriculture during 1971; over the years, however, there has been only a marginal decline in this share. In 2001, the share of agricultural workers in total workforce of Andhra Pradesh remains slightly above 62 per cent. An alarming development during these years is the increasing share of landless agricultural labourers in total agricultural workforce alongside a declining share of cultivators in Andhra Pradesh.Table 2

Occupational Pattern in Andhra Pradesh (in lakhs)Census YearsAgriculture SectorNon-agriculture Sector

Total work-force of AP

CultivatorsAgri. LabourersTotal agri. workers% of cultivators in total agri. workers% of agri. labourers in total agri. workers% of agri workers in total work force-AP House-hold IndustryOtherworkersTotal Non- agri. workers

197157.968.3126.245.954.170.18.745.153.8180.1

198174.183.3157.347.152.964.210.677.187.7245.1

199178.9116.3195.240.459.665.19.694.9104.5299.6

200178.6138.3216.936.263.862.216.4115.6132.0348.9

Source: Statistical Abstract of Andhra Pradesh, DES, Hyderabad, various years1.3 Worker productivity in agriculture in relation to no-agricultural activities declining sharplyAs we have seen in the previous section, there has been a significant decline in the share of agriculture in the total GSDP, while the share of workforce dependent on agriculture remained almost unchanged. Clearly, this will have an impact on the per worker productivity in agriculture in comparison with the non-agricultural workers. As is seen from Table 3, the worker productivity in agriculture which is Rs. 0.13 lakh/worker in 1970-73 although improves marginally to Rs. 0.16 lakhs/worker in 1987-90, declines back to Rs. 0.13 lakh/worker in 2004-07. Hence, the worker productivity in agriculture remained almost stagnant over the period 1970-73 to 2004-07. In contrast, the non-agricultural sector worker productivity witnesses a substantial improvement; from Rs. 0.26 lakh/worker in 1970-73 to Rs. 0.49 lakh/worker in 1987-90 and further to Rs. 1.03 lakh/worker in 2004-07. Table 3

Worker Productivity in Andhra Pradesh (output/worker)

1970-731987-902004-07

Agriculture & Live stock0.130.160.13

Non-agricultural sector0.260.491.03

Source: Statistical Abstract of Andhra Pradesh, DES, Hyderabad, various years2 There have been rapid far reaching changes within the agricultural sector over this period; changes that can be observed along very many dimensions.

2.1 Land Utilisation Pattern

Table 4 gives a comparative picture of the pattern of overall land utilisation in Andhra Pradesh during three time periods; 1970-73, 1987-90 and 2004-07. Following are certain significant changes discernible from the Table:Between 1970-73 and 2004-07, substantial encroaching of waste land seems to have taken place. Together the barren, un-culturable land, culturable waste and permanent pastures and other grazing lands declined from 15.9 per cent of the total geographical area during 1970-73 to 14.3 per cent in 1987-90 and further to 12.6 per cent in 2004-07. In absolute terms, the total decline in waste lands amounts to 9.11 lakh hectares (or almost a million hectare).A part of this encroached land has gone into non-agricultural uses such as extension of urban areas, augmented non-agricultural use of land (construction works etc.) in rural areas etc. The land put to non-agricultural uses that consisted of 20.98 lakh hectares (or 7.7 per cent of the total geographical area) in 1970-73, increased to 27.33 lakh hectares (or 10 per cent of the total geographical area) during 1987-90 and further to 28.06 lakh hectares (or 10.2 per cent of the total area) during 2004-07. Table 4Land Utilisation Pattern in Andhra Pradesh (in lakh hectares)

Category1970-73% to Total% to Total1987-90% to total2004-07% to Total

1 Total Geographical Area274.4100.0100.0274.40100.0274.4100.0

2 Forests62.9123.022.559.7121.861.9922.6

3 Barren and Un-culturable Land22.538.28.422.278.120.847.6

4 Culturable Waste10.833.93.38.343.06.932.5

5 Permanent Pastures and other Grazing Land10.283.73.38.693.26.762.5

6 Land put to Non-agricultural Use20.987.68.022.778.326.059.5

7 Current Fallows21.137.77.427.3310.028.0610.2

8 Other Fallow Lands9.33.45.114.055.116.195.9

9 Net Area Sown113.641.441.1108.6039.6104.0637.9

10 Land under Miscellaneous Tree Crops and Groves not included in Net Area Sown2.851.01.02.670.92.921.1

11 Area Sown more than Once14.15.16.619.957.324.919.1

12 Gross Cropped Area127.7146.547.6128.5546.9128.9747

Source: Statistical Abstract of Andhra Pradesh, various years, DES, Hyderabad.A part of the waste land is also brought under cultivation. As seen from Table 4, the land under cultivation (which includes net area sown, current and other fallows and land under miscellaneous tree crops) has in fact increased by 4.35 lakh hectares over the period 1970-73 to 2004-07. We also observe significant changes within this cultivated area. Most importantly, fallowing has increased in Andhra Pradesh agriculture over the years; fallow lands as a whole have increased from 30.43 lakh hectares (or 11.1 per cent of the total geographical area) to 44.25 lakh hectares (or 16.1 per cent of the total geographical area) during the period under consideration. In percentage terms, the magnitude of increase in fallowing is particularly high in the case of other (or long term) fallows in comparison with the current fallows (Table 4). At the same time, it is important to note that cropping intensity has increased on some of the cultivated land over the time period. Cropping intensity, measured in terms of the area sown more than once, has increased from 14.1 lakh hectares in 1970-73 to 19.95 lakh hectares in 1987-90 and again to 24.91 lakh hectares in 2004-07 (an increase from 5.1 per cent to 9.1 per cent of the total geographical area over the entire period). Despite considerable decline in the net area sown (from 41.4 per cent to 37.9 per cent of the total geographical area over the time period), gross cropped area increases marginally due to the significant improvement in the area sown more than once in the state.2.2 Another important change that has occurred in operated area is in its distribution by size classes2.2 Operational Land Holdings increasing fragmentation of operational holdings in Andhra Pradesh agriculture The results of the World Agricultural Census over the years 1970-71 to 2000-01 reveal that there has been a significant increase in the number of marginal holdings in Andhra Pradesh agriculture (Table 5). The number of marginal holdings increased from 24.91 lakhs in 1970-71 to 70.23 lakhs in 2000-01. In percentage terms these amount to an increase from 46 per cent to 61 per cent of the total number of operational holdings over the years. In relation to the large number of holdings, the area operated by the marginal farmers amounts to mere 10.86 lakh hectares (or 8 per cent of the total operational area) in 1970-71 and although improves marginally, remains low at 31 lakh hectares (or 22 per cent of the total area operated) in 2000-01. Apart from the marginal holders, the number of holdings by the small farmers also shows an increase in percentage terms-i.e. from 20 per cent in 1970-71 to 22 per cent of the total number of holdings in 2000-01. Together, the marginal and small farmers hold almost 83 per cent of the total number of holdings in Andhra Pradesh in 2000-01; while the area operated by the farmers under these categories amount to a mere 47 per cent of the total operational area in the same year. This clearly tells us the story of an increasing fragmentation of operational holdings in Andhra Pradesh agriculture over the years.

Table 5Number of Operational Holdings and Area Operated under Different Size Classes in Andhra Pradesh as per the World Agricultural Census 1970-71 and 2000-01Category of HoldingsNo. of Operational Holdings (in lakhs)Area Operated (in lakh hectares)

1970-712000-011970-712000-01

Marginal (below 1.00 hectare)24.91

(46.0)70.23

(60.9)10.86

(8.0)31.04

(21.6)

Small (1.00 2.00 hectares)10.65

(19.6)25.18

(21.8)15.33

(11.3)35.65

(24.8)

Semi Medium (2.00 4.00 hectares)9.42

(17.4)14.23

(12.3)26.07

(19.2)37.95

(26.4)

Medium (4.00 10.00 hectares)6.89

(12.7)5.01

(4.4)41.86

(30.8)28.55

(19.8)

Large (above 10.00 hectares)2.34

(4.3)0.66

(0.6)41.74

(30.7)10.80

(7.5)

All sizes54.21

(100.0)115.31

(100.0)135.86

(100.0)143.99

(100.0)

Notes: Figures given in parentheses are percentages to all sizes category.

Source: www.fao.orgFigure 1: Number of Operational Holdings in Andhra Pradesh as per the World Agricultural Census 1970-71 and 2000-01 (in lakhs)

Source: www.fao.orgFigure 2: Area Operated in Andhra Pradesh as per the World Agricultural Census 2000-01 (in lakh hectares)

Source: www.fao.org (Data base of the Food and Agriculture Organisation-FAO)In contrast with the small and marginal farmers, the number of holdings with semi-medium, medium and large farmers have registered significant decline over the period. In percentage terms, the number of holdings with semi-medium farmers declined from 17 per cent in 1970-71 to 12 per cent in 2000-01. While the number of holdings with medium farmers decreased from 13 per cent in 1970-71 to 4 per cent in 2000-01, that with large farmers declined from 4 per cent to a megre 0.6 per cent during the same period (Table 5 and Figure 1)Another important observation that derives from Table 5 as well as Figure 2 is a significant decline in the area operated by the medium and large farmers. Out of the total operational holding of 135.86 lakh hectares, the medium and large farmers together account for 83.60 lakh hectares (62 per cent) in 1970-71. The operational area under these categories have declined to 39.35 lakh hectares (or 27 per cent of the total area operated which is 143.99 lakh hectares) in 2000-01. The decline in area operated is more pronounced in the case of large farmers.Results of the various NSS rounds also give us similar trends in the operational holdings of Andhra Pradesh (see Table 6, Figures 3 and 4)Table 6Changes in Percentage Distribution of the Number of Operational Holdings and Area Operated by Size Categories of Operational Holdings during various NSS Rounds in Rural Andhra Pradesh Category of Holdings1970-71

(26th)1981-82

(37th)1991-92

(48th)2002-03

(59th)

No.of holdingsArea OperatedNo.of holdingsArea OperatedNo.of holdingsArea OperatedNo.of holdingsArea Operated

Marginal (1.000 hectare or less)47.39.348.610.359.317.560.718.6

Small (1.001 2.000 ha.)19.111.722.115.421.423.320.721.1

Semi Medium (2.001 4.000 ha.)18.221.915.521.113.226.212.022.8

Medium (4.001 10.000 ha.)11.931.310.830.25.423.55.522.1

Large (larger than 10.000 ha.)3.525.82.923.10.89.41.115.5

All sizes100.0100.0100.0100.0100.0100.0100.0100.0

Note: * Kharif season estimates.

Source: NSSO (2006), Some Aspects of Operational Land Holdings in India, 2002-03, NSS 59th Round (JanuaryDecember 2003), Report No. 492(59/18.1/3). The percentage distribution of the number of operational holdings and area operated by size categories of operational holdings in total Andhra Pradesh during various NSS rounds reveal that there has been an increasing fragmentation of operational holdings over the period 1970-71 to 2002-03 (Table 6, Figures 3 & 4). The percentage share of marginal holdings increased consistently over the time period. The increase has been particularly marked between 1981-82 and 1991-92, when the number of marginal holdings gone up from 48.8 per cent to 59.3 per cent. The share of small holdings although increased significantly from 19.1 per cent in 1970-71 to 22.1 per cent in 1981-82, fell back to 21.4 per cent in 1991-92 and further to 20.7 per cent during 2002-03. The combined share of area operated by small and medium farmers has notably increased from 21 per cent in 1970-71 to 39.7 per cent in 2002-03. Most of this change has occurred between the period 1981-82 and 1991-92, when the share of operational area increased from 25.7 per cent to 40.8 per cent.In contrast to the small and marginal holdings, we observe a consistent decline in the share of semi-medium, medium and large holdings in Andhra Pradesh (Table 6, Figures 3 & 4). The number of semi-medium and medium holdings declined from 30.1 per cent in 1970-71 to 17.5 per cent in 2002-03. The decline in the share of medium holdings, however, is much sharper than the semi-medium holdings over this period. In the case of area operated, the share semi-medium holdings have actually increased over the years, from 21.9 per cent in 1970-71 to 26.2 per cent in 1991-92, however, dropped to 22.8 per cent in 2002-03. As against the trend in semi-medium holdings, the share of area under medium holdings depicted a consistent decline through out from 31.3 per cent in 1970-71 to 30.2 per cent in 1981-82, and further to 23.5 per cent in 1991-92 and 22.1 per cent in 2002-03. The large holdings also registered a cutback in the percentage share of the number of holdings, from 3.5 per cent in 1970-71 to 2.9 per cent in 1981-82 and further to 0.8 per cent in 1991-92, however there was some consolidation of the large holdings in the 1990s, reflected in a marginal increase to 1.1 per cent in 2002-03 (Table 6, Figures 3 & 4). In lines with the decline in the number of operational holdings, the area under large holdings also decreased from 25.8 per cent in 1970-71 to 23.1 per cent in 1981-82, and further declined substantially to 9.4 per cent in 1991-92, however increased to 15.5 per cent in 2002-03.

To sum up, overall there is an increasing trend of fragmentation of operational holdings in Andhra Pradesh agriculture, with significant growth in the number of holdings as well as total area operated by the small and marginal holdings, and decline in the share of medium and large holdings. It is important to note that these changes have occurred largely almost solely in the 1980s. There was hardly any change in the 1970s and in the 1990s there was some reversal in the trends if anything: that there was some consolidation of the large holdings in this decade.Figure 3: Percentage Distribution of the Number of Operational Holdings by Size Categories of Operational Holdings during various NSS Rounds in Rural Andhra Pradesh

Source: NSSO (2006), Some Aspects of Operational Land Holdings in India, 2002-03, NSS 59th Round (JanuaryDecember 2003), Report No. 492(59/18.1/3).Figure 4: Percentage Distribution of Area Operated by Size Categories of Operational Holdings during various NSS Rounds in Rural Andhra Pradesh

Source: NSSO (2006), Some Aspects of Operational Land Holdings in India, 2002-03, NSS 59th

Round (JanuaryDecember 2003), Report No. 492(59/18.1/3).2.3 Significant Changes in cropping pattern in the state during this periodThe literature speaks of an increasing trend of crop diversification in Andhra Pradesh agriculture since mid-1980s [Pochanna (2002), Vakulabharanam (2004), Reddy DN (2006) and Human Development Report 2007, Andhra Pradesh]. To bring out the extent of crop diversification, in the present study we have used the Herphindahl index. The Herphindahl index is defined as:

HI = pi2where,

pi ( or the proportion of area under ith crop) =

Ai = Area under ith crop

= Total cropped area

The value of the HI-index varies between zero and one. It is one in the case of perfect specialisation and zero in the case of perfect diversification. The selected crops for compiling the index for Andhra Pradesh agriculture are: rice, maize, coarse cereals excluding maize, total pulses, cotton, groundnut, other oilseeds and other non-foodgrains over three different time periods 1970-73, 1987-90 and 2004-07. The values of the index are presented in Table 7. Table 7

Crop Diversification Index in AP Agriculture

Regions1970-731987-902004-07

Costal Andhra0.310.300.36

Rayalaseema0.290.340.29

Telangana0.230.190.25

Andhra Pradesh 0.210.180.17

Source: Computed from Season and Crop Report of Andhra Pradesh, DES, Hyderabad

Regions1970-731987-902004-07

Costal Andhra0.310.300.36

Rayalaseema0.290.340.29

Telangana0.230.190.25

Andhra Pradesh 0.210.180.16

As evident from the Table, for the slate as a whole, the value of the HI-index is less than 0.25 for the all the three periods, and more importantly, these values are steadily declining over the years. This is indicative of a highly and increasingly diversified nature of Andhra Pradesh agriculture. Among the three regions of A.P., Telangana shows the highest degree of diversification (or alternatively, the lowest value for HI-index) in all the three periods followed by Rayalaseema and Costal Andhra. In comparison with the other two regions, Costal Andhra is relatively more specialised with the index value greater than 0.30 in all the three periods [N.B: I think it is better to mention these regional figures at the end of the chapter or even in Chapter 3, after discussing the general trends].Apart from the changes in land utilisation pattern, there have been considerable changes in the cropping pattern of Andhra Pradesh agriculture during the period 1970-71 to 2006-07. Broadly these changes are marked in a significant shift in area under foodgrains to non-foodgrains crops. As is seen from Table 7, area under total foodgrains reduced from 89.94 lakh hectares (or 70.4 per cent of the GCA) in 1970-73 to 78.81 lakh hectares (or 61.3 per cent of the GCA) in 1987-90 and further to 69.03 lakh hectares (or 53.5 per cent of the GCA) in 2004-07. In contrast to the foodgrains, area under non-foodgrains (particularly, groundnut and cotton) has significantly increased from 29.6 per cent of the GCA in 1970-73 to 38.7 per cent in 1987-90 and further to 46.5 per cent of the GCA in 2004-07. Apart from the shift in area under foodgrains to non-foodgrains, there were also significant changes within the foodgrains basket. Notably, area under cereals as a whole decreased while that under pulses increased, but obviously not enough increase to offset the decline under cereals. Cereals as a group declined consistently from 59.6 per cent of the GCA in 1970-73 to 49.5 per cent in 1987-90 and again to 39.1 per cent of the GCA in 2004-07. among the cereal basket, the drastic decline in the area under coarse cereals (excluding maize) is particularly noteworthy; declining from a significant 41.8 lakh hectares (or 32.7 per cent of the GCA) in 1970-73 to a meager 6.5 lakh hectares (or 5.1 per cent of the GCA) in 2004-07. Within cereals, however, the area under rice and maize has increased over the years. Acreage under rice increased 31.63 lakh hectares in 1970-73 to 39.4 lakh hectares in 1987-90, but, declined to 36.82 lakh hectares in 2004-07. The maize acreage has, however, shown a consistent increase through out the period, and the increase has been significantly high since 1987-90. The area under maize cultivation went up from 2.71 lakh hectares in 1970-73 to 3 lakh hectares in 1987-90 and further increased to 7.13 lakh hectares in 2004-07.Although, the area under pulses has shown a consistent increase from 13.79 lakh hectares in 1970-73 to 18.56 lakh hectares in 2004-07, the increase was not sufficient enough to outstrip the fall in area under cereals. Consequently, the area under total foodgrains has gone down over the years.Table 8Cropping Pattern in Andhra Pradesh for Selected Years (in lakh hectares)1970-731987-902004-07

Rice31.63

(24.76)39.40

(30.65)36.82

(28.54)

Maize2.71

(2.12)3.00

(2.33)7.13

(5.53)

Coarse Cereals excluding Maize41.80

(32.73)21.17

(16.47)6.51

(5.05)

Total Cereals76.14

(59.61)63.57

(49.46)50.46

(39.13)

Total Pulses13.79

(10.79)15.23

(11.85)18.56

(14.39)

Total Foodgrains 89.94

(70.42)78.81

(61.31)69.03

(53.52)

Cotton3.16

(2.47)6.17

(4.80)10.61

(8.23)

Groundnut15.44

(12.00)21.68

(16.87)16.84

(16.84)

Other Oilseeds6.92

(5.42)10.11

(7.87)10.14

(7.86)

Total Oilseeds22.36

(17.51)31.80

(24.74)26.97

(20.91)

Other non-foodgrains 12.25

(9.59)11.76

(9.15)22.36

(17.34)

Total non-foodgrains 37.77

(29.57)49.73

(38.69)59.94

(46.48)

Gross Cropped Area127.71

(100.00)128.55

(100.00)128.97

(100.00)

Note: Figures in parentheses are percentage share of crops in the gross cropped areaSource: Computed from Season and Crop Report of Andhra Pradesh, DES, Hyderabad.2.4 Aspects of Technological Changes in Andhra Pradesh Agriculture There were significant developments at the technological front in Andhra Pradesh agriculture during the period 1970-71 to 2006-07. Notable changes were: introduction of the seed fertiliser (green revolution) technology, use of modern machinery and implements in agriculture, development of irrigation infrastructure alongside a remarkable growth in public investment in agriculture.2.4.1 The Seed-Fertiliser Technology in Andhra Pradesh

The introduction of green revolution technology led to a rapid increase in the use of HYV seeds, synthetic fertilizers and pesticides in the otherwise traditional agricultural practices of the state. As is seen from Table 9, area covered under HYV seeds, especially that under rice, has increased phenomenally over the decades. The increase has been marked in the 1970s. Area under rice that was around 5.43 lakh hectares in 1970-71 made a significant improvement to 27.60 lakh hectares by 1980-81; further the area has been increased to 36.38 lakh hectares in 1990-91 and to 37.02 lakh hectares in 2000-01. Similarly, area under HYV seeds of maize registered a consistent increase through out the period; increasing from a meager 0.33 lakh hectares to 1.16 lakh hectares in 1980-81, and further to 2.40 lakh hectares in 1990-91 and to 4.46 lakh hectares in 2000-01. Area under bajra although showed signs of improvement up to mid 1980s, declined since then. Similarly, the area under HYV varieties of jowar increased from an insignificant 0.28 lakh hectares in 1970-71 to 3.31 lakh hectares in 1980-81. The uptrend has been consistent up to 1995-96; however, there has been a reversal of it in the current decade. Alongside HYV seeds, the use of chemical fertilisers in Andhra Pradesh agriculture also improved remarkably over the years (Table 10). The improvement has been marked especially since the mid-1980s, when the total amount of fertilisers used in agriculture increased from 647 thousand tonnes in 1985-86 to 1620 thousand tonnes in 1990-91. In 2005-06, the amount of total fertilisers used is 2553 thousand tonnes. However, it is a matter of concern that the use of chemical fertilisers has been skewed in favour of nitrogen fertilisers in Andhra Pradesh agriculture. This has got a negative implication on the sustainability of soil nutrition in the long-run.Table 9

HYV Programme in Andhra Pradesh-Area Covered (in Lakh Hectares) YearsRiceJowarBajraMaize

1970-715.430.280.320.33

1975-76----

1980-8127.603.312.431.16

1985-8627.864.332.811.38

1990-9136.384.761.872.40

1995-9631.244.891.082.82

2000-0137.023.820.704.46

Source: Fertiliser and Agricultural Statistics: southern Region, The Fertiliser Association of India,

Southern Region, Chennai, various years; and Season and Crop Report of Andhra Pradesh, DES, Hyderabad.

Table 10Consumption of Chemical Fertilisers in Andhra Pradesh (in Thousand Tonnes)

YearsNitrogen (N)Phosphate (P)Potassium(K)Total

1970-71208.4066.9017.90293.20

1975-76255.7653.5617.54326.86

1980-81399.38130.9045.31575.59

1985-86412.89173.8860.70647.47

1990-911068.13424.14127.481619.75

1995-961192.34420.79142.081755.21

2000-011361.79603.46209.322174.57

2005-061522.09690.09340.362552.54

Source: Season and Crop Report of Andhra Pradesh, DES, Hyderabad, various years.2.4.2 Use of Modern Implements in Agriculture/ Farm Mechanisation in Andhra Pradesh Agriculture During the three and a half decades since 1970-71, there has been a geometric progress in the addition to agricultural machinery in Andhra Pradesh (Table 11). Work-animals got gradually replaced by tractors. It also gave a boost to development of private water sources in the form of bore wells and use of oil engines and electric pump sets. The modern agricultural implements when associated with the new seed-fertiliser technology stimulated the increase in productive forces in Andhra Pradesh agriculture on an unprecedented scale.

Table 11Agricultural Machinery and Implements 1972 to 2003

Years1972198319932003

Ploughsa) Wooden35,10,19033,17,22226,00,28218,74,352

b) Iron85,1552,46,8173,84,1187,72,509

c) Total35,95,34535,64,03929,84,40026,46,861

Water Pumps for Irrigationa) Operated by Oil Engines1,16,5422,50,6491,65,7051,51,337

b) Operated by Electric Motors1,45,3934,37,5839,33,98813,16,219

c) Total2,61,9356,88,23210,99,69314,67,556

Tractors7,04021,45056,88792,384

Source: Statistical Abstract of Andhra Pradesh, DES, Hyderabad various years.2.4.3 Irrigation

The irrigation infrastructure helps in increasing the intensity of cropping and land use, and provides intensives to farmers to use yield increasing inputs (HYV seeds, fertilizers, etc.) and hence results in higher agricultural output. The seed-fertiliser technology when combined with assured irrigation facilities it increases productivity in agriculture. Table 12 presents the data on irrigated area as a percentage of net sown area in Andhra Pradesh in three points of time- 1970-73, 1987-90 and 2004-07. As observed from the table, there has been a consistent increase in the percentage of net irrigated area over the three time periods; it increased from 27.2 per cent in 1970-73 to 36.5 per cent in 1987-90 and further to 40.78 per cent in 2004-07. Even then, a lot much is to be done (around 60 per cent of the net sown area is still unirrigated) in terms of availing the irrigation facilities to the rain-fed/drought-prone regions (especially the Telangana and Rayalaseema regions) of the state.

Table 12Net Irrigated Area as a percentage of Net Sown Area1970-731987-902004-07

Andhra Pradesh27.1736.4940.78

Source: Computed from Season and Crop Report of Andhra Pradesh, DES, Hyderabad.Table 13 disaggregates the growth in irrigation into major sources of irrigation in AP. As seen from the table, the composition of irrigation has undergone a significant change during the period under analysis. The proportion of area under canal and tank irrigation has fallen while the importance of well irrigation has gone up substantially [recent studies on AP agriculture (Reddy R.2003, 2006; Vakulabharanam 2004) also reveal the same results].

Table 13Irrigation as a percentage of Net Sown Area, according to sources of Irrigation in APSources of Irrigation1970-731987-902004-07

Canals13.2716.4314.54

Tanks8.028.575.58

Tube Wells0.672.2212.89

Other Wells4.338.016.21

Other Sources0.901.341.54

All Sources27.1936.5740.76

Source: Computed from Season and Crop Report of Andhra Pradesh, DES, Hyderabad.Two important observations are to be made here. First, the area under tank irrigation has fallen by almost 30 per cent over the years. The tank irrigated area actually increased during the period between 1970-73 and 1987-90, however there has been a significant decline in tank irrigated area since then. Major reasons for the decline in tank irrigation are decreasing ground water levels in Rayalaseema and Telangana regions of AP and lack of proper maintenance of the tanks [Reddy R. (2003)]. Second, the farmers are increasingly resorting to groundwater irrigation through tube wells, bore wells and open wells. The well irrigated area constituted only 5 per cent of the net sown area in 1970-73, but it accounted for approximately 20 per cent of the net sown area in 2004-07. The shift in cropping pattern towards cash crops like groundnut and cotton especially in the dry zone areas of Rayalaseema and Telangana regions [Table 8] of the state explains the increasing dependency on well irrigation. However, the matter of concern is that although well irrigation is a more productive and remunerative option than the other two sources of irrigation, its long term sustainability is critically linked with replenishing mechanisms like tanks, watersheds, rainfall pattern etc. [Reddy R. (2006)]. In the absence of these mechanisms (or declining trends in the developments of these), well irrigations become no more viable and well failures become a common phenomenon. The recent years experiences of well-failures in AP prove this to be true.

2.4.4 Public Investment in Agriculture 2.5 Conclusion

In sum, over the period 1970-71 to 2006-07, there have been rapid changes in the agrarian sector of Andhra Pradesh in terms of land use patterns, diversification/commercialisation of cultivation practices, irrigation and other technological changes etc. However, an important point to be made here that while there are rapid changes in Andhra Pradesh agriculture, the changes are not uniform over the entire period. This aspect will be taken up for a more detailed study in the coming chapter[N.B: I would like to incorporate the upcoming sections (sections 3&4) in this introductory chapter itself; but Im not sure where to place it].

3 Broad Phases of Agricultural Development in Andhra Pradesh in the LiteratureThe process of agricultural development in Andhra Pradesh has been explained by decomposing the sequence of development in to different phases by various scholars [see for example, Subrahmanyam and Sekhar (2003), Pochanna (2004) and Chowdry (2006)].

Pochanna (2004) classifies the agricultural development process in the state broadly into six phases. The first phase is concentrated around the settlement of land dispute and related legislation in the state. The second phase covers the period of 1950s and mid-1960s where the concentration is on development of agricultural infrastructure through massive doses of public investment. Major river projects like Sri Ramsagar and Nagarjuna Sagar projects have commenced during this period. The third phase, beginning from the mid-1960s to the end of 1970s, consists of consolidating the base and gains of the two earlier stages with the introduction of a highly productive agricultural technology (the green revolution technology) in the form of biological, chemical and mechanical inputs. This has resulted in an unprecedented growth in agriculture, especially in foodgrains. The fourth period commencing from the end of 1970s is mainly characterised by input intensification which in turn resulted in a dramatic increase in productivity and extension of technology to non-food crops. During the fifth period, i.e., from mid-1980s to early 1990s, there is diversification of cropped area from foodgrains to non-foodgrains crops. The sixth phase of agricultural development in Andhra Pradesh consists of the period of economic reforms beginning with the early 1990s. In view of the economic reforms, the Government of Andhra Pradesh initiated various policy measures to stimulate growth in the agricultural sector. Here, the main focus is given for development of agriculture in rain-fed areas, concentrating on yields of the crops, water-shed development, developing export markets, building infrastructure, and investing in research and development (R & D) and extension services. However, the performance of agricultural sector in the state during the reform/post-reform period is not impressive.

Subrahmanyam and Sekhar (2003) provide a classification of different phases in the agricultural development in Andhra Pradesh from the perspective of agricultural growth performance. Basing their division of the different phases of agricultural development in Andhra Pradesh around two events, namely, the green revolution and the economic reforms (which began in early 1990s); they break up the growth performance of agricultural sector for the long period of 44 years (1955-56 to 1998-99) into four sub-periods. The first sub-period extending form 1955-66 to 1969-70 is the pre-green revolution period. The second and third sub-periods covering 1970s and 1980s represent the first and second phases of green revolution. The fourth sub-period of 1990s is the period of economic reforms. A summary of their analysis is given below.

As per the authors analysis, Andhra Pradesh attained significant acceleration in agricultural growth in the first phase of green revolution over the pre-green revolution period. The growth rate of aggregate agricultural output in the state accelerated dramatically from 1.9 per cent in the pre-green revolution period to 3.5 per cent per annum in the first phase of green revolution period. A striking feature of agricultural development at the national level during the first phase of green revolution is the wide variation in the rate of growth of output not only in different regions but also among different crops. This inter-regional and inter-crop imbalance arose because of the restriction of the high yielding varieties (HYV) seeds to only rice and wheat in the initial years and the adoption of these varieties only in the well endowed regions (especially the north western states like Punjab, Haryana and some parts of Uttar Pradesh). However, the case with Andhra Pradesh is different. Here the high acceleration witnessed during the first phase of green revolution is not merely due to rice, the main beneficiary of green revolution in the initial phase, but due to the good performance of all foodgrain crops. For example, while the rice output grew at 3.6 per cent, pulses attained growth rate ranging between 3.2 to 8.1 per cent and millets attained growth rates ranging between 1.8 to 7.1 per cent per annum. These high growth rates of unirrigated crops resulted in a broad-based growth and reduction in regional inequalities in the state in contrast to the experience at all-India level.

The second phase of green revolution maintained the growth rate attained in the first phase in Andhra Pradesh. The achievement is not due to the continuation of growth in yield of various crops attained in the previous period, but due to shift in the cropping pattern from low valued coarse cereals to high valued crops like oilseeds, cotton and pulses. The share of millets in gross cropped area declined from 27 per cent during 1970s to 20 per cent during 1980s, while the share of oilseeds increased from 12 per cent to 21 per cent and that of cotton increased from 3 to 4.5 per cent. Because of these shifts in the area from foodgrains to commercial crops, the growth rate of cereal output decelerated from 3.6 per cent to 2.2 per cent while the growth rate of non-foodgrain output accelerated from 2.8 to 5.0 per cent. In the state, regions with dominance of rice and regions that have shifted form coarse cereals to groundnut or cotton attained a high growth rate of aggregate output than other regions. Hence, the decade of 1980s is not a period of accelerated and broad-based growth for Andhra Pradesh as in the case of all-India [see for all-India growth trends in 1980s, Rao (1989), Sawant and Achuthan (1995), Bhalla and Singh (1997)] . It is a period of shifts in cropping pattern from low valued crops to high valued crops.

In the post-reform period the Andhra Pradesh state experienced a steep deceleration of agricultural growth. The growth rate of aggregate output index declined from 3.4 to 2.3 per cent. The growth rate of rice output declined from 3.3 to 1.6 per cent per annum. The growth rate of groundnut output decelerated from 5.2 to 1.9 per cent and that of cotton declined from 8.1 to 7.4 per cent per annum. This decline in agricultural growth is mainly caused by deceleration in the growth rates of yields of major crops in the state. For instance, the growth rate of rice yield declined steeply from 3.1 to 1.3 per cent and that of cotton from 3.4 to 1.4 per cent. The growth rate of groundnut yield remained low at 0.7 per cent. Sugarcane also experienced significant decline in the growth rate of yield from 3.2 to 1.0 per cent per annum. It is important to note that output growth in the state in the 1990s decelerated steeply despite significant growth in the gross cropped area at 0.6 per cent per cent per annum (this increase is on account of increase in the cropping intensity from 117 to 123 per cent in the state during the period). Expansion of area could not offset the decline in the growth rates of yield.4 The Agrarian Crisis in Andhra Pradesh

Although agriculture remains the backbone of the Andhra Pradesh economy, the contemporary times witness disturbing trends in its agrarian sector with farmers suicides, declining prices of several crops, widening disparities between agricultural and non-agricultural sectors and a drastic slowing down in the rate of agricultural growth as a whole. As the Commission on Farmers Welfare, Government of Andhra Pradesh (2004) rightly points out: Agriculture in Andhra Pradesh is in an advanced state of crisis

4.1 Declining Production and Productivity Scenario

The first indication of the crisis is given by the production indicators. Starting with early 1980s, there has been a continuous decline in the growth of agricultural output. The growth rate of aggregate output declined from 3.4 per cent per annum in the 1980s to 2.3 per cent per annum in the 1990s [Subrahmanyam and Sekhar (2003) p.1204]. This decline is even more pronounced in the case of foodgrains. Table 14 presents the data on the compound growth rate of production of major foodgrains output of Andhra Pradesh for the two periods 1970-71 to 1983-84 (Period I) and 1987-88 to 2006-07 (Period II).

Table 14Compound Growth Rates of Production of Major Foodgrains in Andhra Pradesh (Per cent)FoodgrainsPeriod I

(1970-71 to 1983-84)Period II

(1987-88 to 2006-07)Overall Period

(1970-71 to 2006-07)

Rice4.820.972.32

Jowar1.31-2.87-2.91

Bajra2.62-4.81-4.59

Maize5.709.255.68

Ragi0.18-5.10-3.92

Total Cereals3.971.371.75

Total Foodgrains 3.901.541.86

Source: Computed from Season and Crop Report of Andhra Pradesh various years, DES, Hyderabad. As seen from Table 14 except maize all other cereals register decline in their compound annual growth rate. The compound growth of rice, which is the staple crop of the state, declines from a healthy rate of 4.82 per cent per annum in Period I to an insignificant 0.97 per cent per annum during Period II. Growth rate of jowar output declines from 1.31 per cent per annum in the first period to -2.87 per cent per annum in the second. The case with bajra and ragi is not different. The growth rates of the three coarse cereals, namely, jowar, bajra and ragi remain negative when we consider the overall period (i. e. from 1970-71 to 2006-07) as well. In the cereal basket, it is only maize that shows an increase in the growth rate from Period I (5.70 per cent per annum) to Period II (9.25 per cent per annum). Although pulses also show a positive trend in their growth rate (Table 15) it does not seem to be sufficient to offset the magnitude of decline in the growth rate of cereals (which declines from 3.97 per cent per annum in the first period to 1.37 per cent per annum in the second period). As a result, the total foodgrains also decline from a growth rate of 3.90 per cent per annum in Period I to 1.54 per cent per annum in Period II.

Table 15Compound Growth Rate of Production of Total Pulses in Andhra Pradesh (Per cent)

Period I

(1970-71 to 1979-80)Period II

(1980-81 to 1996-97)Period III

(1998-99 to 2006-07)Overall Period

(1970-71 to 2006-07))

Total Pulses-1.313.366.173.66

Source: Computed from Season and Crop Report of Andhra Pradesh various years, DES, Hyderabad.The decline in the growth rate of foodgrains is much sharper in per capita terms. Table 16 gives the per capita foodgrain production at three different points of time: 1970-73, 1981-84 and 2004-07.

Table 16Per capita Production of Rice, Total Cereals and Total Foodgrains in Andhra Pradesh

(in Kilograms)

1970-731981-832004-07

Rice105.43151.32145.11

Total Cereals155.43204.48187.35

Total Foodgrains 164.08214.56203.70

Source: Computed from Statistical Abstract of Andhra Pradesh various years, DES, Hyderabad.

Table 17Compound Growth rates of Per capita Production of Rice, Total Cereals and Total Foodgrains in Andhra Pradesh (in Per cent)

Period I

(1970-71 to 1983-84)Period II

(1987-88 to 2006-07)Overall Period

(1970-71 to 2006-07)

Rice2.69-0.930.35

Total Cereals2.09-0.40-0.14

Total Foodgrains 2.02-0.23-0.03

Source: Computed from Statistical Abstract of Andhra Pradesh various years, DES, Hyderabad

As seen from Table 16, the achievements in per capita terms are not as impressive as they appear in aggregate terms. This is self evident from the fact that the average per capita production of total foodgrains fluctuates between 160 Kgs to 215 Kgs during the 37 year period under analysis. The per capita production in all the three variables (i.e. rice, cereals and foodgrains) reveals a similar pattern i.e. it rises in the period 1981-84 but tends to fall marginally during 2004-07. The picture becomes clearer when these variables are analysed in terms of their compound growth rates (Table 17). After achieving an impressive growth of about 2 per cent per annum in total foodgrains during period 1970-71 to 1983-84, it steeply declines to -0.2 per cent per annum during 1987-88 to 2006-07. Such a sudden fall in the growth rate is also observed in the case of rice and total cereals which decelerates from about 3 per cent to -1 per cent and 2 per cent to -0.4 per cent per annum respectively. This decline in the growth rates acquires significance from the fact that it has a direct negative bearing on the availability and intake of foodgrains by the people of the state.

As the recent studies point out, it is the decline in the yields of all the important crops that has pulled down the growth rate of aggregate output in the state [Subrahmanyam and Sekhar (2003), World Bank (2003) and Reddy D N (2006)]. Undertaking a decadal analysis of the yield of major crops in Andhra Pradesh, Subrahmanyam and Sekhar (2003) observe that the growth rate of rice yield declined steeply from 3.1 per cent per annum during 1980s to 1.3 per cent per annum during the 1990s. While the growth rate of cotton declined from 3.4 per cent to 1.4 per cent, that of ground nut remained low at 0.7 per cent. Sugarcane also experienced a significant decline in the growth rate of yield from 3.2 to 1.0 per cent per annum during the same time period. Here, the authors identify that the steep deceleration in the output growth in the 1990s is despite the significant growth in the gross cropped area at 0.6 per cent per annum. This indicates that the expansion of area could not offset the decline in the growth rates of yield in the agrarian sector of the state.

A World Bank study (2003) compares the yield levels of the major crops in Andhra Pradesh with that of domestic and international standards. The study reveals that APs agriculture is considerably less productive. For instance, Egypt produces almost 3.3 times more rice per hectare than AP. Kuwait produces 6 times more maize per hectare than AP. The yield of groundnut in Israel is 7.6 times higher and the yield of tobacco in United Arab Emirates (UAE) is 10 times higher than in AP. The study acknowledges that although a comparison of yields between AP and the countries with the highest yields in the world appears inappropriate considering the differences in agro-climatic conditions, it helps to benchmark APs productivity from a global perspective and provides an indicative measure of the enormity of growth potential that exists in its agriculture. The study further compares the yield performance of AP agriculture with those of states within India. Even here, the yield level of AP agriculture is not very impressive. For example, the yields in Tamil Nadu in crops like rice, sugarcane, groundnut and oilseeds are 1.3, 1.4, 1.9, and 1.9 times higher respectively compares to those of Andhra Pradesh. Tobacco and pulses in U.P, Onion in Gujarat and cotton in Madhya Pradesh have yields that are 3.9, 1.8, 1.5, and 1.2 times higher than corresponding yields in AP. The only crop where AP has the highest yield among Indian states is maize. The study points out that in terms of overall yields of foodgrains, AP continues to lag behind Punjab, Haryana, Tamil Nadu, West Bengal and even Kerala.

Reddy D N (2006) also undertakes a similar study of yield performance in Andhra Pradesh agriculture in lines with the World Bank (2003) study. What concerns this study the most is the slowdown in the yield levels of rice (since early 1990s) which is the single largest crop accounting for about 37 per cent of gross cropped area and ranks first in 20 out of 22 districts in the state, and contributes about 25 per cent of the state agricultural domestic product (SDP).

4.2 Meagre Returns from Cultivation

The results of the National Sample Survey (NSS) 59th round (January-December 2003) on Situation Assessment Survey of Farmers are quite revealing. The survey identifies that in 2002-03 the average returns from cultivation per hectare in Andhra Pradesh are Rs 5243 in Kharif and Rs 7815 in Rabi (Table 18). From the total farmer households, 82 per cent with an average size of 1.2 hectare in Kharif and 39 per cent with an average land size of 0.9 hectare in Rabi engaged in cultivation. The paid out expenses as per cent of value of output is about 62 per cent in Kharif and 53 per cent in Rabi. Here, it is important to note that compared to the national average, Andhra Pradesh agriculture has got relatively lower returns per hectare but a greater share of expenses both during Kharif and Rabi seasons.

Table 18Returns to Cultivation 2002-03

Andhra Pradesh All India

Kharif

Farmer Households Cultivating (per cent)81.786.2

GCA per Cultivating Households (Hectares)1.21.1

Gross Returns per Hectare (Rs)52436756

Expenses by Value of Output (per cent)62.343.9

Rabi

Farmer Households Cultivating (per cent )39.162.3

GCA per Cultivating Households (Hectares)0.90.9

Gross Returns per Hectare (Rs)78159290

Expenses by Value of Output (per cent)52.842.2

Average Returns per Farmer Households (Rs)810511258

Average Family Size4.75.5

Notes: GCA = Gross Cropped Area; Gross Returns = Value of output Expenses; Expenses are those paid out only and hence, it does not include family labour or rent for own land; Value of output is total produce (including by products) times price.

Source: Mishra (2007)

The NSS 59th round on Income, Expenditure and Productive Assets of Farmer Households analyses the average monthly income and consumption expenditure of farmer households in Andhra Pradesh for the agricultural year 2002-03. The results are presented in Table 19. The study reveals that the average monthly return of a farmer household from cultivation alone is around Rs 743. Monthly returns from farm animals and non-farm business are calculated to be Rs 93 and Rs 155 respectively. In addition, average monthly income in the form of wages is Rs 643. Overall the average monthly income of the farmer household from wages, farm business and non-farm business in the state of Andhra Pradesh is calculated to be Rs 1634. On the other hand, the average monthly consumption expenditure of a farmer household in the state stands at Rs 2386. From the data presented above, we conclude that there is not much diversification of the sources of the farmer households and the income of an average household from cultivation would hardly suffice to meet even the basic necessities of life. It raises the basic question regarding the viability of farming itself under the present conditions in the state.

Table 19Average Monthly Income from Different Sources and Consumption Expenditure

per Farmer Household in Andhra Pradesh during the Agricultural Year (July02-June03)Size Class of

Land Possessed

(Hectares)Income

From Wages

(Rs)

Net Receipt

from Cultivation

(Rs) Net Receipt

from Farming

of Animals (Rs) Net Receipt

from Non-Farm

Business (Rs)Total Consumption

Expenditure (Rs)

< 0.018639841512133

0.01 0.40786140921222049

0.41 1.006414951101592274

1.01 2.003801174722112549

2.01 4.00436199993623045

4.00 10.0024847551683084133

> 10.004038553-4709325724

All Sizes643743931552386

Source: NSSO (2005), Income, Expenditure and Productive Assets of Farmer Households, NSS 59th Round (JanuaryDecember 2003), Report No. 497(59/33/5).

Manoranjan Pattanayak and, Bibhu Prasad Nayak (2003), Crop Diversification in Orissa: A Spatio-Temporal Analysis (2003). International Economics Division, SIS, JNU Working Paper Series, July. Available at SSRN: http://ssrn.com/abstract=671585

Historically the major sources of irrigation in the State are tanks, canals and wells in the same order of importance [Reddy, R. (2006)].

The rationale behind the periodisation is discussed already in the methodology.

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