Wealth creation in a Jhoom Cultivation Society...!!!
By:- Boilal Gangte *
Some time back, before Reliance retail was launched (not to the dot sure though), I've seen a panel discussion in TV which was part of some symposium organized by NDTV. One of the discussion points was the immediate need for the rural sector?
He was not the most articulate among the elite panelist nor did he spoke in his best, Bigger Ambani answered a strong distribution system whereby rural farmers have good and quick access to urban market. Though it was the simplest and shortest, but the answer to me was the most profound (maybe there could be some ulterior motive as Reliance Retail was on the anvil, which plan to source directly from the rural farmer. Anyway that's not the point)....
Disparity of wealth is the worst byproduct of capitalism and I feel it's one of the most uttered social evil not only in India but across the world. The mission of curbing this social evil to me is noble and should be in the top priority list in any government's strategy.
In our entire 62 years of independence almost all manifestos tries to curb this evil through different form of redistribution of wealth, few of the latest being loan waiver, NREGs, et al. However, I haven't heard or read any scheme or "yogjna" which actually delivers. Well, corruption is the easiest scapegoat year on year and it'll be for years to come. If it's going to continue for years to come then are we saying that we will never come out of this vice?
I have a lateral views on this.
There is a passage in Bible: "Give a man a fish; he'll eat for a day. Teach a man how to fish, he'll eat for a lifetime"...
Our leaders sure have heard of this and they've been trying to implement by using certain eradication vehicles like education, loan, loan waivers, minimum job guarantee, free lunch, etc. I'm not saying all these are not important, yes they are indeed essential. However, something which I strongly feel for and which is not getting its deserved front page, though sometimes some government touch part of it is what the Bigger Ambani said "a robust distribution system".
When I say distribution system it's not just about the infrastructure like roads or railway tracks, but an environment which is a combination of infrastructure and a concoctions of social, economic and political factors which will give producers access to market place without being exploited.
Today, we have the infrastructure and the distribution channels which source goods from the interior and bring it to the market place, but my observation is that in this entire supply chain, the middlemen siphon off the maximum value-addition undeservingly more than the producer and the consumer.
They create artificial shortage and extort from consumers and then create artificial excess or shortage of transportation mean whereby he/she source goods from the rural producers at blood sucking rate. More then the consumers, the rural producers are the one who are hit the most in this entire set-up. Since the middlemen are people from the urban area, this value creation in this supply chain is injected back to the urban economy. It's like the rich get richer....
Why I'm saying distribution is because majority of our brethren in rural belt are farmers by profession and they will be. The only way to create wealth for them is to have surplus harvest. Surplus in itself doesn't create wealth unless they can be converted into money or unless they are bartered with other necessity, which off course is not feasible in this age. So the only option is to be able to convert those surpluses into liquids which are only possible if those surpluses reach the market place.
Since I've not traveled to all lengths and since I'm still young to know all the social and economic construct of all parts of the country, all this prophecy of mine is purely based on the part of the country I belonged, the North East part of the country and which is mostly mountainous terrain.
Let's draw some corollary of lack of distribution system which leads them to adopt subsistence cultivation despite they are endowed with CASH CROPS which can bring them the much needed surplus, from a village which I know, called Santing.
This small hamlet is situated in one of the mountain range (extensions of the Himalayas) of Manipur. The mountains are a natural fertile which host plethora of cash crops like tea, coffee, cane, bamboos, banana, jack fruits, chilies, turmeric, passion fruits, oranges, timbers, orchids (to name a few), which is endowed in wilderness by Mother Nature. The main occupation of the people here is "Jhoom Cultivation"; they crop rice in the mountain slope by planting seed by seed, unlike large scale production technique used in paddy fields in the plains.
The question here is why do these hill bellies crops rice in the first place when they are naturally endowed with more productive and more money generating crops/plants? To add to the woes there is hardly anything call irrigation system, and everyone knows how much rice cultivation require water.
I know, you will blame education or lack of awareness sitting from your urban house. You know what, the village has a catholic school apart from the old mission school run by the local church since ages and the nearest town which has all modern amenities like TV with cable connection, newspaper, electricity, mobile phone is just about 90 Kms away. To add to it, at least half of the people would have undergone some form of primary education and thus know how to read and write...And the village run through a state highway, though it could be the bumpiest and most curved road…..then why o why?
Hypothesis 1:
To this hill bellies the only market for cash crops is local market consumption which is the 90 Km far town or the occasional suppliers who sporadically source this cash crop if they can bring them to this town. These suppliers are in turn dependent on whether they can export it to mainland part of the country (which can be a separate topic).
Since consumption capacity of the local market is small (few populations), unless suppliers buy it, bringing the cash crop to the local market in bulk just increase supply and hence reduce the cost, which doesn't benefit them, hence they will bring in bulk only if they have some suppliers.
To give a clearer picture, let's build a probability tree for villagers if they were to grow cash crop.
Hypothesis 2:
Why do they cultivate rice when it's not only tough but also not conducive for the land?
Firstly, people at the bottom of the pyramid aim and dream for stability. Because when you are dependent on hard labor and the vagaries of nature you would not have much room for sophistication approach to life, because it requires higher content of risk which need brain power.
Secondly, since these people are natural rice eater (though it's a bit weird) cultivation of rice guarantee them one year supply of their staple food and with some additional sourcing of forest produce like wild fruits, herbs, hunting, timber, etc. they will manage the year without starvation but at the same time without any improvement in status from the previous year because they consume whatever they produce, with no rooms for any surplus and hence savings.
Now let's compare the two hypotheses:
- Hypothesis 2 gives you an almost 100% chance of survival though with 0% wealth creation.
- Hypothesis 1 will give you 25% chance of being wealthy, 12.5% of survival (break event), 25% chance of being in lost and 37.5% chance of being in debt.
But...
If I were to ensure that transportation between the village and the local market is 100%, then the equation will turn into:
- Wealthy: 50%, Lost: 50%, as I'll totally remove the other branch of the probability tree.
But then the question is how do I build this so called Utopian type of distribution? The answer is limitless and will be unending debate...As I've taken the pain of penning down such a long prophecy, let me put few top of the mind thoughts:
- Create a market place which have a minimal ceiling price for farmers to sell their produce, so that he/she is guaranteed that at the end of the year he/she will be able to sell his/her product at least at that minimal price. What will this ensure? This will motivate and promote the less aware farmers to cultivate more profitable products rather then follow subsistence farming.
- Build a network where in goods are easily transported within markets depending on demand and supply. E.g. if supply of ginger is more in the east for a particular year then there should be an effective and efficient system of exporting it to a South or West where there might be a demand for ginger in that year.
- In all this system not only government participation, but even private participation should be mandated. Like in banking where some portion of their assets should be placed in priority sector, why not manufacturing companies, retail and trading companies be mandated to source their raw materials from priority locations?
Anyway have we ever reached that optimum point?
Or
Is the ethos of our country to attain that point rather then the welfare of the entire nation?
Disclaimer: Views here are totally personal and if there are any similar views published before then it's coincidental.
* Boilal Gangte - Originally from Churachandpur now working at ICICI Bank in Mumbai. You can see other writing stuffs through his blog The writer can be contacted at boilalpg(at)aol(dot)com
This article was webcasted at e-pao.net on 18th August 2009.
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