A presentation made at the WCCA 2011 event in Brisbane, Australia.

1. Policy impacts on land use and
agricultural practices in North-West
India
ACIAR CSE/2006/132
Nick Milham WCCA/FSDC September 2011

2. What to do when policy seems to
have gone wrong?
- when ‘successful’ policy begins to
show undesirable outcomes

4. Profound, policy induced, change
- major beneficiary of the Green Revolution
Table 1: Trends in Crop Area in Punjab
Year
Crop
1960-61 1980-81 2000-01 2004-05
‘000 ha ‘000 ha ‘000 ha ‘000 ha
Rice 227 1,183 2,611 2,647
Wheat 1,400 2,812 3,408 3,482
Maize 327 382 165 154
Cotton 446 648 474 509
Pulses 903 341 61 40
Oil seeds 185 248 87 91
Sugarcane 133 71 121 86
Total 3,621 5,685 6,927 7,009
Source: Government of Punjab

5. Policy Environment since the 1960s
Capital Land Water
- machinery subsidies - restriction on farm size - cost unrelated to use
- no restrictions on use
high
intensity Favours crops
land with high water
Fertiliser uses and energy
inputs
- subsidised
Punjab Farming System
- highly mechanized Energy
Favours high N
- rice/wheat system - large subsidy on electricity
using crops - input intensive - small subsidy on diesel
- stubble burning
Crop prices
- MPS
- procurement (rice & wheat)
- export restrictions
OUTPUTS
Price risk - High rice and wheat production - Excessive water use
removed - lower - Self sufficiency goal - Electricity supply problems
but secure prices - Affordable food for the poor - Pollution from stubble burning

6. Policy Success
 Enormous expansion in productivity food
grain production; India now self-reliant in
cereals
 Low and stable consumer prices (at least
until recently)

7. But!
– productivity now low by world standards
– consumer prices may be rising in real terms
– water consumption high and groundwater
supplies being depleted
– soil fertility declining and fertiliser rates excessive
and rising
– energy (electricity and diesel) demand is high
– rice stubble largely burned in the field >> air
pollution and on-farm productivity
consequences
– subsidy programs very costly to government

8. How to address the stubble burning problem?
Subsidise technology like
the Happy Seeder?
Q: Would it work?
A: Yes!
Q: Is there a better way?
A: Principles, politics and
practicality

9. Add a new program to address the
problems of the existing program?
– entrench the existing arrangements
– add to the budget cost to government
– impose efficiency costs on the economy
The Policy Principles Answer:
– probably “No”

10. Modelled impact
Wheat - HS
4.50
4.00
3.50
3.00
Crop Aea (ha)
2.50
2.00
1.50
1.00
0.50
0.00
HS-cost HS-cost HS-cost HS-cost HS-cost HS-cost HS-cost HS-cost HS-cost HS-cost
S1 S2 S3 S4 S5 S6 S7 S8 S9 S10
Scenario
25% subsidy: budget cost ~$AUS1,000 million

11. Modelled impact
With Subsidies Without Subsidies
Happy Seeder used No Yes
Rice (ha) 3.93 2.28
Wheat (ha) 4.2 4.2
Maize (ha) 0.27 1.92
Soybean (ha) 0 0
Net farm income (Rps) 152,898 132,999
Rice stubble burned (t) 24 0
Nitrogen (kg) 533 478
Electricity (kw hrs) 1,496 1,557
Diesel (L) 1,644 941
Water (ML) 81.4 60
Casual labour (hrs) 279 635
Note: Total farm area 4.40 hectares; total cropped area 4.20 hectares.

12. Lessons
 Changes in policy settings can have very large
effects on farm production systems and their
environmental and social outcomes.
 When problems emerge, look closely at existing
policy settings before considering additional
arrangements – a good solution may be there!