I-B03: Effects of urbanization on value chains and livelihoods of farmers and other stakeholders

Project summary

India is experiencing unprecedented growth in urban areas especially during the past 20 years since economic liberalization. As a result, demand for agricultural land has multiplied and urbanization of rural areas surrounding big cities like Bangalore has gathered momentum. The rapid urbanization has brought about a great deal of structural changes in agriculture surrounding the urban areas. Among various components of agriculture, the dairy sectors which are important livelihood supports for poor and marginal farmers are affected severely as the raw materials or inputs needed for these activities have been seriously affected by the urbanization. Hitherto what were considered as sustainable small farm livelihood ventures are turning out to be a big economically viable unit especially the dairy sub-sector. However, the vegetable and dairy value chains although not affected much in the remote rural areas, are experiencing tremendous pressure in the semi-urban areas. Why is the dairy sector experiencing this change, what are the causative factors for such changes in the dairy value chains? Who has been affected most by this change whether small farmers or rich or labour force involved in the dairy and vegetable production and marketing chains? These are some of the questions that come to the mind in the whole gamut of rural-urban gradient. Due to resource scarcity, the efficiency in the production of vegetables and dairy products is likely to vary both in positive and negative directions and how this change in efficiency in the production could affect the livelihood and equity among farmers is an important issue which requires in depth investigation especially from policy point of view. The proposed study examines these issues in detail with following specific objectives: Analysis of influence of urbanisation on the structure of vegetable and dairy activities (primary level); Examination of influence of urbanisation on production, collection and primary value addition stages in both the vegetable and dairy sectors; Assessment of changes in livelihoods of farmers engaged in these activities, secondary stakeholders (such as collectors, feed suppliers, forage suppliers, and others involved at primary level); Quantification of efficiency (changes in costs and incomes) and equity (who have been affected or benefitted from changes in value chains and its efficiency) impacts and, need for technological, policy and extension services to improve the economic efficiency and equity dimensions.

The study will be carried out in region surrounding Bangalore urban conglomerate and region will be divided into three distinct areas with varying degrees of urbanisation: urban, transition and rural areas. 50 farmers will be sampled in each of these three layers in both of the two transects (north and south) to generate a total sample of 300 dairy farmers. These farmers will be interviewed for three years to form the panel data. In addition, 50 stakeholders representing different activities other than primary production in the dairy and vegetable value chain will also be selected randomly. Conventional economic measures will be used to work out economics of dairy and vegetable enterprises. Indicators will be developed to analyse structural changes in dairy and vegetable activities. Livelihoods of dairy farmers will be analysed using appropriate indicators. Efficiency and equity will be assessed employing frontier production function, data Envelopment Analysis and Gini ratio.

It is expected that the outcome of the study will be an important input for evolving policies to tackle problems arising out of urbanisation in agriculture in general and dairy and vegetable subsectors in particular. Further, it is expected that the experiences of urbanisation and results of this study will be useful for tackling problems that arise due to urbanisation elsewhere in India or elsewhere.