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 The Price of Childhood 

 on the link between prices paid to farmers and the use of child labour in cottonseed production in Andhra Pradesh, India 

title page - contents - list of tables - section-I (introduction) - section-II - section-III - section-IV (summary/conclusions) - appendix - notes


NOTES

SECTION-I: INTRODUCTION
  1. Venkateswarlu, D. and L. da Corta (2001) 'Transformations in Age and Gender of Unfree Workers on Hybrid Cottonseed Farms in Andhra Pradesh', Journal of Peasant Studies, Vol. 28, No. 3, pp 1-36; Venkateswarlu, D. (2001) 'Seeds of Bondage: Female Child Bonded Labour in Hybrid Cottonseed Production in Andhra Pradesh', jointly published by Business and Community Foundation and Plan International (India Chapter), New Delhi. <<

  2. In the areas where cottonseed production is concentrated unemployment and out migration for wage work among adult labour is high. Mahaboobnagar district in Andhra Pradesh where cottonseed production is concentrated is well known across the country for large scale distress migration of agricultural labourers to urban areas in search of wage work. <<

  3. Out of 14000 acres under cottonseed production in Andhra Pradesh during 2003-04, 27% was controlled by Association of Seed Industry companies (all multinational seed companies namely Proagro, Syngenta, Monsanto, Advanta, Emergent Genetics are members of ASI. Indian companies namely Raasi Seeds, Mahyco, Ankur, JK Agri Tech are also members of ASI). Non ASI companies like Nuziveedu, Tulasi, Pravardha Seeds, Palamur Seeds, Amereswara Agri Tech, Vibha, Gangakaveri, Prudhvi Agrotech, Swagat Seeds, Nandi Seeds, Maurya Seeds accounted for nearly 50% of the area and the remaining was controlled by the unorganized sector. <<

  4. Emergent Genetics, Proagro and Syngenta have recently worked out an action plan in collaboration with local NGOs to address the problem of child labour in cottonseed production. This action plan includes a scheme of incentives and disincentives to the farmers. Under this scheme several disincentives have been announced for farmers who violate the no-child-labour norm in the agreement between them and the companies. In the proposed scheme of disincentives, the first time violation of the farmers will result in issuing a show cause notice by the company. If the farmer continues to violate the no-child-labour norm after a second inspection, the company will cut 10% of procurement price money which it agreed to pay to the farmer. For a third time violation the company will completely reject the seed from the farmers and no future production will be given to them. If, under incentives scheme, farmers completely avoid child labour in their farms they will be given 5% bonus on procurement price. If seed farmers in a particular village come forward to totally eliminate child labour on their farms these companies will reward the entire village by financially supporting educational infrastructural needs of the village like constructing a school building, supplying educational material etc. In collaboration with Naandi foundation they have opened motivation centres (creative learning centres) in 20 villages for child labourers to mainstream them into formal schools. To improve the crop productivity these companies also announced that they will organise training programmes for the farmers. During 2005-06 as a pilot programme seed production contracts were given to women Self Help Groups (SHGs) in five villages. These women SHGs received credit support from the local district administration and technical support is extended by seed companies. <<

  5. Venkateswarlu, D. (2003) 'Child Labour and Transnational Seed Companies in Hybrid Cottonseed Production in Andhra Pradesh' published by the India Committee of the Netherlands (full report is available at http://www.indianet.nl/cotseed.html) and Venkateswarlu, D. (2004) 'Child labour in hybrid cottonseed production in Andhra Pradesh: Recent developments' published by the India Committee of Netherlands (full report is available at http://www.indianet.nl/cotseed2.html). <<

  6. 0n June 24th 2005 Syngenta hosted a consultative meeting at Hyderabad to discuss the issue of child labour in cottonseed production. This meeting was attended by the representatives of ASI, seed organizers, NGOs and the state government. The issue of price and its link to child labour was discussed during this meeting. There was a difference of opinion between seed company representatives and NGOs regarding the link between procurement price policy and use of child labour. During this meeting ASI hold the view that the employment of child labour in the cottonseed production is not linked to the procurement price policy adopted by companies. It argued that cottonseed farmers have relatively better profit margins compared to other farmers. Procurement rates offered invariably exceed the cost of production considering the wages paid to adult labourers, and provide enough margins in order to hire adult labourers. For improving incomes of farmers increasing price is not a solution. Efforts have to be made to improve the productivity levels. <<

SECTION-II: ECONOMICS OF COTTONSEED CULTIVATION
  1. Compared to cottonseed wages, other local agricultural labour markets wages are comparatively more open and responsive to wage bargaining, especially in Kurnool where there is plenty of high wage agricultural employment enabling workers to bargain for higher wages and better conditions. However, bargaining for higher wages in cottonseed based on child labour is less responsive to these outside wages increases than in agriculture based solely on adult labour. This is because any bargaining for higher wages must be done by parents on behalf of child workers. In Kurnool, wages are paid in advance early in the season directly to the parents. For many parents, this wage advance is in fact a loan, usually for some pressing need such as food or medical expenses. Thus these parents are not in a position to bargain hard for higher wages. Moreover, there is not much alternative paid employment available for young girls. When wages are in fact a loan to parents for a pressing need, it may be difficult nigh impossible for parents to threaten not to send children to the fields if wages don’t rise. Mid-season or harvest bargaining, which can be very effective in other agricultural work, is similarly difficult when wages are paid in advance. This downward pressure on wages is very typical of attached and bonded labour arrangements in Indian agriculture. <<

  2. See Venkateswarlu, D. and L. da Corta (2001) 'Transformations in Age and Gender of Unfree Workers on Hybrid Cottonseed Farms in Andhra Pradesh', Journal of Peasant Studies, Vol. 28, No. 3. <<

  3. There is an important gender division in wage rates. Women’s wages are far below men’s and this is part of the reason why employers seek out female children and adult females – they are much cheaper. Whilst there is little or no difference between wages for adult men and women if they do the same activity, they rarely do the same activity – traditionally, women do certain agricultural works, men do others. We found in an earlier study in Andhra Pradesh that over the last 20 years this traditional gender division of labour changed substantially to suit employers - much of ‘joint male/female work’ in paddy and groundnut cultivation has become largely feminized – thereby cheapening labour costs. Employers in cottonseed build on this trend, choosing female children, teenagers and adults in order to keep labour costs down (Da Corta and Venkateswarlu (1999), Journal of Peasant Studies, Vol. 26, Nos. 2 and 3. Also published in T.J. Byres, Karin Kapadia and Jens Lerche (eds.) 'Rural Labour Relations in India', London: Frank Cass Publishers. <<

  4. Because in an open fully functional labour market, wages should equalize between different agricultural crops, however, because in cottonseed children and teenagers work alongside adults, child and teenage wages are averaged in with the adult wage, pulling the average wage in cottonseed down, below the adult wage in non-cottonseed local agricultural field work. <<

SECTION-III: COST IMPLICATIONS OF REPLACING CHILD LABOUR WITH ADULT LABOUR
  1. The average hourly wage rates increased in Kurnool by 16.1% and in Mahaboobnagar by 16% during 2002-04. <<

  2. Fall in Child Labourers Calculation: Another way to estimate the same thing is to examine the fall in child labourers per acre per day. In the table above we can see that the proportion of child labour (both paid and family labour) in the total workforce declined from 6.28 persons per acre per day, or 68.3% of the workforce in 2002 to 4.88 persons per acre per day or 50.6% of the workforce in 2004 (a fall of 1.4 persons per acre per day, or a fall of 17.7 percentage points). A fall of 1.4 child labourers per acre per day is associated with a rise of Rs. 2213 in total labour costs. A reduction in 4.88 child labourers per acre per day is necessary in order to reduce child labour to 0. This fall in 4.88 is associated with arise in Rs. 7723. (This is because 4.88/1.4= 3.49 and so Rs. 2213x3.48 = Rs. 7723). This is the same result we obtained above. Again one should add 8% on for wage inflation each year (e.g. 2005 + wage inflation would be Rs. 8340; and by 2006 it would be Rs. 8959. <<

  3. The average seed yield over the period 2002 to 2004 is 217.5 Kg per acre. Average cost of per Kg seed is Rs. 236. Rs. 7970 additional costs will increase the per kg seed production by Rs. 37. <<

  4. For estimating the profit margins of seed companies one needs to examine all the costs incurred by companies - procurement price paid to seed farmers, commissions paid to seed organizers and dealers, company administrative expenses and research costs for developing seeds etc. While the data regarding procurement prices of seed companies are easily available, data for other expenses (administrative expenses, research costs, dealer commissions etc.) are not. While estimating the profit margin of companies Rs. 200 per Kg of the seed in case of non-BT hybrids, Rs. 500 in case official BT hybrids and Rs. 100 in case of unofficial BT hybrids is deducted towards the expenses incurred by the company for its administrative costs, research costs and commissions given to dealers. These figures are very broad and rough estimates calculated on the basis of few key informant interviews with persons involved in cottonseed business. These figures may not represent the exact costs of companies’ administrative and research costs and commissions paid to dealers but certainly give an idea about these costs. The detailed analysis of seed companies’ profits is not the purpose of the present study. Here we are simply making the point that it is plausible that seed companies can afford to raise procurement price by a few rupees given the gap between procurement price and sale price. <<

SECTION-IV: SUMMARY AND CONCLUSIONS
  1. The additional costs on account of replacing children with adult labour and paying minimum wages to them can also partly be covered through by taking appropriate measures for improving the productivity of the farms. In recent years the decline in crop productivity is one of the major problems affecting the profitability of farmers in general and cottonseed farmers in particular in the survey area. <<


India Committee of the Netherlands / Landelijke India Werkgroep - October 25, 2005