MANAGERIAL ECONOMICS PROJECT ON

URBANIZATION: A PROBLEM TO FOOD PRODUCTION

Submitted by

AAYUSHDivision: A Roll No: 15010224001 Class: BBA LLB

Of Symbiosis Law School, NOIDASymbiosis International University, PUNE

In

MARCH, 2016

Under the guidance of

Prof. Shweta Saurav, Professor, SLS-NOIDA

1

C E R T I F IC AT E

The Project entitled “Urbanization: A Problem to Food production” submitted to the

Symbiosis Law School, NOIDA for Managerial Economics as part of Internal Assessment is

based on my original work carried out under the guidance of Prof. Shweta Saurav from

December to March. The research work has not been submitted elsewhere for award of any

degree.

The material borrowed from other sources and incorporated in the project has been duly

acknowledged. I understand that I myself could be held responsible and accountable for

plagiarism, if any, detected later on.

Signature of the candidate:

_______________________

Name of the Candidate: Aayush

Date:

2

ACKNOWLEDGEMENT

I would like to offer Prof. Shweta Saurav my heartfelt appreciation for providing me the opportunity to undertake a research project on the topic, “Urbanization: A problem to Food Production” I would like to thank them for all the necessary help and guidance they offered in completing my project. Without their help, it would have not have been possible to carry out this research project. I would like to thank my college, Symbiosis Law School- Noida, for providing me with excellent opportunities and facilities to help me complete my project.

I would also like to thank my parents and my classmates for helping me, in one way or the other, who have been constant pillars of support for the successful completion of the research project.

3

TABLE OF CONTENTS

TOPIC PAGE NO.

INTRODUCTION 5

RESEARCH METHODOLOGY6

LITERATURE REVIEW6

OBJECTIVES OF STUDY8

RESULTS AND DISCUSSION 9

LIMITATION OF STUDY 12

CONCLUSION 12

REFERANCES 13

4

INTRODUCTION:-

Globalization combined with urbanization along with factors such as educational infrastructures and

employment opportunities in urban areas have reduced farm labour availability in multifarious cultures.

Information and communication technologies have reduced the spatiality of rural and urban areas in many

countries. Historically, cities were first established in alluvial plains and valleys. Rapid urbanization has led

to intrusion of these fertile lands and valleys. Besides, increasing water and energy requirements place

further constraints on agriculture production in many countries. However it must be noted that human

activities, rather than natural forces are the major sources of the contemporary changes in the state and flow

of the biosphere. UN projections suggest that the world's urban population will grow by more than a billion

people between 2010 and 2025, while the rural population will hardly grow at all. It is likely that the

proportion of the global population not producing food will continue to grow, as will the number of middle

and upper income consumers whose dietary choices are more energy- and greenhouse gas emission-intensive

(and often more land-intensive) and where such changes in demand also bring major changes in agriculture

and in the supply chain.

It is with these concerns we need to understand what has urbanization

pinned in the past and it is bringing changes in the future. While their numerous issues that could be

addressed concerning urban influences on the biosphere ranging from the conversion of land itself to a

broader context of the ecosystem services required for the recycling urban metabolic by products . Hence the

food security and the loss in the agricultural products is the most distinct impact of the wide spread

expansion of the activities in both rural and urban areas and this is why the impact of urbanization on the

food production needs to be addressed upon further. This would entail a clearer picture regarding the actual

state of affairs regarding food production and the direction in which the agriculture sector has been headed.

Urbanisation and economic development are broadly synonymous and therefore the issue of agricultural

production needs to be dealt in the context of recent developments of sustained growth in incomes and

urbanisation as well. Urbanisation per se becomes significant since it affects employment, migration,

literacy, access to markets and infrastructure. Therefore, an attempt is made in this paper to analyse and

decipher the relationship between urbanisation and agriculture growth.

5

RESEARCH METHODOLOGY:-

DATA COLLECTION:

This project involves research and analysis of existing research work and data, hence replicating a

"secondary research methodology". The data abstraction sources include previous research papers on

related topics as well as articles and journals. The project is aimed at following and examining the large

scale trends experienced in our society. Further this project looks at the topic in an objective manner using

tables and statistics to quantify the information and could be considered as having a "quantitative

character".

LITERATURE REVIEW:-

(Stage, Stage, & Mcgranahan, 2010) have concluded that urbanization in poor countries may

affect food prices is that it increases the number of households that depend on commercial food

supplies, rather than on own production, as their main source, and hence are likely to hoard food if

they fear future price increases. In respect to it, a policy option has been suggested for managing

larger food reserves. However, attempts to curb urbanization have been ill-advised and are not

suggested.

(Russell, 1952) opines that the problem of increasing food production is being handled in different

ways; by increasing the output per acre of land by increasing the number of acres cultivated, by

reducing the wastes and losses caused by animals large and small, and by plant diseases and pests. A

further important need is to increase the certainty of crop production, for India is very liable to large

crop failures due, among other things, to drought, floods, hail, frost, fungus epidemics, locusts,

grasshoppers, and earthquakes.

(Winfield, 1973) examines the significant changes in land utilization due to the heavy migrations

from rural to urban areas. According to him, the land converted to urban areas is increasing, though

it has little effect on total crop production. The technological transformation of agriculture has had

much larger effects and has operated as a push-pull on the city ward movement of people as farm

functions have moved to the city. Some ramifications of this exodus is also increase in the demand

for animal products. Apart from that there has been substantial escalation of solid waste production

in cities and on farms. The researcher also posits his environment induced development pattern by

emphasizing that future planning must meet the challenge of wasteful land utilization, the overshift

of population to cities, and the problems of restoring the organic matter cycle.

6

(Chanchal & Ananta) have concluded that urbanization has no effect on Indian agriculture in near

future. Probably the Green Revolution and innovative agricultural technologies have dampened the

effect of urbanization and population growth on agriculture. The research has been conducted with

data collected online from www.indiastat.com from 1950-51 to 2009-10 on Total Food

Grain production (TFG), Total Cropped Area (TCA), Urbanized Area (UA) and Population. Then

on the basis of 60 years of data a Multiple Linear Regression (MLR) has been fitted taking TFG as

dependent variable and TCA, UA and Population as independent variables. The statistical

significance of the model is determined based on Coefficient of Determination (R2). The

significance of the estimated independent variables is tested based on the respective p-values, taking

5 percent level of significance as standard.

(Kalamkar, 2009) also makes an attempt to analyse the relationship between urbanisation and

agricultural growth in India. Though urbanisation is a worldwide phenomenon, it is especially

prevalent in India, where urban areas have experienced an unprecedented rate of growth over last

three decades. India shares most characteristic features of urbanisation in the developing countries.

Urbanisation and economic development are broadly synonymous and therefore the issue of

agricultural production needs to be dealt in the context of recent developments of sustained growth

in incomes and urbanisation as well. There is a need to control poverty and population growth

below replacement level in the country and unless significant measures are taken to incorporate

environmental concerns into agricultural development, urban planning, technological innovations,

industrial growth, and resource management, the situation is likely to worsen in the future.

(Streeter, 1970) in his report states that the result of a sudden abundance of food crops has

produced a series of "urgent second-generation problems". His report suggests for more irrigation

water, fertilizer, machinery, pesticides storage, better roads, easier credit, and firm price supports.

The research also makes use of the simultaneous great efforts taking place in the field of population

control to establish the hurdles which the agriculture sector is facing in lieu of stable food

production. It has also been suggested that research needs to be undertaken to improve the qualities

of rice and wheat wherein the improved new varieties are resistant to many pests, have proved

capability of maintaining their higher productivity under a wide range of different conditions, and,

under favourable conditions, of yielding much larger crops a year than had been possible before.

From this it is implied that as developing industries move faster in expanding their industrial as well 7

as urban capabilities, they will be able to buy more of their food from highly developed regions-

North America and Europe, which have increased their output of food grains.

(Howard, 1920) believes that Agriculture will remain, India's greatest industry and also gives prime

importance to his crops in his study. In addition to this he also differentiates the problems faced by

the food industry in India which is entirely different from anything to be found in the west. It was

realized by the investigators speedily that they were in a new world. The research brought forward

the importance of small cultivators in India-which is not much of contributing factor in the West. Set

amidst this context of such shifts in demand, specialized agribusinesses have stepped in to exploit

economies of scale, in both the provision of farm inputs and marketing of farm outputs, while

household enterprises continue to dominate food production. The changes in food preferences and

food supply chains provide opportunities for smallholder peri-urban farmers, and for others linked

through transportation and other means to urban markets. However, a significant portion of

smallholders continue to be excluded from these opportunities.  Research therefore needs to

examine how the opportunities provided by urban markets can be better exploited by smallholders

not just in peri-urban communities but also in communities further away from cities.

OBJECTIVES OF THE STUDY:-

This research project looks upon the

The already existing agricultural practices and methodology in India and the ramifications of

avant-garde agricultural techniques.

The impact of Urbanization on the Agriculture-the backbone of Indian Economy and how it

effects the total food gain production.

The difference in the consequences resulting out of the same factors in India when compared

to the Western countries.

8

RESULTS AND DISCUSSION:- IMPLICATIONS OF CURRENT AGRICULUTAL PRACTICES

Agriculture is the mainstay if Indian economy because of its high share in employment and its significant

contribution in creation of livelihood notwithstanding its reduced contribution to the country’s gross

domestic product (GDP).The share of agriculture in the GDP has registered a steady decline from 55.4 per

cent in 1950-51 to 38.1 per cent in 1980-81 and 20.5 per cent in 2006-07.

Agriculture remains the leading sector in terms to employment and livelihood with more than half of India’s

workforce engaged in it as the principal occupation. Even after taking into account the slower growth of

GDP in agriculture than non-agriculture is expected, the main cause for concern has been the inability to

reduce the dependence of the workforce on agriculture to a significant extent creating enough non-form

opportunities to absorb the redundant labour in rural areas and assigning those in agriculture to access such

opportunities.

Considerable changes could be observed since the late 1960s following the execution of green revolution

technology leading to considerable progress in food-grain production. However, the trend of this high-

growth was limited to regions which adopted these technologies. Besides, the negative externalities of the

technological changes began to surface in different forms under the pressure of inter-sectoral growth which

9

decelerated the investment trends in agriculture which could also be obviated by the signing of WTO

Agreement on Agriculture placing additional factor beside the policy planners.

INCREASING POPULATION : CAUSE OF CONCERN

India is at the acceleration stage of the process of urbanisation. The pattern of

urbanisation in India is characterised by continuous concentration of population and

activities in large cities. Nearly 62 per cent of urban population

reside in Class I towns, but they account for only 9 per cent of towns. The

distribution of urban population is thus skewed. Cities grow on account of urban pull

factors, created due to emergence of economic opportunities and push factors from

rural areas. After taking into account the thrust of sustained growth in the gross domestic product, it can be

concluded that urbanisation and economic development will be irreversible and will have a circular effect on

agricultural production.

10

After reviewing all the evidence, it can be safe to say that problem of feeding India will remain extra-

ordinarily difficult if the population continues to increase at this rate. The definitive steps which would be

required to facilitate maintenance of even low standards of nutrition would include addition of 32 million

acres of land in the next ten years, increment in the output per acre by 15 per cent and purchase of 12 million

additional acres to be brought under irrigation. These extensions would be possible only if industries are

developed to provide fertilizers, better implants and better transport, besides a market for food that will act

as a catalyst to the cultivator to improve his methods.

COMPARATIVE CONSEQUENTIALSITIC ANALYSIS

Between the period of 1960 and 1990, world agricultural production per capita increasedalmost constantly largely because of increased agricultural productivity. Apart from a boost in the 1970s, linked to the commodities price rise, prices have declined in parallel with the increase in foodproduction. In nations where food is a large share household expenditure, the rise in food prices created political and economic chaos. The ramifications of this could be witnessed in the attempt of various countries to contain the shock through price controls, export restrictions or other calculated measures. Another practice that could be observed is the reduction in the storage of food reserves by the government. Historically, countries managed the effects of poor harvest on domestic prices by selling food from these food reserves; today most counties meet this demand by purchasing food on the world markets. An important effect of urbanization validated is an increase in number of people dependant commercially on supplied food for whom expenditure on this takes up a large part of their overall budget. In a nutshell, there is an established nexus between agricultural productions due to changing diets, loss of farmland due to urban expansion and soil degradation due to increased population but it is too far-fetched to conclude that urbanization per-se is driving those other processes in foreign nation. This is synonymous to the findings in the Indian context where urbanization has also no direct linkage to food production, a factor which could have been mitigated by innovation agricultural technologies and diversified food production regions. Although instances such as substantial reduction in per capita availability of food grains during the last decade of reforms stand firm leading to the potential rapid growth in demand for high value food commodities by 2020, this detailed study shows that urbanization has no effect on Indian agriculture in near future.

11

LIMITATIONS OF THIS STUDY:

Although through this project I have tried to bring forward a true picture regarding the objectives which I wanted to seek but still I would like to state certain factors which would mitigate its brevity and propounding effect. They are:-

Limited to electronic medium - The crux of this research is built upon journals and articles available through the online library. I was unable to discover specific books in the college library which could have galvanized me to include more robust and substantial sources of content in this research project.

Lack of prior research studies on the topic – Citing prior research studies forms the basis of any literature review and unavailability of more number of research studies on this topic amounted to be of considerable magnitude of hindrance prohibiting me to fill further gaps on this topic.

CONCLUSION:

There are many things that we can do to restore the long-term trendtowards lower food prices. It would be better to do those things ratherthan try to limit urbanization, which at best would not have any effect onthe problems currently causing higher prices and at worst might actuallymake them worse. Urbanisation is an important determinant of demand for high value commodities. By 2020, urban population is expected to be nearly 35 per cent of the total population. This isexpected to fuel rapid growth in the demand for high value food commodities. Thereis a need to control poverty and population growth below replacement level in thecountry and unless significant measures are taken to incorporate environmentalconcerns into agricultural development, urban planning, technological innovations,industrial growth, and resource management, the situation is likely to worsen in thefuture. Limiting urbanization, on the other hand, is unlikely to lead to lowerfood prices. Unless policies to curb urbanization also reduce incomegrowth, the shifts in diet would continue regardless, and the increasedpollution often linked to economic growth would simply be emittedin rural areas instead. The building-over of arable land would likely beeven worse if people with rising incomes stayed in rural areas, and theproductivity gains from larger farms would be foregone. If anything,reduced urbanization might well lead to less agricultural production andhigher food prices.

12

REFERANCES:

Chanchal, P., & Ananta, S. (n.d.). Effect of Urbanization on Agriculture in India. National Academy of Agricultural Research Management .

Howard, A. (1920). THE IMPROVEMENT OF CROP PRODUCTION IN INDIA. Journal of the Royal Society of Arts , 555-564.

Kalamkar, S. (2009). Urbanisation and Agricultural Growth in India . Indian Journal of Agriculture Economist .

Russell, J. (1952). Food Production Problems in India. International Affairs , 15-28.

Stage, J., Stage, J., & Mcgranahan, G. (2010). Is urbanization contributing to higher food prices? Environment & Urbanization , 199-215.

Streeter, C. P. (1970). A Partnership to Improve Food Production in India: A Special Report. The Annals of the American Academy of Political and Social Science , 189-191.

Winfield, G. F. (1973). The Impact of Urbanization on Agricultural Processes. The Annals of the American Academy of Political and Social Science , 65-74.

13