Agricultural Economics Research Review

Vol. 19 July-December 2006 pp 251-268

Economic Impact of Commercial Hybrid Seed

Production in Vegetables on Farm Income,
Employment and Farm Welfare – A Case of
Tomato and Okra in Karnataka
M. Sudha, T.M. Gajanana and D. Sreenivasa Murthy

Abstract

Commercial Seed Production (CSP) in vegetables like tomato and okra is

an important economic activity for farmers in the dry regions like Haveri
and Gadag in Karnataka providing assured returns and additional
employment. Its economic impact assessed at individual and aggregate
levels based on a sample of 70 cultivators has indicated that the activity
provides stability, equity in income distribution across the group and
helps enhance family welfare. Undertaken mainly during the khraif season
on a plot of around 0.43 ha, the farmers incur an expenditure of around
Rs 49,780 / ha for tomato and Rs 38,555/ha for okra. With a seed yield of
0.493 and 5.66 quintals of tomato and okra, respectively, the farmers could
realize a net return of Rs 88,338/ha from tomato and Rs 39,440/ha from okra.
Being highly labour-intensive involving special operations such as
emasculation and hybridization, the commercial seed production generates
employment opportunities of around 415 women-days in both tomato and
okra CSP. With low coefficient of variation in the range of 8 per cent price
in okra to around 28 per cent for yield in tomato, the CSP could provide
income stability for the dryland farmers. Measured in terms of Gini’s
coefficient of income equality, the CSP of tomato and okra with a value of
0.22 and 0.24 has proved to improve income distribution across the group.
By adopting a combination of two plots of tomato, one during kharif and
one during rabi, with one plot of okra in kharif, CSP could fetch the
highest net return of Rs 33,859/ha. The presence of surrogate water market
and dwindling groundwater in the region highlight the urgent need for a
policy and action points for safeguarding the social and environment
issues in the highly beneficial CSP of tomato and okra.

Section of Economics and Statistics, Indian Institute of Horticultural Research,

Hessaraghatta, Bangalore 560 089. e-mail : [email protected]
The authors thank the referee for providing helpful suggestions.
252 Agricultural Economics Research Review Vol. 19 July-December 2006

Introduction
Despite being the world’s second largest producer of vegetables, India
lags far behind in their productivity in comparison to that in developed
countries (Sharma and Pandey, 2003; Verma et al., 2002). Increased
availability and adoption of improved varieties or hybrids have been recognized
as a plausible solution for enhancing the productivity levels of vegetables.
Commensurate with this view, there has been an increasing trend in the
adoption of hybrid seed technology in vegetables like tomato (40 %), cabbage
(68.6%), brinjal (82%) and Okra (10 %) during the past two decades. This
technology, though capital- and labour-intensive, has increased the profitability
of farmers through enhanced productivity. But, the increased adoption also
warrants increased availability of hybrid seeds to the farmers. Seed production
in vegetables, especially of hybrids, though a specialized skilled activity, was
transformed into a commercial economic activity by the private seed
companies way back in the late-1970s and was largely undertaken on the
farmers’ fields. This could be considered a spill over effect of technological
advancement in view of the agro-climatic suitability of a specific area,
besides availability of other factor endowments. The commercial (on-farm)
seed production in vegetables undertaken in India not only meets much of
the requirement of domestic demand but also fetches foreign exchange for
the country, and thus adds substantially to the economic development of the
farm families.
Commercial seed production in vegetables is gaining popularity with the
farmers and private seed companies, as it is undertaken mainly in dry areas
for want of suitable agro-climatic conditions for increased seed set. This
forms an important economic activity for all those farm families who otherwise
have dwindling income from dryland farming due to recurrent drought
conditions. Besides providing additional income and employment generation,
the commercial hybrid seed production or seed multiplication has several
other impacts that need careful evaluation. There has not been any attempt
so far at assessing the economic impact of the commercial (on-farm)
production of vegetable seeds in a holistic manner. Hence, this study was
undertaken with the specific objectives of (i) assessing the economic impact
of Commercial Seed Production (CSP) in vegetables like tomato and okra
on farm income and employment, and (ii) evaluating the socio-economic
implications on stability, equity, farm welfare and environment.

Materials and Methods

Study Area and Data Collection
‘Ranebennur’ in Karnataka state is a globally known ‘Seed Production
/ Multiplication Centre’, where a number of seed companies in the private
 Sudha et al.: Economic Impact of Commercial Hybrid Seed Production 253

Table 1. Details of selected farmers of CSP

Sl No. Particulars Sample farmers
1 Tomato 25 (35.7)
2 Okra 16 (22.9)
3 Tomato and okra 29 (41.4)
Total 70 (100.0)
Percentage of farmers for different companies : Mahyco: 27 (Tomato), 46 (Okra);
Namdhari: 24 (Tomato) , 24.3 (Okra); Numhems : 33 (Tomato) 24 (Okra); IAH : 15
(Tomato) 4 (Okra)
Figures within the parentheses are percentages to total

and public sectors have been undertaking CSP / multiplication in vegetables

since long. Haveri and Gadag districts in the state of Karnataka being the
representative regions for tomato and okra seed production, were purposively
selected as the study area1 . Based on the popularity and accessibility to the
commercial seed companies, four companies, viz., Mahyco, Namdhari,
Nunhems and Indo-American Hybrid Seeds (IAHS) were approached and
with their cooperation, a total of 70 farmers were contacted for collecting
data on costs, returns and profits from commercial (on-farm) seed production
in tomato and okra for the agricultural year 2003-04. The details of
classification of the selected farmers are given in Table 1.

Analytical Framework
The studies so far have evaluated the impact of technology on income
and employment generation from the angle of adoption of new varieties and
not from the view point of stability, equity and sustainability (Sudha and
Subrahmanyam, 1993 and Subrahmanyam and Sudha, 1997). Hence, efforts
have been made in this study to assess the economic impact at the level of
both individual farmer and group /aggregate level.

Individual Farmer level

(i) Income from the specified activity vs income from the other farm activities
Haveri and Gadag districts in Karnataka state fall under the Transitional
Dry zones with an average rainfall of less than 700 mm / annum. These dry
hot belts are ideally suited for seed multiplication in a number of crops,
especially vegetables. The cropping pattern in these areas is one of typically
rainfed farming, based mainly on the kharif crops, including cotton, bajra,

1
The CSP has changed substantially and regional specializations for specific crops
have emerged over the years.
254 Agricultural Economics Research Review Vol. 19 July-December 2006

maize, jowar, groundnut and sunflower, fetching the farmers an average net
income of Rs 7443 / ha, when the rainfall is normal. During the years of
sub-optimal rainfall (like the ones experienced during the kharif seasons in
2001 to 2003,) much of the area is left fallow. Under such circumstances,
allocation of a small proportion of farm area (around 25 %) towards
commercial seed production of vegetables provides an income-security to
the farmer, as the activity is regular and is undertaken year after year in the
region. Therefore, to assess income effect of CSP, the income from CSP
was compared with that from the other crops regularly grown in the region.
(ii) Employment generated from the adoption of specific activity
Unlike regular crop production, the CSP includes special operations
such as emasculation, hybridization, harvesting and cleaning of seed, which
require additional labour. Since most of these operations are performed
mainly by the farm women, CSP not only generates additional employment
opportunities but also provides employment security to the women.
(iii) Farmers’ perception of welfare accrued to the farm family
The impact on family welfare has been assessed through the farmers’
perception on the income enhancement, increased socio-economic status
and family welfare
Group of Selected Farmers: The impact of technology adoption has been
assessed on enhancing the economic stability and improving the equity in
income distribution at the group level and the impact on the environment.

Methods of Analysis
Besides simple tabular analysis and percentages involving the cost of
cultivation, profitability and benefit cost ratios, coefficient of variation (CV)2
and the Gini’s coefficient of income distribution and Lorenz curves were
used for analyzing the data.

2
CV = (Standard Deviation / Mean) × 100
Mean
—
X = (Σ Xi)/n
where,
n = Number of observations, Xi = The ith observation
Standard Deviation

,
where,
n— = Number of observations, Xi = The ith observation.
X = Mean of the observations (weighted average was taken)
 Sudha et al.: Economic Impact of Commercial Hybrid Seed Production 255

Gini’s Coefficient (G)

The Gini’s coefficient of inequality measures the area below the diagonal
of the perfect inequality to the Lorenz curve as a proportion of the total
triangular area, represented by a line of perfect equality. The Gini’s index of
inequality ranges between 0 and 1. Gini’s Coefficient of ‘0’ represents perfect
equality, while ‘1’ represents greater inequality. It is represented by Eq. (1):

…(1)

where, σX and σY are cumulative percentages of X’s (farmers) and Y’s

(income) (in fractions) and N is the number of elements (observations).

Index of Dissimilarity
The index of dissimilarity (ID) is given by Eq. (2):

…(2)

Lorenz Curve
It is a graphic representation of the degree of income inequality. Plotting
cumulative income and cumulative population on a graph generates the Lorenz
curve. If the income were to be equally distributed, the Lorenz curve would
be a 45 degree line, while an unequal distribution of income would generate
a curve below this line. The greater equality is associated with the
convergence of Lorenz curve with the diagonal.

Results and Discussion

Some Salient features of Commercial (on-farm) Seed Production
Commercial (on-farm) seed production in vegetables could be traced
back to the late-1970s, when contract farming was brought into India3 .
Normally, the public or private seed companies enter into a written/oral
contract with farmers individually for the production and supply of seed at a
prefixed rate4 . The supply of inputs besides the seeds (breeders or foundation

3
Indo-American Hybrid Seeds was the first private company to initiate on-farm
production of tomato hybrid seeds in Karnataka during the late-1970s. It was the
seed multiplication in maize by Hindustan Lever Ltd., which introduced contract
farming into India.
4
National Seeds Corporation (NSC) used to undertake the seed multiplication for
most of the cereals and some vegetables on contract basis.
256 Agricultural Economics Research Review Vol. 19 July-December 2006

seeds) is optional in the contract5 . Technical guidance for crop cultivation,

special operations such as emasculation, pollination and hybridization,
harvesting and processing are provided to the farmers through regular field
visits by the trained supervisors.
Generally, the seed companies allot a specific area for seed production,
such as one acre in case of tomato and or 1.25 acres in case of okra (which
is called a ‘plot’) and provide the requisite number of seedlings (normally 25
day-old) of both the parents for maintaining the plant population for
hybridization and seed production.
The seed or seedlings are charged along with a service charge for
supervision, seed testing, etc. One plot per person per crop is a norm, keeping
in view the additional labour and capital needs as the entire process of
cultivation, processing and seed testing takes around eight months for the
grower to receive the total emoluments.

Economic Impact of Commercial Hybrid Seed Production in

Tomato and Okra
The Impact of CSP on Income
The costs, returns and profits from hybrid seed production in tomato
and okra have been presented in Table 2.
Tomato: On an average the cost of cultivation of tomato hybrid seed
production worked out to be Rs 49,775/ha. The material inputs such as
seed/seedlings, FYM, fertilizers and pesticides, special operations such as
staking, etc. worked out to be Rs 23,576 accounting, for 47.37 per cent of
the total cost of seed production. Expenditure on labour(hired) was found
as Rs 17793, accounting for 35.75 per cent of the total costs. The imputed
value of family labour worked out to be 6 per cent of the total operational
costs.
Though, kharif was the most preferred season for seed multiplication
in most of the crops, in the case of tomato, it was possible to take up two
crops (both kharif and rabi) in a year. Growers realized a seed yield of
around 0.50 quintal in tomato and a gross income of Rs 1,38,118 /ha with an
average price of Rs 2,80,159/q of seed, thereby fetching the growers a net
realization of Rs 88,343 / ha per season. The BCR worked out to be 2.72.
Okra: The hybrid seed production in okra is normally undertaken on an
average area of around 0.44 ha. The cost of production for okra seed worked
out to be Rs 38,548/ha with material inputs such as seed/seedlings, manures,
fertilizers and pesticides accounting for about 42.31 per cent of this total.
The hiring of labour involved Rs 14,356, accounting for 37.24 per cent of
5
In the case of contract production of tomato by Pepsi in Punjab also, the seed
cost is collected from the farmers.
 Sudha et al.: Economic Impact of Commercial Hybrid Seed Production 257

Table 2. Costs, returns and profits from commercial hybrid seed production in
tomato and okra
(Per ha)
Particulars Tomato Okra
. Quantity Value (Rs) Quantity Value (Rs)
A. Material input cost ( paid out)
Seed / Seedlings 865 1111
FYM (tonnes) 4.41 2003 5.97 1951
Stakes (No.) 7298.9 6486 - -
Thread / wire (kg) 17.09 635 7.66 242
Fertilizers, kg
N 101.39 107.53
P 138.4 4961 139.7 7804
K 136.1 137.3
Pesticides (Qty- No. of sprays) 17 8195 15.94 4739
Electricity charges (Rs/crop/season) 431 462
Sub Total 23576 16309
(47.37) (42.31)
B. Labour (mandays)
Hired labour 382.18 17209 296.77 13876
Bullock power 584 480
Sub-total 17793 14356
(35.75) (37.24)
C. Interest on working capital (10% pa) 4137 3066
D. Total variable cost (A+B+C) 45506 33731
(91.42) (87.50)
E. Fixed costs* 1209 1074
(2.43) (2.78)
Sub-total (D+E) 46715 34805
(93.85) (90.29)
F. Imputed value of owned labour 79.36 3060 101.38 3743
(6.15) (9.71)
G. Total cost of cultivation (E+ F) 49775 38548
(100.00) (100.00)
H. Yield (q) 0.493 5.66
I. Price (Rs / q) 280159 13780
J. Gross return (Rs) 138118 77995
K. Net return (Rs) (J-G) 88343 39447
L. Family labour income (J- (D+E)) 91403 43190
M. Own farm business income (J- D) 92612 44264
Benefit-cost ratio 2.77 2.02
*Includes rental value of land,
Note: Figures within parentheses indicate percentages to total cost of cultivation.
Area and sample size: Tomato: Byadagi, Ranebennur and Shirahatti, 54 growers;
Okra: Byadagi, Ranebennur, Shirahatti and Mundragi, 41 growers
258 Agricultural Economics Research Review Vol. 19 July-December 2006

the total cultivation expenses. The growers realized the seed yield up to
5.66q and price of Rs 13780/q, resulting in a gross return of Rs 77,995 and
a net profit of Rs 39,447 with a BCR of 2.02.

Income from Other Crops

The income effect of CSP in tomato and okra in the Haveri region has
been depicted in Table 3(a & b). Different crop combinations and crop

Table 3. Income effect of CSP in tomato and okra

Crop combinations Average Average Average B:C
cropped expenditure net ratio
area (Rs/ha) returns
per farm (Rs/ha)
(ha)
(a) Tomato
Maize (55%); Cotton (45%) 1.46 10,000 5,730 1.57
Maize (47%); Cotton (39.3%); 1.70 20,472 19,409 1.95
Hyb. tomato (SP) 13.7%
Additional area / returns 0.24 13,679
Cotton (50%); Jowar (50%) 0.32 13,250 9,150 1.69
Cotton (40%); Jowar (40%); 0.40 30,960 25,960 2.19
Hyb. tomato (SP) (20%)
Additional area / returns 0.08 16,810
(b) Okra
Sunflower (60 %), 0.33 9,700 2,337 1.24
Groundnut (20 %),
Hyb. maize (20 %)
Sunflower (50 %), 0.40 14,797 14,077 1.95
Ground nut (16.66 % ),
Hyb. maize, (16.66 %)
Okra SP (16.66 %)
Additional area / returns 0.07 11740
Bajra (50% ), 0.35 8,625 2,562 1.29
Sunflower (25 %)
Groundnut (25 %)
Bajra (44.5%), 0.40 12,954 8,240 1.63
Sunflower (22.2 % ),
Groundnut (22.2 %),
Okra SP (11.1 % )
Additional area / returns 0.05 5677
 Sudha et al.: Economic Impact of Commercial Hybrid Seed Production 259

sequences normally followed in the region along with the costs and returns
have been compared with those from the CSP. In the tomato CSP region,
cotton was the most important kharif crop. Besides, maize (hybrid), jowar,
bajra among the cereals and cabbage and chilli among the vegetables were
widely grown during the season. The cotton and maize crop sequence
fetched a net return of Rs 5730/ha, while the allocation of around 13.7 per
cent of the cropped area to CSP of tomato, could fetch to the farmers an
additional net gain of Rs13,679/ha, nearly 2.3-times more than that without
CSP. Similarly, the net realization from allocating around 20 per cent of the
area to CSP of tomato could add Rs 16,810/ha to that from the crop
combination of cotton and jowar grown during the kharif season. The BCR
also has increased from 1.69 to 2.19 with CSP of tomato.
Similar was the case for okra seed production. In the Gadag taluk,
which was the most popular location for CSP of okra, the general cropping
pattern included sunflower, groundnut and hybrid maize. The income effect
due to CSP in okra has been shown in Table 3 (b). By allotting around 21
per cent of the farm area to CSP in okra, the growers could more than
double their net gain per hectare. The cropping intensity in all the cases with
CSP in okra increased.

Employment Generation
The second significant impact of CSP in vegetables at the individual
farm level was the employment generation potential. The CSP of hybrids is
highly labour-intensive as it involves the manual emasculation and
hybridization, besides the other regular crop production activities. On an
average, eight women were employed for over a month during the crossing
period in tomato and okra, besides other operations such as staking, tying
thread, etc. The crossing operation was a highly specialized job and was
found highly successful when performed by woman/young girls during the
early morning hours. The wage rates were also higher at Rs 40/day for this
operation in comparison to Rs 30/day for the regular operations like weeding,
sowing, etc. Also, since it is a typically rainfed area, the other commercial
crops were ragi, maize, cotton requiring less labour (Table 4).
Tomato: Employment for a total of 104 man-days and 417 woman-days
was generated from CSP of hybrid tomato. The emasculation and
hybridization operations alone generated an additional employment of 275
woman-days per ha. The harvesting and cleaning of hybrid seeds also
required more time and attention and hence was done mainly by women.
Nearly around 74 additional woman-days of employment was generated
from this operation alone. The wage bill for emasculation and hybridization
 260

Table 4. Employment generation from hybrid seed production in tomato and okra
Sl Operations Tomato Okra
No. Own Hired Cost Own Hired Cost
M F M F (Rs) M F M F (Rs)
1 All operations 45.39 10.30 55.75 67.54 5972.05 57.88 21.44 18.13 69.06 4955.03

2 Emasculation and hybridization 5.48 21.30 11.34 275.48 10976.05 6.67 11.56 1.44 257.22 9691.10

3 Harvesting, cleaning and packing 3.56 5.78 37.12 73.90 3321.64 7.61 10.84 2.39 85.94 2973.14

4 Total 54.43 37.38 104.21 416.92 20269.74 72.16 43.84 21.96 412.22 17619.27

M=Man-days , F= woman-days
Agricultural Economics Research Review Vol. 19 July-December 2006
 Sudha et al.: Economic Impact of Commercial Hybrid Seed Production 261

accounted for more than 54 per cent of the total cost of labour for all
operations. A comparison of labour-use for CSP and commercial crop
production in tomato has indicated (Sudha and Subrahmanyam, 1993) that
the CSP of tomato required more than double labour than that in commercial
vegetable cultivation.
Okra: The employment generation in CSP of okra was of around 412
woman-days. The emasculation and hybridization operation alone accounted
for over 257 woman-days, which was nearly 47 per cent of the total labour
employed in the okra CSP. Similar to tomato CSP, the emasculation and
hybridization operations in okra CSP also were performed by women, thereby
generating additional women employment. The total wage bill in the case of
okra CSP was around Rs17619, which was around 46 per cent of the total
cultivation expenditure.

Family welfare
The farmers who were involved in CSP of tomato and okra opined that
the technology had provided them income as well as employment security.
Most of the growers were involved in the programme for more than ten
years with one company or the other. The impact of the CSP on the welfare
of the growers included:
(i) Reinvestment into agriculture, such as purchase of additional land,
(ii) Procurement / acquisition or construction of dwelling house,
(iii) Higher education for children,
(iv) Better health facilities for the family and better standard of living for
their children.
Based on the responses of the growers, irrespective of the crop, it
could be inferred from Table 5 that income effect was the most significant
reason for the growers opting for CSP. Family welfare ranked the second
important reason with reinvestment into agriculture, followed by the marriage
of their wards as the most important attributes of the family welfare.
Repayment of loans was the third in the order of preference of majority of
the growers.

Impact at Aggregate Level

Stability in Income
The commercial (on-farm) seed production in tomato and okra were
considered to be more stable income-generating activities in comparison to
other farm production activities. It was because of high dependency on the
262 Agricultural Economics Research Review Vol. 19 July-December 2006

Table 5. Socio-economic impact

Reasons Per cent to total
A. Impact on social status
• Acquired membership in a society 20
• Won awards (best producer) 1
B. Impact on household income
Total income increased up to 25 % 93
• Bought new household items 7
• Able to buy better food /clothing / jewellery 7
• Able to perform social functions 13
C. Impact on family welfare
• Bought additional land for the household 52
• Performed child’s marriage 23
• Sent son /daughter for higher education 11
• Health improvement 11
D. Impact on creditworthiness
• Able to repay loans 32
Note: n=70
rainfed farming in the study area, with the main focus on kharif-based
cropping pattern6 . Table 6 presents the coefficient of variation (CV) in
yield, price and net income of different crops popularly grown along with
those from CSP of tomato and okra. The CV for the net income from CSP
tomato was the lowest at 40.97 as compared to that of okra, cotton, onion,
hybrid maize or jowar, reflecting the wide popularity of CSP of tomato in
the region
The variability in yield and price realization was higher in the popularly
grown kharif crops like maize and jowar and hence there was higher
variability in income as well. Although the net gain from dryland crops like
hybrid maize and jowar was lower and the price and income variability
were much higher compared to those from the CSP of tomato and okra.
The farmers cultivated these crops to meet their domestic food and fodder
requirements. In the case of other crops of the region, viz. cotton and onion,
it could be seen that the yield variability was lower than that of CSP crops,
but the variability in price or net returns was much higher than that of CSP
crops. Hence, adoption of CSP of tomato or okra at least in one season was
highly preferred as it provided the farmers stability and security of income.

6
Discussions with farmers in the study area indicated that due to the failure of
monsoon in two consecutive years, the production of regular kharif crops of the
region, viz. Cotton, maize (hybrid) and jowar was reduced substantially and the
farmers were totally dependent on the vegetable hybrid seed production.
 Sudha et al.: Economic Impact of Commercial Hybrid Seed Production 263

Table 6. Variability and income stability of CSP of tomato and okra

Name of the crop Coefficient of variation in
Yield (q/ha) Price (Rs/q) Net return (Rs/ha)
Mean CV, % Mean CV, % Mean CV, %
Tomato CSP 0.49 28.47 2801 37.99 88338 40.97
Okra CSP 5.66 34.99 13780 8.39 39065 72.17
Cotton 12.12 27.13 3491 52.01 10218 53.36
Hybrid maize 9.18 40.54 790 49.75 -522 -435.93
Jowar 16.06 49.16 773 98.01 1484 171.82
Onion 59.20 29.02 533 8.50 5385 200.88

Between CSP of tomato and okra, the income variability was lower for
tomato, which justified its preference by growers. Though the variability in
price realization was much lower in the case of CSP of okra, the higher
variation in yield realized was causing greater variability in the net income
from CSP of okra. The fact that tomato can be grown in both kharif and
rabi seasons and the net gain was higher justified the popularity of tomato
CSP in this region.

Equity in Income Distribution

Hybrid seed productions in tomato and okra were helping the farmers
by reducing the inequality in income distribution across a group of growers.
The estimation of Lorenz curve and Gini’s coefficient of income equality
indicated that the income distribution from seed production is more equitable

OKRA

Fig. 1. Income distribution pattern of tomato seed production, okra seed production
and commercial production of other crops
264 Agricultural Economics Research Review Vol. 19 July-December 2006

compared to that from other commercial crops. Nearly uniform price and
uniform area allocation could be the important reasons for higher equitable
income distribution. Frequent failures of monsoons, leading to persistent
drought conditions, could be the reasons for low and highly fluctuating yields
of most of the crops grown in the region, causing wide variation in income
as well. The Gini’s coefficient of equity worked out to be 0.22 in tomato and
0.24 in okra compared to 0.45 for other crops, indicating the more equitable
distribution of income from CSP.

Income Maximization Strategy

The CSP of tomato and okra provided the income security to the farmers
in the Haveri-Gadag region. It was equally important for the vegetable seed
companies from the point of ideal weather for seed production. Since a
number of private seed companies have been operating their CSP of tomato
and okra in this region, there was a competition between the companies to
attract and retain farmers. While the companies aimed at an assured clientele,
farmers tried to maximize the net gain from the CSP. As a result, new
models of CSP with a combination of crops have emerged to satisfy the
needs of both the farmers and the companies. One of the most popular ones
was the production of tomato CSP for two seasons along with one season
of okra CSP. The returns were maximum in this model at Rs 90,769 /ha as
compared to all other combinations. Hence, this was the most preferred
model with a number of growers opting for it (Table 7).

Negative Impact of CSP in Tomato and Okra

Although the CSP in vegetables like tomato and okra have largely helped
the farmers in realizing higher remuneration and increased employment
opportunities, the continued CSP in one region was found to have some
negative impacts also.

Over-exploitation of Groundwater
The most serious negative impact of CSP was the increasing exploitation
of groundwater. Since CSP was the most significant contributor to the
average annual income of the households in the otherwise dry region, the
farmers tried to have at least one ‘plot’ of CSP in tomato or okra. Therefore,
there was a rush for digging bore-wells. On an average, each of the farmers
had sunk 6 to 7 bore-wells during the past five years, involving an average
expenditure of over Rs 75,000 per well, with hardly one or two in the working
condition. This was considered inevitable, both from the point of keeping
the contract with the seed company alive and to have some assured income
Table 7. Income maximization modules with CSP in tomato and okra
Crop combinations Average cropped Percentage area Average expenditure Average net B:C
area per farm allotted for (Rs/ha) returns ratio
(ha) different crops (Rs/ha)
Maize; Cotton; 1.70 47 % (Maize), 20,472 19,409 1.95
Hyb. tomato (SP) 39.3 % (Cotton),
13.7 % (Tomato SP)
Sunflower; Groundnut; 0.40 50 % (Sunflower) 14,797 14,077 1.95
Hyb. maize; Okra (SP) 16.66 % (Groundnut)
16.66 % (Hyb. maize)
16.66 % (okra SP)
Bajra; Cotton; 4.95 30 % (Bajra) 19,299 33,859 1.75
Hybrid maize 14% (Cotton)
Finger millet / Paddy/ 10% (Hybrid maize)
Savi /Onion and Garlic 18% (Onion, garlic)
Hyb. tomato (SP) (K&R); 28% (Tomato & okra SP)
Okra (SP) (K)
Sudha et al.: Economic Impact of Commercial Hybrid Seed Production 265
266 Agricultural Economics Research Review Vol. 19 July-December 2006

against the erratic monsoon. As a result, the number of bore-wells had

largely increased, though the net area irrigated did not increase in the same
proportion as the standard distance between bore wells might not have
been maintained while digging new wells.
It was verified by the taluk-wise data on increase in the number of
bore-wells over the years (Table 8). Between 1985 and 2004, the number
of bore-wells in the Gadag taluk had increased from 10 to 122, registering a
12-times increase, while it increased from 521 to 3618 in Haveri, a 36-times
increase. It was of significance to note that though the net irrigated area
registered a commensurate increase, it was negative in Haveri from 1994-
95 on wards. Despite the increased number of bore-wells in the region, the
net irrigated area has been falling, indicating the increase in failure of bores,
strengthening the argument of over-exploitation of the groundwater due to
CSP, especially in Haveri.

Existence of Exploitative Land and Water Markets

A surrogate water market was in operation in this region, with growers
purchasing water at high prices. Leasing-in of land including water charges
for agreement of sharecropping was a common feature in this region. On

Table 8. Changing pattern of bore-wells and net irrigated area in Gadag and Haveri
taluks, Karnataka
Year No. of Change over NIA Change over
bore-wells previous (ha) previous
period, % period, %
Gadag taluk
1985-86 10 0.0 17 0.0
1990-91 70 600.0 160 841.2
1994-95 82 17.1 955 496.9
2000-01 82 0.0 1100 15.2
2003-04 122 48.8 2068 88.0

Haveri Taluk
1985-86 521 0.0 999 0.0
1990-91 964 85.0 2931 193.4
1994-95 1453 50.7 7655 161.2
2000-01 1944 33.8 6328 -17.3
2003-04 3618 86.1 5802 -8.3
NIA = Net irrigated area (ha)
Source: Annual Season and Crop Statistics Report, Directorate of Economics and
Statistics, Karnataka.
 Sudha et al.: Economic Impact of Commercial Hybrid Seed Production 267

an average, Rs 2750 were the leasing-in charges per acre/annum. In return

to the water provided, one- fourth of the profits were given as a share. On
an average, over 20 per cent of the selected farmers were leasing-in land
and water for meeting the contractual commitments with the seed companies
and this number was on the increase over the years.

Conclusions and Policy Suggestions

The Commercial Seed Production (CSP) of tomato and okra has been
found to be highly profitable, by providing a net income of around Rs. 88338/
ha and Rs 39065 /ha, respectively and a total of around 461 and 398 human-
days of employment, respectively, to the farmers from dryland farming regions
of Haveri and Gadag districts of Karnataka state. Besides the income and
employment generation, CSP of tomato and Okra has also enhanced the
family welfare through increased income to the family, helping the farmers
to reinvest into agriculture, providing better living and health conditions to
the family and attaining better status in the society.
At the aggregate level, CSP of tomato and Okra has provided higher
income stability in terms of lower coefficient of variation in yield, price and
hence income compared to those in the regular dryland crops of the region
such as onion, cotton, maize and jowar.
The CSP of tomato and okra has helped reduce the inequality in income
distribution more across the farm families as compared to that from the
other crops. The Gini’s coefficient has also been found lower at 0.28 for
CSP compared to other crops. The CSP has provided an opportunity to the
growers to derive income maximizing strategies by choosing an optimal
combination of CSP of tomato and okra along with other crops.
The success of CSP may be attributed to the symbiotic relation that
exists between the growers and the private seed companies. While the
seed companies meet their domestic and export need of vegetable hybrid
seeds, the farmers realize higher returns and assured employment
opportunities. The symbiotic relationship also extends further as the private
seed companies recognize their efficiency and honour the growers who
obtain the highest seed yield, while the growers organize group meetings to
appreciate the efforts of the participating companies.

Policy Implications
There is an urgent need to evolve a national seed production policy that
provides guidelines to safeguard environmental and community issues in
268 Agricultural Economics Research Review Vol. 19 July-December 2006

commercial seed production programmes involving public-private

partnerships. These should include:
• Stringent guidelines and effective watch on the over-exploitation of
groundwater and the efforts and incentives for recharging the same.
• Policy guidelines that enforce a commitment for the seed companies to
undertake infrastructure development and social welfare programmes
for the community where the seed production is undertaken.

Acknowledgements
The authors are grateful to the ICAR for providing funds for this research
work, under the Ad-hoc Scheme entitled, ‘Assessing the economic impact
of selected vegetable technologies on farm income, employment and
welfare’, and the Director, IIHR, Bangalore for permitting the work to be
carried out. The authors are grateful to the anonymous referee for providing
valuable comments. The authors also acknowledge the comments and
suggestions offered by Dr Mruthyunjaya, National Director, NAIP, which
helped in improving the research work and Dr Deshpande and Mr Basava
Raju, of Mayhco for their cooperation in data collection. The assistance
provided by Smt. C.N. Komala and Mr Kusha Bittira Ullasa, SRFs in the
Scheme is also acknowledged.

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