A cotton farmer in Kurnool

Swapna, a small farmer in Kurnool (Andhra Pradesh) grows cotton on her small piece of land. The bolls of the cotton plant are ripe and some have already burst, so Swapna is busy picking cotton. The bolls, which carry the cotton in them, do not burst open all at once so it takes several days to harvest the cotton.

Once the cotton is collected, instead of selling it at Kurnool cotton market, Swapna and her husband take the harvest to the local trader. At the beginning of the cropping season, Swapna had borrowed ₹ 2,500 from the trader at a very high interest rate to buy seeds, fertilisers, pesticides for cultivation. At that time, the local trader made Swapna agree to another condition. He made her promise to sell all her cotton to him.

Cultivation of cotton requires high levels of inputs such as fertilisers and pesticides and the farmers have to incur heavy expenses on account of these. Most often, the small farmers need to borrow money to meet these expenses.

At the trader’s yard, two of his men weigh the bags of cotton. At a price of ₹ 1,500 per quintal, the cotton fetches ₹ 6,000. The trader deducts ₹ 3,000 for repayment of loan and interest and pays Swapna ₹ 3,000.

Swapna: ₹ 3,000 only!

Trader: Cotton is selling cheap. There is a lot of cotton in the market.

Swapna: I have toiled so hard for four months to grow this cotton. You can see how fine and clean the cotton is this time. I had hoped to get a much better price.

Trader: Amma, I am giving you a good price. Other traders are not even paying this much. You can check at the Kurnool market, if you do not believe me.

Swapna: Don’t be angry. How can I doubt you? I had only hoped that we would earn enough from the cotton crop to last us a few months.

Though Swapna knows that cotton will sell for at least ₹ 1,800 per quintal, she doesn’t argue further. The trader is a powerful man in the village and the farmers have to depend on him for loans not only for cultivation, but also to meet other exigencies such as illnesses, children’s school fees. Also, there are times in the year when there is no work and no income for the farmers, so borrowing money is the only means of survival.

Swapna’s earning from cotton cultivation is barely more than what she might have earned as a wage labourer.

The cloth market of Erode

Erode’s bi-weekly cloth market in Tamil Nadu is one of the largest cloth markets in the world. A large variety of cloth is sold in this market. Cloth that is made by weavers in the villages around is also brought here for sale. Around the market are offices of cloth merchants who buy this cloth. Other traders from many south Indian towns also come and purchase cloth in this market.

On market days, you would also find weavers bringing cloth that has been made on order from the merchant. These merchants supply cloth on order to garment manufacturers and exporters around the country. They purchase the yarn and give instructions to the weavers about the kind of cloth that is to be made. In the following example, we can see how this is done.

Putting-out system– weavers producing cloth at home

The merchant distributes work among the weavers based on the orders he has received for cloth. The weavers get the yarn from the merchant and supply him the cloth. For the weavers, this arrangement seemingly has two advantages. The weavers do not have to spend their money on purchase of yarn. Also, the problem of selling the finished cloth is taken care of. Weavers know from the outset what cloth they should make and how much of it is to be woven.

However, this dependence on the merchants both for raw materials and markets means that the merchants have a lot of power. They give orders for what is to be made and they pay a very low price for making the cloth. The weavers have no way of knowing who they are making the cloth for or at what price it will be sold. At the cloth market, the merchants sell the cloth to the garment factories. In this way, the market works more in favour of the merchants.

Weavers invest all their savings or borrow money at high interest rates to buy looms. Each loom costs ₹ 20,000, so a small weaver with two looms has to invest ₹ 40,000. The work on these looms cannot be done alone. The weaver and another adult member of his family work upto 12 hours a day to produce cloth. For all this work, they earn about
₹ 3,500 per month.

The arrangement between the merchant and the weavers is an example of putting-out system, whereby the merchant supplies the raw material and receives the finished product. It is prevalent in the weaving industry in most regions of India.

The garment exporting factory near Delhi

The Erode merchant supplies the cotton cloth produced by the weavers to a garment exporting factory near Delhi. The garment exporting factory will use the cloth to make shirts. The shirts will be exported to foreign buyers. Among the foreign buyers are businesspersons from the US and Europe who run a chain of stores. These large stores do business strictly on their own terms. They demand the lowest prices from the supplier. In addition, they set high standards for quality of production and timely delivery. Any defects or delay in delivery is dealt with strictly. So, the exporter tries his best to meet the conditions set by these powerful buyers.

Faced with such pressures from the buyers, the garment exporting factories, in turn, try to cut costs. They get the maximum work out of the workers at the lowest possible wages. This way they can maximise their own profits and also supply the garments to foreign buyers at a cheap price.

The Impex garment factory has 70 workers. Most of them are women. Most of these workers are employed on a temporary basis. This means that whenever the employer feels that a worker is not needed, the worker can be asked to leave. Workers’ wages are fixed according to their skills. The highest paid among the workers are the tailors who get about ₹ 3,000 per month. Women are employed as helpers for thread cutting, buttoning, ironing and packaging. These jobs have the lowest wages.

The shirt in the United States

A number of shirts are on display at a large clothes shop in the United States, and are priced at $26. That is, each shirt sells for $26 or around ₹ 1,800.

Use the diagram shown in the margin to fill in the blanks below.

The businessperson purchased the shirts from the garment exporter in Delhi for ₹ _______ per shirt. He then spent ₹ _______ for advertising in the media, and another ₹ _______ per shirt on storage, display and all other charges. Thus, the cost to this person is ₹ 900 while he sells the shirt for ₹ 1,800.
₹ __________ is his profit on one shirt! If he is able to sell a large number of shirts, his profit will be higher.

The garment exporter sold the shirt at ₹ 300 per piece. The cloth and other raw materials cost him
` 100 per shirt. The workers’ wages cost another
₹ 25 per shirt. The cost of running his office came to ₹ 25 per shirt. Can you calculate the profit per shirt for the garment exporter?

Who are the gainers in the market?

A chain of markets links the producer of cotton to the buyer at the supermarket. Buying and selling takes place at every step in the chain. Let us recall who were the people who were involved in this process of buying and selling. Did they all gain as much? There were people who made profits in the market and there were some who did not gain as much from this buying and selling. Despite their having toiled very hard, they earned little. Can you place them in the table shown here?

Market and equality

The foreign businessperson made huge profits in the market. Compared to this, the garment exporter made only moderate profits. On the other hand, the earnings of the workers at the garment export factory are barely enough to cover their day-to-day needs. Similarly, we saw the small cotton farmer and the weaver at Erode put in long hours of hard work. But they did not get a fair price in the market for what they produced. The merchants or traders are somewhere in between. Compared to the weavers, they have earned more but it is still much less than the exporter. Thus, not everyone gains equally in the market. Democracy is also about getting a fair wage in the market. Whether it is Kanta or Swapna, if families don’t earn enough how would they think of themselves as equal to others?

On one hand, the market offers people opportunities for work and to be able to sell things that they grow or produce. It could be the farmer selling cotton or the weaver producing cloth. On the other hand, it is usually the rich and the powerful that get the maximum earnings from the market. These are the people who have money and own the factories, the large shops, large land holdings, etc. The poor have to depend on the rich and the powerful for various things. They have to depend for loans (as in the case of Swapna, the small farmer), for raw materials and marketing of their goods (weavers in the putting out system), and most often for employment (workers at the garment factory). Because of this dependence, the poor are exploited in the market. There are ways to overcome these such as forming cooperatives of producers and ensuring that laws are followed strictly. In the last chapter, we will read about how one such fish-workers’
cooperative was started on the Tawa river.

1. What made Swapna sell the cotton to the trader instead of selling at the Kurnool cotton market?

2. Describe the conditions of employment as well as the wages of workers in the garment exporting factory. Do you think the workers get a fair deal?

3. Think of something common that we use. It could be sugar, tea, milk, pen, paper, pencil, etc. Discuss through what chain of markets this reaches you. Can you think of the people that help in the production or trade?

4. Arrange the statements given alongside in the correct order and then fill in the numbers in the cotton bolls accordingly. The first two have already been done for you.