Building resilience for cotton farmers in India: Evidence from Gujarat and Maharashtra

By Alejandro Guarín, Emma Blackmore, Vishal Pathak, Giulia Nicolini, José Morell-Ducós and Laura Kelly

Summary

India is the world’s largest cotton producer, accounting for nearly a quarter of global production. The cotton sector is crucial for India’s economy and supports the livelihoods of approximately six million farmers. However, climate change — specifically more frequent periods of extreme heat — poses a significant threat to the livelihoods of the smallholder farmers, especially women, who depend on this crop, and it is a critical risk to the global textile supply chain.

Crop insurance could help farmers manage the risks of an uncertain future. But there is room for improvement in its coverage, affordability and effectiveness. The links between crop insurance and other risk reduction and adaptation measures, including government programmes and community-led initiatives, could also be better understood.

This study draws on original data from the Indian states of Gujarat and Maharashtra to explore the vulnerabilities of cotton farmers, their perceptions of and responses to climate and other shocks, and the current and potential use of insurance as a risk management tool. Our hope is that insights derived from this report can inform risk-mitigating decisions by different actors in the cotton sector.

Data and methods

This report draws from three data sources: a literature review on crop insurance, a farmer survey, and focus group discussions (FGDs) with male and female farmers in Surendranagar (Gujarat). The study primarily focuses on farmers’ perceptions of their context and needs, rather than factual information about environmental shocks or insurance coverage.

The survey, conducted in September 2023, involved 360 cotton farmers equally split between Surendranagar district in Gujarat and Sambhaji Nagar district in Maharashtra. These districts were chosen for their cotton production, presence of the Self-Employed Women’s Association (SEWA), and contrasting characteristics in terms of average incomes and irrigation use. The sample was stratified to include equal numbers of SEWA members and non-members, with respondents randomly selected from farmer lists in villages across two blocks in each district. All respondents were women, evenly distributed across age groups (18–35, 35–45, and over 45). Most had little or no formal education, with only 20% having secondary education. Husbands were typically reported as the main earners, and about 70% of respondents had been farming for 11–30 years.

Key findings

Socioeconomic context and livelihoods

• Farmers are mostly landowners, with the majority of landholdings smaller than ten acres.
• There is some specialisation towards cotton farming in terms of area dedicated to cotton, but most farmers grow a wide variety of crops, including grain, spices and vegetables. Most keep livestock.
• Irrigation is prevalent in Gujarat, but much less common in Maharashtra.
• Households have mixed livelihood strategies, deriving income from farming but also some paid employment outside the farm.
• Income is seasonal, highest during harvest season (December to February) and lowest from April to June.
• Over half of survey respondents declared that income had somewhat or significantly increased, but the FGDs painted a somewhat more mixed picture.

Experience of climate change and its impacts

• Over the past five years, farmers have perceived higher average temperatures, lengthier dry spells and a greater number of days of extreme heat.
• For farmers, extreme weather events like erratic rainfall and heatwaves are becoming more frequent, occurring every one to three years.
• These changes have led to significant loss of crops. Half of the respondents reported major or complete losses as a result of drought and flooding.
• The impacts of these changes have affected women and men differently: men emphasised reduced incomes, while women spoke about broader challenges to the household and their livelihoods, including their children’s nutrition and education.

Coping and mitigation strategies

• The most common measures used to cope with climate and other shocks are: using savings, reducing household expenditures and taking loans.
• To mitigate — that is, prepare for and prevent — the effects of future shocks, farmers use on-farm strategies such as crop rotation, intercropping or planting trees, as well as economic measures including saving, purchasing insurance or paying off debt.

Uptake and awareness of insurance

• Uptake of life, health and livestock insurance is relatively infrequent, but use of crop insurance is slightly higher, especially in Maharashtra (corresponding to the government’s national crop insurance scheme, which is available in this state but not Gujarat).
• The main barriers to using insurance include lack of awareness of local schemes and unaffordability.
• There is mixed awareness of and use of the different government schemes.
• FGDs revealed confusion about what insurance products are available and who provides them. Farmers also voiced complaints about the burdensome processes for making claims and expressed lack of confidence in the ability of insurance to provide timely and fair compensation.

Recommendations

1. Businesses, donors and farmer organisations should work to improve awareness among small-scale farmers of coping mechanisms, including insurance and government schemes. There are several government programmes available to help farmers, but farmers are unclear on how to access them or what their benefits are, and they often have misperceptions that need to be addressed. The role of grassroots and other nongovernmental organisations should be enhanced and expanded.
2. Stakeholders in the supply chain, including businesses, insurance and finance providers, and farmer organisations, must co-design new ideas for insurance products. Available crop insurance products are insufficient and inadequate to help farmers. Technology can help overcome barriers like transaction costs, claims verification and payouts, but products must be co-designed with users to suit their particular needs and abilities. Some form of subsidisation is likely to be necessary to overcome affordability barriers.
3. Businesses, donors, governments and nongovernmental organisations should consider resilience building beyond insurance. Insurance is one of several tools for building resilience. Supporting community-based schemes like the SEWA Livelihood and Recovery Fund could help scale and sustain efforts that are already known and trusted by farmers. Other resilience-building mechanisms, including agroecological or water management practices, must also be considered.
4. Industry, advocacy groups and research institutions should think beyond the cotton sector and beyond India. The risks of climate change go well beyond the cotton supply chain, and affect farmers well beyond the study site. It is important to understand vulnerabilities in other populations and geographies, as a piecemeal approach is unlikely to reach the scale needed to make a difference.