Low cottonseed procurement price spawns child labour

Employment of adult labour to cost an additional Rs 7,970 per acre

Ch Prashanth Reddy / Hyderabad

An inalienable link has been established between the procurement price by seed companies including multinational enterprises and use of child labour in hybrid cottonseed production in Andhra Pradesh.

A study commissioned by the India Committee of the Netherlands, International Labor Rights Fund of USA and Eine Welt Netz NRW of Germany also holds that the low procurement price paid by the seed companies is responsible for farmers “evading India’s minimum wage laws”.

“Procurement price is an important contributing factor for large-scale employment of child labour in the cottonseed sector. Unless this issue is addressed, other interventions to address the problem of child labour in this sector will not be very effective,”director of Hyderabad-based Glocal Research and Consultancy Services Davuluri Venkateswarlu, and an agricultural economist of Oxford University’s St Antony’s College Lucia da Corta, who conducted the study, stated, adding that the contract farmers of the seed companies employ children, particularly girls, basically to minimise costs.

The study is based on the analysis of primary data collected through field visits and surveys in 38 sample villages spread over 10 mandals in the districts of Kurnool and Mahabubnagar in Andhra Pradesh. Incidentally, Andhra and Gujarat account for nearly 75 per cent of the total cottonseed production in the country.

As per the study, the cost of replacing children with adult labour in hybrid cottonseed production will be Rs 7,970 per acre. This additional amount raises the total cost of production by 12 per cent, that is Rs 37 per kilogram. And, if the official minimum wage of at least Rs 52 a day has to be paid to all the workers, the additional cost of production will be Rs 25,061 per acre and the cost of production per kg of cottonseed will increase by Rs 115.50.

The question now is who should shoulder the burden of this additional cost? Venkateswarlu and Lucia da Corta stated that with the current procurement prices of companies, “seed farmers cannot afford to pay the higher wages necessary to attract adult labour and still make reasonable profits.”

On the other hand, they pointed out that there was a vast difference in the procurement price and the market price of cottonseed.

As against the procurement price of Rs 293 per kg being paid for farmers, the seed companies were selling non-Bt cotton hybrids at Rs 1,055 per kg and Bt cotton hybrids at Rs 3,555 per kg. Hence, the seed companies would be able to make good profits even if they bear the cost for replacing child labour with adult labour.

Even if the entire additional burden is shifted to the seed companies, according to the study, their current profit margins will decline only by 1.3 per cent to 6.8 per cent depending on the type of hybrids. However, if the total additional cost is shifted on to the seed farmers, the decline in their profit margin will be as much as 64.9 per cent resulting in a net loss.

Given this scenario, the study points out that farmers would not be able to pay the official minimum wage, “which makes the seed companies responsible for evading India’s minimum wage laws”.

The Times of India, 4-12-2005 by: Neelam Raaj

European Commission cottons on child labour

NEW DELHI: Working 13 hours a day under the blazing sun for a measly Rs 25-30 a day is no child's play.

But that's what 100,000 children - of which over 60% are girls - have been doing at cottonseed farms in Andhra, says a report commissioned by the India Committee of the Netherlands (ICN), the International Labour Rights Fund and Eine Welt Netz NRW (OneWorld Net Germany). Titled 'The Price of Childhood', the report has been cited by Max van den Berg of the Party of European Socialists and vice-chair of the development committee in a written question to the European Commission. The question raises the issue of multinational companies fostering child labour by not paying Indian farmers who produce their cottonseed enough to hire adults.
Says Davuluri Venkateswarlu, a researcher who co-authored the report with Oxford University agricultural economist Lucia da Corta, "Our report has established the link between child labour and low procurement price paid by MNCs like Bayer, Monsanto and Syngenta as well as Indian firms like Nuziveedu, Raasi and Ankur Seeds. Unable to pay the local minimum wage of Rs 52 for an adult, farmers advance money to parents who are then bound to send their children to the fields." "The number of child labourers employed on cottonseed farms far exceeds those in the carpet, bangle or diamond-polishing industries," he adds. What's worse is that a majority are girls, points out Magsaysay Award winner Shanta Sinha whose MV Foundation works to eradicate child labour.
"They are primarily used for cross-pollination, a very labour-intensive task in which each individual bud has to be emasculated and pollinated by hand. The girls work like robots under the hot sun, they're paid less than the boys and keep falling sick from exposure to pesticides." The MNCs, on their part, say they have made efforts to discourage use of child labour by imposing penalties on errant farmers and conducting joint inspections with NGOs. But an irate Shanta Sinha, whose NGO withdrew from the Child Labour Eradication Group (CLEG) to protest against the non-implementation of the joint action plan chalked out in 2003, says the seed companies are merely putting up a front.
"The farmers were tipped off by the firms whenever monitoring visits were conducted. And while there has been a reduction in the number of child labourers, it is only because the number of acres under cultivation has come down. Come May, recruitment of kids will start again," she says. According to Davuluri, the seed companies acknowledge that there is child labour in their supply chain. "The problem is they deny that there is any relation between this and the price they pay to cottonseed farmers," he says.

India Committee of the Netherlands
PRESS RELEASE, 31 October 2005

Bayer, Monsanto and Syngenta

Companies perpetuate child labour in India by low prices and flawed inspection

Multinational and Indian seed companies are paying Indian farmers who are producing their cotton seed almost 40% too little to enable them to hire adults for the local minimum wage of Rs.52 (€1,-) instead of children. The companies are multinationals like Bayer, Monsanto and Syngenta but also Indian companies like Nuziveedu Seeds, Raasi Seeds and Ankur Seeds.
At present the farmers working for these companies mainly hire children and young people below 18. At least 100.000 of them work 13 hours a day in cotton seed production in Andhra Pradesh for less than half a euro per day. They are often bonded by loans given to their parents.

Two new reports
These are some findings from the report 'The Price of Childhood' (i) released by the India Committee of the Netherlands (ICN), the International Labor Rights Fund (USA) and Eine Welt Netz NRW (OneWorld Net Germany). The authors of the report, independent Indian researcher Dr. Davuluri Venkateswarlu and British agricultural economist Lucia da Corta from Oxford University, are holding the view that the seed companies are responsible for large-scale child (bonded) labour and for evading India's minimum wage laws. The parents of the working children are often un(der)employed. If they do have work in the sector, it is usually for a wage which is not much more than half of the official minimum wage.

According to a recent report of the MV Foundation (ii) 11 children in Andhra Pradesh have died and 3 were severely injured due to accidents caused while travelling to work and due to inhalation of pesticides working in the fields. Many children have health problems like headaches, vomiting and depression. Often they don't have access to medical aid.

Who is paying the price of childhood?
The research clearly shows that farmers would have a net loss if they would hire adults at the local minimum wage instead of children and teenagers. That is by far not the case for the companies. The market prices of one kilogram of cotton seed is 3.6 up to 12.1 times as high as the procurement price paid to the farmer! If companies would pay for the substitution of child labour for adult labour (against minimum wages) it would cost them between 4.2% and 21.3% of their profit. If paid by the consumers the seed would cost 3.2% to 10.9% more.

Companies like Bayer, Monsanto and Syngenta do acknowledge that there is substantial child labour in their supply chain and that they are at least partly responsible for that. They do however deny that there is a relation with the price they are paying to cotton seed farmers. According to the companies farmers are to blame for the high incidence of child labour and say farmers have to improve their productivity to make the shift from child to adult labour.

A consequence of this is that the activities against child labour undertaken by the companies had a limited effect thus far. The report 'The Price of Childhood' shows that there has been a decrease in the number of working children between 6 and 14 years to roughly half of all labourers. However, the other half now consists for 70% of young people between 15 and 18 years of age. They have generally worked as a child before and are now kept on. But like the younger children they work around 13 hours a day and hardly earn more than they do.

Flawed inspection
Multinational companies as well as Indian companies have been criticised since 2001 by the MV Foundation - a very successful NGO spearheading the anti-child labour movement in the state of Andhra Pradesh - for allowing and abetting child labour in cotton seed production. This has been supported by northern NGO's like the India Committee of the Netherlands (ICN), the International Labor Rights Fund (USA) and a number of German organizations by putting pressure on multinational companies to eliminate child labour in their supply chain.

While in earlier years not much was done by the companies except giving statements against child labour, this year a policy was agreed upon by Bayer and Monsanto - supported by Syngenta which has a 'crop holiday' in Andhra Pradesh in 2005 - consisting of monitoring, incentives and sanctions. Monitoring started in co-operation with the MV Foundation. The companies promised a bonus of 5% to farmers working without child labour. Violations however would, after a first warning, be sanctioned by a reduction of 10% and finally a rejection to purchase the seeds. Indian companies like Ankur, Nuziveedu and Raasi did not take any action thus far, despite promises by the Association of Seed Industry (ASI) of which they are members.

After a few months of joint inspections with multinationals, the MV Foundation however decided in September to discontinue this kind of co-operation. It found that e.g. visits were announced by the companies to the farmers. The result was that they only found a few children, while unannounced visits by the MV Foundation revealed there were many more children working in the fields. The MV Foundation offered to continue a form of independent monitoring and provide the results to the companies and/or the local authorities and the public.
Background on child labour in cotton seed production
Three reports have thus far been researched and written by Dr. Venkateswarlu on child labour in cotton seed production. In his last report of October 2004 the author estimates that around 83.000 children are still working in cotton seed production in A.P. Around 12.000 of them are via agents ('seed organizers') for multinational companies. According to the first report 'Seeds of Bondage' (2001) almost all children are dalits ('outcastes') or from 'backward caste'. Recently the Mumbai Mirror (10 and 11 September 2005) reported on girls working in the cotton seed fields.

The report 'The Price of Childhood' and free downloadable photo's can be found on: and
More background information can be found on:

India Committee of the Netherlands, Gerard Oonk, tel. 31-30-2321340 or tel. (00) 31-30-2321340; e-mail:

i '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', by Dr. Davuluri Venkateswarlu and Lucia da Corta, October 2005; published by India Committee of the Netherlands, the International Labor Rights Fund (USA) and Eine Welt Netz NRW (Germany).

ii ' Elimination of child labour in cotton seed farms through social mobilisation', March 2004-January 2005