From emu farms to guar crops: Why the desert is fertile for Ponzi schemes
Driving through the dustier districts of South India, such as Kolar or the northern interiors of Tamil Nadu - you often pass clumps of the paddle-shaped cactus known as Opuntia or Prickly Pear. It grows wild though is often used to demarcate the boundaries between fields. It looks so rooted in the ancient landscape that it can be a surprise to learn that it an import from South America.
The emu farmers of Erode would be familiar with the cactus. It inhabits the same dry terrain that was said to be ideal for raising the large flightless birds from Australia. The terrain, in fact, was what changed the idea of raising birds with no proven market in India from dubious to alluring. When your land only supports low value crops, like millets, the idea that an investment of Rs1 lakh in emus could bring you returns of Rs3.34 lakhs in just two years can sound distinctly attractive.That was the promise made by promoters like M.S.Guru of Susi Emu Farms.
It was backed by promotions using Tamil film stars and questions about where the market for the birds was were brushed aside. Emus were total value animals, the promoters said, since the meat had gourmet and health appeals (tastes like beef with lower cholesterol), the skin made high quality leather, the feathers and eggshells could be used into handicrafts and, as a special appeal, emus had a gland that yielded an oil with considerable export value.Details about where exactly the oil would be exported to, and who the consumers would be, were vague, but no one probed too deeply, including the many journalists drawn by photographs of farmers in lung is feeding birds almost as big as they were.
In almost no time there were around 250 emu farms in the state, mostly around Erode, with over 12,500 birds. Guru's company was talking about setting up a chain of emu restaurants across the country, with the first one outside the South recently opening in Delhi.What happened next has been well documented by ET and other media. Guru and other promoters have vanished, taking with them investments running into hundreds of crores, made by an estimated 36,000 people, according to a statement put out by chief minister J.Jayalalithaa's office. The birds left behind were starving, forcing the state to step in and pay over Rs3 crores to take care of them for three months. The birds will now be culled - though animal rights organisations are protesting - at a considerable cost, with not much prospect of recovering the expense through sale of meat, since it turns out that few really want it, or any other emu products.
Emus in Tamil Nadu, it turns out, were a Ponzi scheme of the kind the state is notorious for (chit funds, teak, goats are past examples), given added appeal by its use of arid land. There seems, in fact, to be a whole series of products that are sold with the promise of realising high returns from arid land, such as biofuels like jatropha and jojoba, agave (a cactus-like plant used to make tequila and a sweet syrup) and perhaps even the current boom commodity of guar beans.These all seem to find receptive audiences in desert-land farmers, who generally have larger plots than those in more fertile areas, and less of an incentive to stick to established crops.
Quite often there are government schemes available too, offering cheap loans for semi-arid crops. So the farmers take a gamble on these products, and sometimes they do make short term profits, because these are not all scams. Yet they are sold on extravagant promises of transformational prosperity and long term yields, which they almost never deliver.And this is where that cactus comes in, as a visible reminder of the first such desert dream sold in South India. Opuntia first came to India as part of a scheme to produce cochineal, a red coloured dye derived from insects that feed on the cactus. Cochineal has been produced in Latin America for centuries, by people like the Aztecs and Incas. And when the Spanish arrived they quickly realised the value of the dye, since it holds fast to cloth, and produces two different, desirable shades - brilliant scarlet and darker crimson. It is also safe for consumption, which is why cochineal has been used to colour cakes and drinks like Cherry Coke (though substitutes have been found as vegetarians became aware of its use).
Arvind Sinha, in an essay on cochineal cultivation on the Coromandel coast, published in Coastal Histories: Society and Ecology in pre-Modern India, writes that by 1736 880,000 pounds of cochineal were being imported into Europe - and around half a million pounds sterling were being paid to the Spanish, who had a lock on the supply. These figures come from the dispatches of the Court of Directors of the East India Company, which showed that they were aware of the potential profits of finding their own source of cochineal.
And in Dr.James Anderson they found the man to make it happen. He had held posts like Physician-General to the Madras Army and Chief of Hospitals in Madras, but he also served, like most doctors at that time, as an unofficial scientist-at-large, while also, like most British officials in India at that time, looking out for ways to make a fortune. Cochineal came to his attention and he started looking for Indian insects that could produce such a dye. In 1786 he thought he found one, and sent samples back to Britain, but it proved to be impracticable for dyeing.But this initiative put Anderson in touch with scientists, like the botanist, Sir Joseph Banks, who pointed out that rather than trying to find an Indian bug, he should try growing the original.
The climate in parts of South India was similar to the semi desert areas where cochineal bugs came from and, equally important, cheap labour was available for the painstaking job of harvesting the bugs (a British initiative to grow cochineal in the West Indies had failed for lack of labour). Anderson was so charged by the idea that he became an evangelist for cochineal, promoting its growth not just in India, but in desert parts of British colonies around the world.In India Anderson experimented with local plants, but finally decided that it was best to get Opuntia.
Botanists like Banks sent specimens, and by the early 1790s Anderson had over 2000 plants in a plantation near Rajahmundry. The problem was now getting enough insects to establish a breeding population, which was not easy since they had to survive a long and damp sea voyage. Anderson wrote letters begging for help to the Company Directors, who were responsive, but didn't want to antagonise the Spanish. Sinha quotes one source on how the Directors "did not intend the instructions relating to the care and preservation of the cochineal insect at sea should be made public..."Finally in 1795 Anderson appeared to have some luck.
A British ship captain named Neilson, who had earlier been based in Madras where he had encountered Anderson and his obsession, docked in Rio de Janeiro and on a walk outside town he found a cochineal plantation. He smuggled out some samples, and sailed with them to Calcutta, by which time only one leaf, with a few dozen insects had survived.
But with just this, writes Victoria Finlay in Color, her wonderful book on the histories behind colours, "top men at the East India Company started imagining their fortunes were made."In a letter to one of the British governors, Anderson laid out the basic desert land dream: imagine, he wrote, "the opportunity of converting the most waste, barren and dry lands in your possession to great advantage, by encouraging the cultivation of the plant." And initially it seemed to work. By 1797 the Madras government had collected 21,774 pounds of cochineal, and Anderson must have started imagining his fortunes rolling in.
But unfortunately it turned out that they had got an inferior version of the bug (the same problem was to affect the vanilla boom in Kerala some years back) and Anderson never got the returns he was expecting.The real death knell for Indian cochineal was sounded a couple of decades later when chemists like William Henry Perkin synthesised vivid dyes from substances like coal tar. Chemical dyes were cheap and easy to produce in bulk and quickly drove organic dyes like cochineal into niche markets (like luxury use) which were easily supplied by existing South American production.
In recent years, there has been increased interest in natural cochineal, but no one seems to be - yet - trying to grow it in South India, where the descendants of Anderson's Opuntia plantations now grow free.This is how it always seems to go with arid-region crops.
