Corporate cultivation a la cooperative farming
India, being a Third World compliant country for experiments of the advanced nations, is now targeted for innovations in the farm sector. There seems...
There are farm and business lobbies with intellectual inputs from experts in the field to substantiate the need for corporate farming. Why not? It is demonstrated by scholars and management experts that small farms and fragmentation of holdings are a bane of Indian agriculture as they are unviable and economically disastrous. A This is supported by data that the marginal holdings of less than one hectare of land on an average have remained at 0.4 at the national level and in Andhra Pradesh at 0.44 ha. The proportion of such holdings in the total holdings in our State has slightly increased from 61.59 to 63.59 during 2005-2011.
Therefore, it is sensible to go in for corporatisation of farming in States like Andhra Pradesh where the proportion of marginal holdings is very high. There is also an argument that the marginal farmers have failed to bring in technology and innovations to improve the productivity of agricultural operations and, as a result, the farmer remains poor and underdeveloped. A What is the harm if the small bit of holdings is given to a corporate body that brings technology, investment and remunerative prices through access to international market?
The above argument seems to be not supported by productivity data. For instance, the productivity of rice was 3011 kgs per ha in 2003-4 and it increased to 3148 by 2011-12 in Andhra Pradesh. The productivity of jowar, an important crop in the State, was 1102 kgs in 2003-4 and it substantially rose to 1749 in 2011-12.
If the farmer is not getting remunerative prices, it is not due to the unviable nature of his holdings, but other economic and policy related constraints. In fact, around a century ago economists had reminded that it is not the size of the holdings but the amount of investment made on the piece of land that is to be taken into consideration in measuring productivity. A Arthur Lewis, later Ranis-Fei, Hayami and other economists have reasoned that the supply of food and labour to the sustenance of industry are important as they not only create demand for the industrial goods but also in getting foreign exchange through agricultural exports.
India is not the USA or Japan to reduce the role of agriculture to less than 5 per cent of GDP as 60 persons of every hundred depend on it. The role of industry in creating jobs is not encouraging (NSS survey) to throw away the babe along with the bathwater.A Notwithstanding the arguments of some economists, the policymakers and economic managers have introduced sufficient policy packages to encourage corporatisation of cultivation in a phased manner. In fact, a variant of the commercialisation of agriculture was already in place in the form of contract farming.
This is a kind of vertical integration of farmers to supply a given quantity and quality of products at an agreed price to the buyer, mostly involving the corporates. There are 10 top corporate houses like Tata, Ambanis, Bharati, Agrigold (AP), IEEPL apart from MNCs that are in this business quite for some time. They are very powerful and are lobbying for corporatisation of farming and linking it with FDI and international cartels.
Now consider the experience of contract farming, a prelude to corporate farming. Harish Damodaran, in one of his reports in Business Line in June 2012, reported that the corporate ventures in agriculture are failing. He has given a case study of Tata Chemicals in the area of fresh fruits and vegetables in Malerkotla, Punjab, where it shut its operations for non-achieving the planned scale of operations.
We have in our State the Kuppam experiment. Economies of scale are a prerequisite of corporatisation. Yet, experience on this front is not encouraging.A Look at the ideology of cooperative farming whose ideological genesis rests with Robert Owen and the subsequent Cooperative Credit Society Act 1904 in India. The ideal behind the movement was to develop the spirit of mutual help and social harmony, equity and empowerment. A Though it was confined to credit and expansion of sugar, milk and a few other areas in the agriculture sector, it has provided the necessary impetus for the development of innovations under the guidance of the State.
It is reported that there are 5.5 lakh cooperatives (PACs, etc) with a membership of 22 crores. We may attribute the limited success of the so-called First Green Revolution to the spirit of public interest imbibed by the cooperative spirit. Interestingly, the central government has brought the 97th constitutional amendment and added 43B to promote voluntary formation, autonomous functioning and democratic control of cooperatives. It has also enacted the Multistate Cooperatives Act in 2002 to facilitate inter-state operations of agricultural cooperatives.
The XII Plan envisages tenancy reforms to enable leasing out of land to "others". We have yet to see the impact of the initiatives of the State on the economic efficiency and social uplift of the farmers. Billions of rupees were invested in the development of infrastructure, including public irrigation, technology, KVS, etc, and billions are earmarked as subsidies. Then why the sudden shift in the policy towards privatisation and corporatisation of the farm sector? If the private sector and FIIs are considered by some experts as efficient, the government should make a law that they should restrict their operations in areas uncovered by cooperatives and low technology zones.
Let them bring capital and technology without encroaching on the public resources and improve the welfare of farmers without repeating what they have done in Brazil, Ethiopia, Sudan, Tanzania and other Third World countries.
In the context of covert attemps to introduce corporate farming on a large scale, the author looks at whether the sizes of average and marginal holdings can benefit in the absence of appropriate technology and A capital