Adaptability and viability of "corporate farming" in agriculture sector in India

Corporate farming in India

1. INDIA Adaptability and viability of “Corporate Farming” In By, Rahul Reddy & Swati Singhal

2. We all imagine a green picture, when we read the word India. Because of the very fact we all know and agree that India has been the center for agriculture and food production before and after Independence.

3. The history of agriculture in India dates back to the Rigveda. Today India ranks second worldwide in farm output. About 67% of Indian population undergoes agriculture . India exported $39 billion worth of agricultural products in 2013 , making it the seventh largest agricultural exporter worldwide and the sixth largest net exporter. As per the 2010 FAO world agriculture statistics , India is the world's largest producer of many fresh fruits and vegetables, milk, major spices, select fibrous crops such as jute, staples such as millets and castor oil seed. India is the second largest producer of wheat and rice, the world's major food staples . BUT TODAY…..

4. Although agriculture employs about half the country's workforce , growth in the sector has lagged that in the rest of the economy. As the majority are small and marginal farmers who lack funds, equipment and the technical know-how to boost farm productivity.

5. As per latest estimates released by Central Statistics Office (CSO) the share of agricultural products/Agriculture and Allied Sectors in Gross Domestic Product (GDP) of the country was 51.9 per cent in 1950-51, which has now come down to 13.7 per cent in 2012-13 at 2004-05 prices. A very disturbing feature of the crisis in agriculture, which has been there for nearly two decades now, is that it is taking place at a time when the overall Indian economy , except during the recent global financial crisis, has been witnessing a high growth. The key aspects of the agricultural crisis can be listed briefly: Compared to the 1980s , agricultural production, productivity and value of output from early 1990s , have decelerated for almost all crops . The state instead of facilitating the risk-taking farmers has been withdrawing . There has been a decline of public investment in irrigation and related infrastructure .

6. Why? What is happening? And What are the problems of a farmer? Declining viability of agriculture resulting in majority of the farmers ( 67 percent ) inclined to quit agriculture . Micro studies reveal that most of the farmers prefer not to see their children end up as farmers. The survey of 5,000 farm households across 18 states says that 76 per cent farmers would prefer to do some work other than farming.

7. Over 78% of Country’s hydro power capacity is still remained unexploited . And the governments always considered agriculture as a Social sector rather than a contemplating, competitive industry, Farmers as mere vote banks. Always involved in appeasement policies and short term benefits rather than a long term plan . PROBLEMS. The low productivity in India is a result of the following factors: Overregulation of agriculture has increased costs, price risks and uncertainty. Government intervenes in labour, land, and credit markets. India has inadequate infrastructure and services ISSUES & CONCERNS. Soil fertility concerns Environmental issues Food security concerns Seed problems Labour problems Contract disputes Middle man’s influence THE KEY ISSUES

8. The above reasons made us to study on Indian agriculture with the outcome on the current topic: Reasons for corporate farming in India: Raising Population Food security Development of Agriculture. That leads to Country’s development as a whole. Increase Employment Protect farmers & heritage of the country. Adaptability and Viability of “CORPORATE FARMING” in agricultural sector in INDIA.

9. With the growing population, its impossible to accommodate every one in service or other sectors, But if the Corporate Agriculture is encouraged we can reduce the pace of urbanization and have the buffering period to properly plan the cities according to needs as the educated youth can be employed in agricultural activities . Ex: Foot wear, cloth or furniture industries.

10. In this paper we have discussed the following issues Merits and demerits of this system in Indian conditions . Existing conditions prevailing in other countries where this system is already on. The key implementations of corporates and innovations brought in those countries. The corporates willing ness to invest. Their expectations in regard with incentives and change in law. The government’s way of approach, the policy frame works etc. The market conditions in India . Factors which would influence the system (pros and cons) in the initial and later stages (if its implemented ). What would be the requirements of the corporates, Is the existing infrastructure in regard with water and power is sufficient? Suggestions… How can an existing farmer be made a part of this initiative {Quid Pro Quo}? If in case of land acquisitions, it would be really a mess. What would be the best way to use the land? Lease/Rent or percentage methods to be adopted? In a large country like India where it faces the drought almost every year in any of the regions dry land, drought farming is a key. How this system would develop the supply chain management and finally help the consumer and the Indian economy?

11. Advantages: Everything is produced on a big scale: more land for crops means more income for the producer and more products going off the farm Use of machinery (often large, modernized machinery) make chores such as feeding animals, seeding, spraying, tilling, and harvesting crops easier and less time-consuming. Bigger machinery on bigger fields means less time spent on that field. Improved seed cultivars used means bigger returns to the producer - more yields/acre put more money in the producer's pocket Business oriented farming, where producers run the farm as a family business, not as a hobby. Create job opportunities for those who want to work on a farm, be it grain, livestock or mix of both . Disadvantages: •Lots of income coming in also means lots of expenses going out. This does not always equal in profits. A producer can get in the red quite easily with expenses outweighing income. Hiring employees may even out the workload for the producer, but the producer needs to pay those employees to work. This is one of the expenses that a producer has to pay out in order to have the farm function like it should. Magnet for negativity from non-ag community about animal welfare, environmental concerns, messages about how "big agribusinesses are greedy," etc. Not always a low-cost option of a way of farming, though commercial producers are adopting such practices more and more. In any innovation or a new start there are always Pros and Cons, but in a larger perspective the advantages and the value addition is all to be seen if it’s doing good and supporting the system so much. So, in this case of down trending sector our focus would be on its advantages and implementation rather than minute negatives and obstacles.

12. Merits of Corporate Farming REDUCED AGRICULTURAL WASTAGE: Timely harvesting of crops helps avoid wastage of food. This increases the yield produced from the same input. Did you know? About 2% of the total farmlands in the US, under this type of farming , produce as much as 14% of the overall crop production . Increase in output leads to decrease in food prices . This would be really helpful in our conditions too as the Urban area is increasing resulting in depleting agriculture land . BETTER QUALITY YIELD: Corporates are in a better position to protect crops through extensive use of pesticides . This helps ensure minimal damage to crops and a better quality yield . This farming also encourages the employment of food cultivation techniques that increase the storage life of crops for exports . NEW TECHNOLOGY: A concept that is predicted to soon popularize in capital-intensive economies is the precision technology . Tractors will be run through the control of satellites to harvest crops in a much lesser time. This will inadvertently avoid wastage due to deterioration .

13. REDUCED MINIMUM SUPPORT PRICE: This farming is definitely synonymous with large outputs that lead to economies of scale . Hence, it helps reduce the minimum support price . This means you pay lesser for the same food than you did 5 years back . This will help keep a check on food inflation and bring down the prices of crops and, thus, makes cheap food available to all and in large quantities . BOOSTING THE AGRICULTURAL SECTOR: Industrialization of agriculture has helped in rapid production of crops to meet the needs of the economy and revived the importance of agriculture in the GDP . It will also contribute to the development of exports . Increase in agricultural production through the use of advanced technology has obviously boosted the agri -scenario in developed and developing economies In turn this helps in high Intensive farming. Intensive farming is a form of farming that makes use of large amounts of fertilizers and machinery, as well as requires large labor and capital inputs for farming, in relation to the land that is being used for the same (small land). This form of farming is done for the purpose of one final goal and that is to bring about the maximum yield from a relatively smaller land.

14. In One of the articles by Chetan Bhagat for TOI, where The writer talks about the sufferings of Indian farmers and how it can be rectified by opening agriculture sector for MNCs. Though farmers get "subsidies, tax breaks, welfare schemes" and politicians and NGOs claiming to be pro-farmers, where exactly are we lacking ? SO, the whole concept relatively mentions about “Bake in India” program and to treat agriculture as any other industry, similar to “Make in India” initiative . Indian companies ‘BAKING’ in other countries: The Tata group has been given a land lease in Uganda to run a pilot agricultural project, while the Jaipurias of RJ Corp have a lease of a 50-acre model dairy farm. The latter is already active in dairy products in African markets such as Uganda and Kenya. Construction major Shapoorji Pallonji & Co has acquired the lease for 50,000 hectares of land in Ethiopia and may look at agricultural projects in future. And it's not just large Indian companies, small and medium enterprises in sectors ranging from spices and tea to chemicals are looking at entering the commercial agriculture space in Africa. There are roughly about 70 Indian companies which are already in the process of making a foray into the farming sector in Africa. The countries which offer big opportunities include Ethiopia, Malawi, Kenya, Uganda, Liberia, Ghana, Congo and Rwanda, U.k etc.

15. Corporate farming is first and foremost about making a profit. Corporations almost always use what is termed the conventional agricultural methods that have mostly developed since World War II, on large tracts of consecutive farmlands . They generally target their land acquisitions to agricultural regions where family farms are economically stressed due to temporary downturns in the value of the local crop. Utilizing the financial straits being experienced by the current owners, they can facilitate their own purchase of the land at relatively cheap prices. EXISTING LAWS: Tenancy Reforms. Ceiling on Land Holdings. The laws relating to Gramdan and Bhoodan . Labor laws & Laws relating to fertilizers and seeds. Legislation relating to live stock and The marketing & finance for Agriculture. EXPECTATIONS OF THE CORPORATES: Executives of these companies and foreign diplomats said they want the government to address impediments such as frequent changes in tax rules and issues over food licensing and safety standards. However, the Agricultural income is exempted from the Indian Income tax for a normal farmer, the corporate companies are not expecting such an exemption but they feel that it should be well encouraging and stable in order to gain the promising momentum. Chaudhary, the Cargill India chairman, said India's industrial laws need to be simpler so that everyone could follow them. "We are keen for GST (goods and services tax) implementation which will solve a lot of problem. Land acquisition is one major problem in India, and the government has to set this issue, before it’s too late. Says, MNCs like Monsanto.

16. CONCLUSION That is why even market-friendly economies, such as America’s, have laws that provide for compulsory land sales. The benchmark for compensation is set by recent sales of local land. But such transactions, which are rare at best, tend to have taken place at depressed prices .

17. Irrigation and power are the other constraints, where the official census relating to five year plans show that 78% of Country’s hydro power is yet Un-exploited . That means the scope to build small and medium dams is left unused which can be subsequently used to agriculture. And unequal distribution of power in the country is the other major issue. If the government assures the companies regarding the above discussed issues with such special provisions, we can definitely see the investments flowing into this sector and give a real boost to the country’s primary sector and major source of living to majority of population which also helps in development of other sectors where the Economic growth and Food security can be attained promisingly. Agriculture should be treated in par with other sectors of infrastructure and increase its contribution by retaining the past glory.

18. AGRICULTURE – The word itself has CULTURE within. And we Indians were and are predominant in contributing our culture with the rest of the world and our agriculture played a considerable role till date which helped the country reach its heights and it’s our responsibility to preserve it and further strive for its growth for the future generations. So, what are we waiting for?   Let’s – Bake in INDIA Thank You, Rahul Reddy T & Swati Singhal

19. References: Alagh , Yoginder . K., 2004, State of the Indian Farmer: An Overview, Delhi, Academic and Ministry of Agriculture. Alagh , Yoginder . K., 2007, Community Organizations and Rural Development in the Eleventh Plan, S.K.Dey Centenary Memorial Lecture, Journal of Rural Development, June. Government of India, Planning Commission, 2011, Issues for Approach to the 12th Five Year Plan, Power Point, 21 April 2011. F.A.O.,2006. State of Food and Agriculture in Asia and the Pacific2006, FAO Regional Office for Asia and the Pacific, Bangkok. F.A.O, 2008, Accelerating Agricultural Growth In India, New Delhi, MOA, GOI. http://www.buzzle.com/articles/pros-and-cons-of-corporate-farming.html http://articles.economictimes.indiatimes.com/ Chadha, G K (1996): Wastelands in Rural India: Policy initiatives and programmes for their development, National bank for Agricultural and Rural Development (NABARD) Occasional Paper No. 2, NABARD, Mumbai. Dash, M (2004): “Political Economy of Contract Farming”, Mainstream, 42(52), December. Deshingkar , P, U Kulkarni, L Rao and S Rao (2003):“Changing Food Systems in India: Resource Sharing and Marketing Arrangements for Vegetable Production in Andhra Pradesh,” Development Policy Review, 21(5-6): 627-639. Dev, S M and N C Rao (2004): “Food Processing in Andhra Pradesh – Opportunities and Challenges”, CESS Working Paper No. 57, Centre for Economic and Social Studies (CESS), Hyderabad, June. Dhaliwal, S (2005): ‘’Political, farmers’ bodies propose agri policy to Centre’, The Tribune, March 13, Chandigarh. Dhall , Y (2006): “Punjab govt. picks up Ambani’s Agri Bill,” The Economic Times, Ahmedabad, p.7. Dileep , B K, R K Grover, and K N Rai (2002): Contract Farming in Tomato: An Economic Analysis”, Indian Journal of Agricultural Economics, 57(2), 197-210. Dogra, B (2002): “Land Reforms, Productivity and Farm Size”, Economic and Political Weekly, 37(6), 532-533. Eaton, C and A W Shepherd (2001): Contract Farming: Partnerships for Growth, FAO, Rome. https://books.google.co.in/books?id=aN2Odv0qhlYC&pg=PA39&lpg=PA39&dq=Companies+doing+agriculture+in+other+countries&source=bl&ots=c9ruzntr1p&sig=MQSFM9MUoaySKoasMCLlqaCNgu8&hl=en&sa=X&ved=0CEgQ6AEwB2oVChMIrqqr8oS7yAIVw7qOCh0lhwmo#v=onepage&q=Companies%20doing%20agriculture%20in%20other%20countries&f=false