My father is an agriculturist and that explains why each time when I am visiting my parents, just like this past weekend, I end up spending a considerable amount of time with my family on discussions around agriculture and its many facets. This weekend too our discussions ranged Â from Â the current economic and political scenarios impacting agricultural policies to the unmet needs, required efforts, and the unending challenges in agricultural sector.
It is not an unknown fact that even though 55% of the worldâ€™s population is rural, 70% of the worldâ€™s poor are concentrated in rural areas with agriculture being the main livelihood activity of the majority of rural households.Empirical evidences suggest that agricultural growth is 3.2 times more effective in reducing poverty than growth in non-agricultural sectors, though, in spite of this, investments in agricultural and rural development have generally lagged.
These statistics and the conversation with my family takes me on a different train of thought and forces me to think that even though the profession of a farmer is to grow food, millions of smallholders can barely grow enough to feed their own families. Despite their hard work the results are usually not favourable as many continue to employ outdated agricultural tools and techniques,struggle with lack of funds and climate disparities among several other challenges.
Today national policymakers and development agencies have shown renewed interest in agricultural and rural development. Many agricultural programs are planned and implemented to address these challenges by providing specific services, such as training, financial help, farm inputs, market accessibility yet only few programs have managed to address all of farmersâ€™ obstacles to growing more food. Though, I strongly believe that most of the programs are designed as such that they can address only one challenge while overlooking others. For example, agricultural loan to a smallholder is of little importance if he does not have other means or inputs to support his farming needs. And most often than not, even if the smallholders have an access to inputs, such as seeds and fertilizers, for the lack of correct knowledge and information they are not always equipped enough to make the most of them- in terms of implementation as well as market outreach.
This brings me to these questions- how crucial is it to adopt an approach where farmers have a strong holistic support system in place; with an easy access to inputs, information, education, and markets, which can lead to an increase in their yields as well as incomes eventually contributing to the economy of the country? Should we be thinking differently about the other pressing issues plaguing the sector such as: agricultural commodity price volatility, poor infrastructure, lack of adequate policies and robust institutions, and the growing negative effects of climate change? Or should we in fact be thinking harder about several other factors which are as crucial to agricultural sector, such as contract farming, gender equity, youth inclusion, which may contribute greatly to creasing out the other challenges as well.
Contract farming has been promoted in the last three decades, with a greater focus more recently, as an institutional innovation of the Public-Private-Partnership (PPP) model where farmers, corporates and the State are collectively involved in the agriculture sector. In basic terms contract farming refers to an agreement between a farmers and a sponsor, where the sponsor normally undertakes to provide material input, technical advice and also purchase all produce at the end of the agricultural cycle. The introduction of contract farming intended to change agriculture from a livelihood activity to a market oriented business.The idea behind such a partnership was to provide support to the marginal farmers so that they could become beneficiaries in the process.
Now, in principle contract farming has several advantages for the farmers, like provision of agricultural services, access to credit, skill transfer, guaranteed pricing system and access to reliable markets. These institutional services can bring about a marked difference in the way smallholders engage in agricultural activity. For instance, Pepsi Co. followed the contract farming model in Punjab to grow tomatoes for the international market, and after its success moved into production of groundnut.
However, as with everything else in the real world, all with contract farming is not perfect. Contract Â farming has, in some instances, added to the woes of the farmers. If not regulated, contract farming can produce unequal power dynamics between the large corporations and smallholders where the interests of large corporations may weigh down upon the smallholders. Although price volatility is reduced, there are other risks that farmers have to factor in, like crop incompatibility, unsuitable technology, manipulation of quality standards, etc. The risk is therefore not entirely mitigated. Also in some cases, even though the ownership of land rests with the farmer, in reality it is the firm/company that directly manages the land.
Analyzing from this perspective, I am left seeking answers to more questions: Who will protect the farmersâ€™ interests against that of corporates and MNCs? How can we ensure that farmers have a voice in decision making? How can the farm-firm link be strengthened?
A holistic systemic approach is definitely the key to improving the agricultural sector in India. Policy makers have grappled with several models including joints stock companies, cooperatives, and now contract farming. But each model comes with its own set of Â strengths and weaknesses. And in that light the question remains whether contract farming is the way to go?
Your thoughts are welcome.