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Responses to Sticklish Issues dated May 7

India's potential in agriculture is yet to be fully harnessed. The shortcomings range from small and fractured holdings of land to the policies per se. Corporate houses are now in direct engagement with farmers through contracts that offer the rural population a better deal than they were getting till now.

Contract farming generally involves: a pre-agreed price between the company and the farmer, along with measures of quality, quantity, acreage to be farmed, and/or duration of the contract. In this system, the contractor supplies all the inputs required for cultivation, and the farmer is responsible for land and labour.

However, the terms and nature of the contract vary according to the crops grown, the agencies involved, the farmers themselves, and the technologies and context in which contract farming is taken up. The farmers' participation is generally limited to production.

One of the most critical issues associated with contract farming is that there will be a shift from staple crops such as rice and wheat to crops required by the food-processing industry and those catering to the overseas market. The switch to contract farming leads to a rise in exports as well. But this may affect the country's food security, and increase dependence on imports. For a corporate, the objective of contract farming is to integrate the supply chain and ensure timely availability of materials, both in quality and quantity. It also reduces the procurement cost by eliminating the middlemen. It is a win-win situation for both corporates and farmers.

Not only do the corporates get produce as per their specifications, the cost is much lower. With debt rampant, and soaring seed and fertiliser costs, contract farming appears a blessing, since all the inputs along with the know-how and updates will be provided by the corporate entity, and there is also a guarantee of purchase of the produce after harvest.

With agriculture increasingly seen as a risky proposition, the promise of economic security within the contract farming system is rather very attractive.

The health of soil a few years hence is a legitimate concern, but many farmers may ignore this to ensure their more immediate gains from contracting with companies. The known problems notwithstanding, it appears that contract farming is soon set to become much more common in Indian agriculture.

*Krithivasan, e-mail

It is a good augury that agricultural scientists have discussed the issue of contract farming at a time when supermarkets and food chains are threatening to drive out the small next door retail shops. Fears have been expressed in the meeting that the rejection rate of agricultural produce by retail chains was high. The farmers then have to bear the extra cost.

As the tie-up between retail chains and farmers is in the infant stage, it will take some time for the farmers to ensure high quality in their farm produce. Hence the supermarkets and retail chain stores should provide the required agricultural expertise and credit at a low rate of interest to the farmers.

To woo the corporate sector into contract farming, the Government is considering the idea of tax-holiday. This will definitely attract large players. But it must be seen that land is allotted to genuine parties who will use it only for farming.

Under the guise of contract farming they should not be allowed to misuse the land for purposes other than agriculture as there is a possibility of converting the land to residential plots and use it to build commercial complexes.

S. Nallasivan, Tirunelveli

In India, there are a large number of small landholders whose livelihood depends solely on farming. If contract farming is introduced business giants will take over lands of farmers with large and medium holdings. With access to large amounts of funds and inputs they can outdo the small farmer. As a result, the pricing of the products will be controlled by them. Besides, the market for agricultural products will be totally under their control. Contract farming is, therefore, not in the interests of the people.

T.R. Anandan, Coimbatore

The slow growth in the farm sector gives economists and planners the jitters and the Government is anxious that farming be diversified into horticulture and animal husbandry so as to achieve 4 per cent growth in agriculture, which can reflect 8 per cent growth in GDP.

Contract farming is one of the quick-fix solutions. No doubt, the farmer can get quick returns but at the cost of soil fertility and long-term growth.

In spite of the steep increase in Minimum Support Price, the Government is finding it hard to garner enough foodgrain stocks for PDS. Imports may become difficult as foodgrains production is slowing, even in the so-called "surplus" economies.

India's cultivable area extends to over 149 million hectares, of which, 45 million hectares are irrigated. Even if 30 per cent of the annual rainfall is diverted to catchment areas, the farmers' water needs would be fully solved. .

Fertility and productivity growth through traditional water farming methods should be re-discovered. India has significant bio-diversity and is home to a wide range of edible plants. Efficient agricultural input management together with a good system of water management can save and rejuvenate countless number of herbs, shrubs and plant wealth, sustaining and providing farmers with alternative sources of income.

T.S. Sundareswaran, New Delhi

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