Contract Farming: A taboo but for different reasons (Definitely not genuine).

In India 65 percent population is dependent on agriculture, which contributes only 17 per cent to the GDP. It clearly says that merely 35 percent of our population is contributing 83 per cent to our GDP. In other words it could be decoded that 35 percent of our population is turning prosperous, leaving behind the languishing 65 per cent.


Even in that 65 per cent (which makes out to be 78 crore individuals approximately) 78 per cent, which come out to be 60 crore approximately, own only 32 per cent of the arable land. Here also it can be decoded that only 22 per cent (100-78=22) of agrarian population commands the 68 per cent resources..

In all a great disparity prevails overt the entire sector on inter sector as well as intra sector basis. If we analyze deeply the fundamental cause of this discrepancy is , the income deflation in the rural India.

Now the problem crops up how can we improve the situation? In this context contract farming seems to be most feasible, way of augmenting the incomes of rural population.

In Orissa’s Sambalpur an illegal practice of ‘ganja’ farming is proliferating under the nose of the government. Now we call it illegal, but if we analyze the benefits of this I think it suggest a way to ameliorate our faltering agri-sector.

The average income from cultivating ‘Ganja’ per acre is Rs5-6 lakhs, which is 40 times more than the paddy, which yields Rs15000 per acre.

The method of farming involves mafia who are also called investors, in those areas. These investors also provide farmers with seeds, fertilizers, with Rs15000 as upfront payment along with assurance of buying their produce.

About 50,000 laborers and 4000-5000 landowners are involved in this trade. (Refer Hindustan Times dated, January 24, 2010).

Now if we ponder over the entire scene thought illegal, doesn’t it beneficial for the otherwise languishing farmers. Why can’t we legalize this sort of trade if it’s beneficial for our farmers?

It will be far better if the government eliminates the mafia from there and plays the role of that mafia, itself in providing seeds, fertilizers, and initial investment. Ganja could be replaced with other better options.

More importantly government should provide with improved marketing support to the farmers. Even if a farmer manages to cross and bear these hurdles of initial investments, monsoon, and low acreage, it’s the final marketing where he succumbs.

I had a personal experience in the Eastern UP that when the MSP of wheat was Rs1036/quintal, the market prices hovered around Rs900-950. In all the corrupt government marketing system of government is far beyond the reach of farmers.

Though there are visible benefits of contract farming like due to Pepsico’s involvement in contract farming with the farmers of Punjab , their per hectare income augmented by 40 per cent, ITC’s e-choupal is benefiting 3million farmers. The Rallis Kisan Kendras have set up contract farming projects for fruits, vegetables, in Madhya Pradesh (Hosangabad) and Karnataka (Bangalore) and other states. The company is also providing credit with collaboration from ICCI and it’s even providing buyers like HLL and Food World.

But, there are several constraints from some section of our society that contract farming or corporatization of agriculture will ultimately make the farmers mere labours in their own lands.

The easiest answer to these questions can be that government should itself take the role of corporate houses, providing all sort of support to the farmers, and buying their products and selling them to the corporate houses.

The government should adopt a mediator’s role for the betterment of farmers. But again being a market driven process, governed on one side by the corporate giants, would lessen the scope of corruption for bureaucracy, which otherwise is thriving we well sucking the blood of meek farmers.