Agrarian Crisis-An opportunity!

Posted on January 27, 2010

Lewitt Somarajan:

Since the new economic policy has already made significant progress in the trade and industrial sectors, the focus should now be shifted towards bringing about structural reforms in agriculture in terms of mode of organization of production. This is being attempted in order to bring about better efficiency of input and output markets and promote growth performance of the sector, ultimately resulting in rural poverty reduction in India.

Though Indian economy has grown at a high rate of 6% during the last decade, agricultural growth rates have lagged far behind (1-2%). Additionally, the agrarian distress and ecological crisis in the largely small-farmer dominated agrarian economy has made matters worse in the presence of globalized and liberalized agricultural markets. The agricultural reforms are being undertaken with primacy given to public-private partnership and a significant role being assigned to private corporate sector in rural development and poverty reduction through trickle down effect of growth.

Corporate Farming with a Difference:

Corporate farming refers to direct ownership or leasing-in of farmland by business organizations in order to produce for their captive processing requirements or for the open market. Though, at present, corporate farming is not allowed in India, there have been loud voices in the recent years to get the legal constraint removed so that agribusiness firms can acquire and cultivate land for their raw material requirements. The model which is most popular in the country today is the one in which the contractor supplies all the inputs required for cultivation, while the farmer supplies land and labor. However, the terms and nature of the contracts vary according to the crops grown, the agencies involved, the farmers themselves and technologies and the context in which corporate farming is taken up.

Generally, a farmer’s participation is limited to production in the fields. Many believe that the rampant increase in corporate farming will eventually lead to loss of food security of the country, implying that the country might become dependent on imports. “We are bound to lose food security considering the way the government is supporting corporate farming without thinking of farmers”-says Madanlal, a farmer from Vidarbh region, who is a victim of so-called modernization of agrarian sector .

The existing problem is in the institution where farmers don’t have any role to play in corporate farming except providing the corporate with labor and land. The government should also take into account that the situation in our country differs as compared to other countries; about 70 per cent of our population is dependent on agriculture. The government should involve the farmers in policy making otherwise their concerns are likely to be left out. The main problem, the existing model of corporate farming facing, is that many times the crop required by the company is not recommended for that particular area. This can also have negative implications on the quality of soil. Also they are interested in cultivating only those crops, which are required by them as raw materials for their respective industries.

China cultivates about 108 million tons of food grains from its arable land, which is about one-fourth of the arable land of India, while the output being the same. Hence, a new model of corporate farming is much needed, but such a model should be completely social entrepreneurship based, as is not the case with existing models of corporate farming.

A new global report survey says India is home to 319 million of the so-called poorest of the poor in the world, or those living below the dollar-a-day poverty line. This is because it failed to match the decline in poverty that other regions were able to achieve. Accordingly, 190 million Indians earned between Rs.30 & Rs.40 a day & 106 million earned between Rs.20 & Rs.30 a day.

Social entrepreneurship based farming can give a definite solution to all the problems that our country is facing in the agricultural sector in terms of low agricultural output, lack of proper irrigation facilities, electricity, proper supply chain & marketing of the crops & thereby giving employment opportunities to lakhs, in an organized manner.

Corporate houses can aim at waste lands owned by State or Central Governments for this purpose. They will be provided with cheap labor by the government through respective district employment exchanges. The salary & other facilities, working hours & leave etc…everything should be governed under the laws made by government for the welfare of the employees. Land can be given to these corporate on a lease basis, for 10 to 20 years.

Cereals, vegetables & fruits should be given prime place. Citing the example of Kerala-the climate and soil is not suitable for wheat cultivation. Most of the people in Kerala eat Tapioca as a staple food in place of rice. The other states especially the Northern states consider potato as the second main food. Since world’s population is expected to grow enormously over the next two decades, the world attention is now focusing on the importance of the potato cultivation. The year 2008 was declared as the International year of Potato-this was done for making policy makers, donors and the general public, especially young people & school children, aware of the importance of eatable tuber cultivation. It will become a solution for food insecurity, malnutrition, poverty & threats to the environment. But there should be regulation by governments to produce crops which are basic necessities like cereals & tuber cultivation. Otherwise with the existing models of corporate farming, it gives freedom to the corporate to cultivate crops of their necessities, as a result of which they happened to cultivate crops which yield them huge profits like cotton and jatropha, to name a few.

For example: – The government of Gujarat has recently offered wastelands of up to 2000 acres for horticulture and biofuels on a 20 year lease to big corporate houses and resourceful farmers, at the rate of Rs. 500 per acre interest free, security deposit. If the project does not take off in five years, the leased land will be taken back and the deposit forfeited. There will be no rent for the first five years. For the years 6-10, annual rent will be Rs. 40 per acre and for years 11-20, annual rent will be Rs.100 per acre. There will be a 50% increase in rent if any value addition activity is taken up on the land. The lease will use micro irrigation technology which is being supported by the Gujarat Green Revolution Company with an initial capital of Rs. 1500 crore. The mortgage of land for loan purposes is allowed. No ‘non-agricultural’ permission will be required for processing activity.

The question is-Whether the Corporate houses will take initiatives, if they are not been given the freedom of cultivating crops of their choice?

Yes, they will, as there is a huge scope of making profits, if cultivated using mechanized machines, employing systematic & proper supply chain management & if the respective state governments provide them with necessary facilities & amend laws favoring their cause. As such ventures will be Social Entrepreneurship; governments are bound to provide full support for these projects as these ventures would be a boon for mankind.

Eradication of poverty must be the slogan of the corporate which come forward in the field of agriculture. The state governments should make laws for those corporate who are willing to come forward in the agricultural field. They should engage only in the production of food materials which can be flooded & supplied through local markets. Cereals like wheat & pulses like horse grams, mutter, beans need, not that much water & they can be cultivated during winter season. Alternatively rice can be sown in the rainy season. Then in the remaining season, tuber cultivation can be employed; ensuring all round cultivation throughout the year, giving huge profits for the corporate houses & employment to those who depend upon agriculture for their livelihood.

Solution for Private Lands:

In the rural villages especially in some of the Southern & almost all the Northern states the domination of tribal chiefs & elders & the influenced exerted by traditions meant that peasants could not even think about joining hands with big corporate. They can only experiment with the co-operatives & contract farming. So, corporate farming can be advocated only on large scale government lands in full co-ordination with the respective state governments. Co-ordination, Co-operating or contracting the rich & small land owners can be successfully implemented through Co-operative & Contract farming, as far as private lands are concerned.


The broad scope of Corporate Farming in the developing countries is limitless. The corporate with its growing influence in social transformation prompt the conclusion that the implementation of agrarian reform-consumer goods for domestic purposes will eliminate hunger within a decade from our motherland. This agrarian crisis can be an opportunity for potential Social Entrepreneurs; to fight for the survival of more than a generation & to leave our children a legacy of wealth, not a burden for survival.

The writer is a Special Correspondent of Youth Ki Awaaz and also the author of On the Ninth Cloud.

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