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CONTRACT FARMING PRACTICE IN INDIAN PUNJAB:
FARMERS’ PERSPECTIVE
1.
Introduction
In the
mid-1960s, when India confronted
widespread famine and was dependent on
foreign food aid, it was the
Green Revolution that pulled the
country from the clutches of food-crisis and
made it a food surplus economy.
Punjab played a significant role in Green
Revolution and it were the tenacious
farmers of the state who proved their
mettle.
The
farmer gets only 35 per cent of the value
whereas majority of the price hike is done
by the intermediaries (Government of India,
2009).
The need for
well-functioning
marketing structure has therefore been
recognized by the government in the Twelfth
Plan
and it emphasizes the promotion of
direct marketing,
contract farming (henceforth, CF)
(Government of India, 2013).
CF is an arrangement of production and
marketing wherein firms (mainly
agro-processing) and farmers enter into
advance contracts to
buy the produce of pre-determined quality
and quantity at a pre-determined time and
price from farmers in exchange for provision
of certain services like inputs, technical
assistance etc. (Glover & Kusterer,
1990).
The significance of CF in the context of
Indian Punjab has been realized in the wake
of concomitant agrarian crisis and its
beginning in the state is marked by the
entry of Pepsi in l988, when the
Indian industrial sector opened up to
competition (Singh, 2002).
CF as an out grower schemei
to promote diversification was
promulgated in the year 2002-03 under
the supervision of Punjab Agro-Food
grain Corporation Ltd.
(henceforth, PAFC). The agrarian crisis of
the state due to persisting wheat-paddy
monoculture and given
Johl Committee
recommendationsii
led
the
adoption
of
CF
programme
by
the
government
to
bring
a
change in the economy.
But this program has been abrogated by the
government of the state
and presently CF is carried out by
few companies directly with the farmers.
This study therefore attempts to examine the
unequal relationship through the practice of
CF in the state of Indian Punjab from
farmers’
perspective, their problems and perceptions
about it. The objectives of the study
are:
The study is based on the
field research of 300 contract farmers
from three districts of the state.
The choice of these districts was induced by
the proportional area under CF to GCA for
all the districts based on the data
extracted from Statistical Abstract of
Punjab, (2010-11). The districts were
divided high, medium and low share from
which three districts-
Ludhiana, Jalandhar and Fatehgarh Sahib
were randomly selected. Information was
obtained through pre-tested questionnaire
schedule from farmers and companies dealing
in CF in the state to understand the issues
more
comprehensively.
The paper is divided into four sections.
Section two elucidates the terms and
practices of CF. The problems and
perspectives of farmers related to CF are
discussed in the third section. Finally the
last section concludes the
paper.
2.
Contract Farming in Practice: How the
Farmers are Dealt?
Before attempting to specify contract terms,
detail of the
companies involved in CF for the
surveyed crops has been described (vide
Table 1). The three companies-
Technico Agri Sciences Ltd.,
Pepsi Foods Pvt. Ltd. and
Mahindra Shubh Labh Services
Kartikey
Indo Agritech Pvt. Ltd.
are the multinationals catering to the
domestic and international markets whereas
the Kartikey Indo Agritech Pvt. Ltd. is the
domestic company dealing with the domestic
market.
Table 1. Various Characteristics of
Companies involved in CF of Potato and
Basmati rice
Source:
Field Survey, 2012.
All the new players in the field except Pepsico
Foods Pvt. Ltd. which pioneered CF in the state.
Pepsico Foods is involved in contractual
arrangements of
potato and Basmati rice whereas rest of
the companies deal in seed potato.
Except Pepsico, all the firms prefer to work
with medium to large farmers. Pre-requisites for
the selection of farmers are good soil
conditions, farmers’ willingness to enter into a
contract, possession of land-holding and
agricultural machinery, good will and honesty of
the farmers.
The terms of contract illustrates that written
contract was signed by only 44.7 per cent of
farmers and only 38.7 per cent were provided
the
copy
of the document as against the claim of
all the firms for written contract and copy
being provided to the farmers.
English as the language of the contract
was confirmed by 96.5 per cent of the contract
farmers and the companies.
Other
services
like
credit
(81.3
per
cent),
insurance
(80.7
percent),
compensation in case MPs go high (99 per cent),
compensation for natural calamity (100 per cent)
and
provision for legal dispute (100 per cent)
are also not provided.
It implies that the production as well as price
risks are borne by the contract farmers
themselves that may daunt the participation of
risk averse farmers in CF.
Focused Group Discussion with farmers revealed
that the companies in the state provide seeds
and pesticide kits, the charges for the same are
taken partly in advance and partly deducted from
the payment of the produce.
In case of potato, companies supplied over-sized
seeds which need to be cut before planting. This
escalates the labour cost and also leads to
wastage (if the seeds are not cut properly) and
ultimately increases the total cost of
production.
Table 2. Contract Terms of Various Companies
Source:
Field Survey, 2012
Note:
$ represents
English language and Pbi. is Punjabi
which is the regional language of the state.
3.
Problems and Perspectives of Farmers: Is it the
CF per se
Faulty?
It has been found in various studies that
farmers may face several problems in CF like
poor extension services,
high charges of inputs,
low price of produce,
delayed payments,
manipulation of grading standards etc.
Table 5. Perspectives of the Contract Farmers
about CF
Source:
Field Survey, 2012.
4.
Conclusion
CF in Punjab is on its own with no government
intervention for its effective implementation. . |
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