The cracks in a new dawn

PM Sinha from Ficci suggests reforms in the existing structure of contract farming in and says that the implementation of the proposed reforms will be a positive move forward

India, due to its different agro climatic regions, is historically well suited to produce different varieties of fruits and vegetables in large quantities. But, due to inadequate linkages with markets, the fruits and vegetables produced in abundance often do not realise the value for the farmers.

Fragmented land holdings, lack of capital, poor infrastructure, inadequate information dissemination further lead a to loss of large quantities of the farm produce in India. In spite of this scenario, there have been few systems and models in which the farmers are assured of a market for their produce.

The other side of the coin reveals that the agribased and food industry is not able to acquire timely and adequate inputs of good quality agricultural produce. The underlying paradox has given birth to the concept of contract farming which provides a proper and strong linkage between the farm and market.

Today many private sector organisations in India have sought to surmount challenges that are involved in the management of our agricultural supply chain. The fragmentation, lack of infrastructure, presence of middlemen and plethora of rules and regulations have not proved to be too daunting for certain organisations.

Despite the existing hurdles the organisations have achieved great success in overcoming constraints with strong linkages among research, infrastructure, private sector and the farming community for production and marketing of fruits and vegetables in the country.

Interest in contract farming continues to expand, with the liberalised marketing scenario.Despite promises to liberalise national and state policies, there remains formidable hurdles to the free flow of agricultural produce and the consequent growth of the agricultural sector.

This adversely affects the farmers and also makes them less responsive to changes, thereby, further distorting the already skewed picture.

In the state of Punjab specifically, the question is not “will agriculture deliver?” but “how?” Contract farming in the organised sector for all practical purposes originated in Punjab, with the advent of companies such as Nijjer Agro and Pepsi Foods.

The hope was that the modest successes in such experimentation would encourage the state government to capitalise on the popularity of contract farming and actively promote further investment in support of such ventures.

This has been to date, an opportunity missed and one of the big disappointments to the promoters of such ventures. There has been little legislation to support the broad basing of contract farming in Punjab and thereby the diversification of agriculture.

POLICY PARAMETERS

Legislation that encourages contract farming, like that proposed by Tamil Nadu, is probably more difficult to implement in Punjab, but there are other policy-based initiatives that can be taken. Viewed in a wider perspective contract farming today means more than just growing fruit and vegetables.

It is this recognition that should be the driving force for the speedy implementation of state level agricultural reform. But in this context ambiguity and institutionalised vested interests hinder growth.

A closer look at what a contractfarming programme for paddy and groundnut is subject to in Punjab reveals that firstly a market licence for each mandi under which procurement operations take place is required. A food grain license is also required for each district, where procurement takes place.

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