Bound Bounty

Extensive cost savings for farmers is just one of the desirable interventions brought about by contract farming, says Kairas Vakharia in conversation with Shuchi Srivastava

We spotlight the agreement signed between Mahindra ShubhLabh Services (MSSL) and the Punjab Agro Foodgrains Corporation (PAFC), where they plan to bring in an area of up to 1 lakh acre under contract farming in the current year, which is pegged to increase to 5 lakh acres over the next 3 years. We speak to Kairas Vakharia, CEO, of MSSL and discuss the fine nuances of contract farming as visualised by him where MSSL will provide farmers with quality seeds, fertilisers, pesticides, farm equipment and extension services to raise yields. They will also play a facilitating role so as to link farmers with processors and banks, who would advance credit to them.

What is the difference between contract farming and corporate farming?

The latter holds true when a company itself indulges in farming while contract farming is when a farmer undertakes to cultivate on a contract basis.

What would the nature of this contract be?

The contract basically entails that a farmer would sell his crop to a company while the company provides certain services like the supply of seeds, fertilisers, pesticides and extension services. There is a buyback facility on the crop, which is basically what constitutes contract farming.

What is the involvement of the state government in this arrangement?

In Punjab we have entered into a contract to farm maize and Basmati in this kharif season. We are providing technical and extension services and the Government is going to buyback the crop.

What is the nature of the technical services that you provide?

The farm extension services include technical services. We visit a farmer say eight to nine times a season during different stages of crop development like planting, nursery management, transplanting pest management and others. Our extension workers are stationed in the district.

Is there any particular technology transfer that has taken place under the supervision of your company?

We have especially focussed on the effective diagnosis of pest and insect infestation which farmers are unable to arrive at as quickly as we can. We have influenced farmers who were earlier growing coarse paddy to take to growing Basmati.  

Who are the actual signatories of this contract?

The farmers, MSSL and the PAFC are the signatories to the contract.

What are the essentials that constitute this tripartite arrangement?

At the end of the season the Government will buy back the crop on a certain price formula. There are two kinds of contracts one is a fixed price one and the other is based on the market price. The farmer has the option to choose. If they decide to lock themselves into a price they go for the former and if they decide to play the market they go for the latter.

What are the other states where you have made your presence felt?

We are present in all states barring Kerala, Bengal, Haryana and Bihar.

What are the crops that you cultivate there?

We work across a number of crops the major ones being wheat, paddy and cereals. We also do a lot of work with maize. We also grow certain speciality crops and also look at soyabeans. Horticultural crops like tomato and chillies interests us too.

In all these states have you signed independent agreements with the state governments?

contd...

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