Policies aid corporate farming

Published : Jul 10, 2013 12:30 IST

R. RAMAKUMAR, an Associate Professor at the School of Development Studies, Tata Institute of Social Sciences, Mumbai, has been researching agrarian studies and rural development with special reference to Kerala and Maharashtra. He spoke to Frontline on how the dice continues to be loaded against farmers. Excerpts:

We do not really have corporate farming in India at present, but companies show a great deal of interest in agriculture.

In the neoliberal era, the interest in corporate farming is policy-induced. The government believes that crop diversification is best achieved by promoting cultivation of high-value export crops, allowing free leasing of land, boosting agro-processing and developing post-harvest and marketing infrastructure. In this process of change, it sees the private corporate sector as the leading agent.

This, however, demands possession of large tracts of land by private firms, which is constrained by the land ceiling laws in States. So, the thrust of the post-1991 policies has been to remove the land ceiling limits by amending land reform laws, so as to allow private firms to cultivate unlimited areas. Many States, including Karnataka, Maharashtra, Tamil Nadu and Gujarat, have already introduced these amendments. In States that have had corporate-friendly amendments in land ceiling laws, you may find some examples of corporate farming in high-value crops.

But there are also other barriers to corporate farming. First, India is a land of small holdings. For corporates, the transaction costs of dealing with so many small farmers are not viable. There are also attendant problems of adequate availability, variations in quality and timeliness in supply.

Secondly, corporates have demanded further changes to the APMC [Agriculture Produce Marketing Committee] Act and the Essential Commodities Act, which they believe prevent easy and direct purchase of agricultural produce from farmers and opening and controlling of new agricultural markets. The Central government has actually been forcing the hands of State governments to bring these amendments.

As a result, what you have on a large scale is not “corporate farming” per se , but either “contract farming”—where companies like Reliance Fresh have collection contracts with farmers—or corporate interest in agri-processing. Not that the interest in corporate farming is dead; or there wouldn’t be tremendous pressure on State governments to amend land ceiling laws and other Acts.

So the interest remains even though they cannot be producer companies.

Yes, great interest. Because land is not available to them, they are now getting entrenched in other links in the food value chain: seeds and pesticides on the input side; collection, processing, cold storage and retail sale on the output side. Monsanto and Bayer are examples of the former. The interests of Unilever or PepsiCo or Jain Irrigation in tomatoes, potatoes and onions are examples of the latter. These contracts do not need amendments to land ceiling laws. Large amounts of credit have also been given to such firms by commercial banks under the guise of “agricultural credit”.

But big companies will stay with high-value crops for the present and will not enter into low-value crops like paddy or wheat. One reason for the disinterest is that they have to deal with numerous small farmers. The other reason is that the government is there as a direct competitor since there is a procurement policy linked to the PDS [public distribution system]. That is why there is so much pressure to dismantle the PDS through direct cash transfer and Aadhaar. Thus, the struggle to preserve PDS is also part of the struggle against corporatisation of agriculture.

The Maharashtra government has a public-private partnership programme. What do you think of that?

Maharashtra has partly cleared the road for large-scale corporate farming through different legislative amendments. Plus, as the State’s Agriculture Secretary stated recently, it wants to route money in public schemes through corporate houses to raise efficiency in public spending! So, even if there is a collaborative venture between companies and farmers, the State wants to give subsidies to the companies. They are aiding big companies by directly giving them subsidies.

What about this issue of the state not being involved in acquiring land?

The idea that the state should not be involved in land acquisition—allowing a free hand for corporate houses—is a deeply problematic one. It is only when the state intervenes that there is any chance of a fair deal being worked out for the sellers of land; only then can predatory acquisition of land and higher concentration of land ownership be curbed. The intervention of the state, then, becomes an attempt to regulate the land market, not promote it. In its absence, land alienation will become widespread and corporate farming will become easier. It opens the door to a corporate takeover of agriculture.

Lyla Bavadam

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