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Corporate Farming In India: Is It Boosting Agricultural Sector?

Introduction Of Corporate Or Contract Farming:

India and the agriculture sector, it is the unconditional bond that can not be separated and should not. The agricultural sector plays a vital role in Gross Domestic Product and provides bread and butter for millions of people in the country in various ways. 

However, it has been observed that farmers are distancing themselves from farming due to numerous problems, less income, uncertain weather conditions, new farming rules, etc. They are looking for other opportunities. This will result in huge migration from village to cities. Also, farmers are more into making quick money by offering their lands on a contract basis. But they are not taking it seriously how it can be creating few serious issues. Is it true that Contract farming/ Corporate farming will be dangerous for many people who are related to the agriculture sector? Let’s have a look at it.

Corporate Farming Or Contract Farming:

Corporate farming is the term that describes the business of agriculture, specifically, what is seen by some as the practices of would-be mega-corporations involved in food production on a very large scale.
This is a system for the production and supply of agricultural/horticultural produce under forwarding contracts between producer/supplier and buyer.
Essential to this is the commitment of the producer/seller to provide an agricultural/horticultural commodity of a certain type, at a specified time, at a specific price with the required quantity and quality by a known and committed buyer.

Reasons for Corporative farming or Contract Farming:

  • Consolidation of small farmlands into larger landholdings.
  • Increase in agricultural productivity.
  • Introduction of value-added products.
  • The farmer/ producer will be required to plant the contractor’s crop on his land, harvest, and deliver a quantum of produce (based on anticipated yield) to the contractor.
  • Land and labor availability is farmer’s job. The contractor shall supply all required inputs for the production of the desired crop.

Corporate Farming Benefits:

Corporate farming will have the advantage of modern management, up-to-date technology combined with the experience of farmers and most importantly the availability of funds. Apart from this, marketing plus good logistics management and establishment of cold chain will ensure healthy cash flow.
The availability of modern farming methods and equipment will help to control use of chemical fertilizers and pesticides which is a growing menace.
Organic farming can be undertaken alongside regular farming. In addition to major advantages of corporate farming will be reaped in production and marketing, whilst the prevailing tax exemptions on agricultural Income will certainly promote excellent CASH-FLOW.
The availability of funds at reasonable Internet rates and the subsequent cashflows will help to develop adequate reserves for expansion without further borrowings, and also develop a zero debt organization in a short time

Problems In Corporate Or Contract Farming:

If so many things are good about Corporate farming then why it is not on large scale in India? The actual scenario in India is a little different. Corporate farming has many benefits but after few examples, farmers are a little hesitant and worried about the corporate farming concept. The first picture about Corporate farming was like thousands of farmers will come together and work with better efficiency. Also they will be provided with the highly equipped technologies. But on ground levels, lots of dues, payment delays, quality measures changes at the end of receiving the products such problems created doubts in farmers minds.  Therefore a good strategy couldn’t work well in India till now. Let’s see other reasons why the farmer is little hesitant about corporate farming.

Risk Of Monopolistic Economy:

Corporate farming encourages large companies to get involved in the food production business.
This will promote monopoly or oligopoly in the markets by concentrating on production capacity and power and creating flaws in the existing system of market forces. Corporate farming is not as easy and pleasant as it seems. Although it has numerous benefits, its negative consequences have far-reaching effects in the long term.
The short-sightedness of the government to reap benefits in the present can lead to economic disparity in the future.
It also willingly invites intrusion from strong foreign corporates to interfere with the economic and agricultural situation of a country. In other words, there will be a focus on profit maximization neglecting sensitivity to the demands of the people. Therefore, this may mark the onset of a severe global food crisis. For instance, it can be a great way of using agribusiness with the help of Contract farming. But corporate farming should not be done for making it fully commercial purpose.

Higher Environmental Costs:

Technology always results in faster processes, it is true in food production as well. But it has created an impact on the environment with mechanization that is hard to cope up. In addition, it can be harmful to the natural and biological processes of the environment.
Moreover, corporate farming may soon be a threat to the water bodies that will quickly dry up from excess irrigation, polluting of fisheries by disposal of chemical wastes, depletion of oxygen in the atmosphere, and increasing threat to all those engaged in agriculture. Also, it pollutes the soil and does not care about animal health.

Reduced Nutrition Values:

It also compromises the nutritional value of food by using high amounts of insecticides and pesticides to prevent damage to crops.
They blindly use food additives, coloring agents, chemicals, and hormone injection to speed up the process of crop maturity.  However, organically grown crops have higher nutritional value than genetically grown crops. After that, this has been raised as a critical point in political and economic debates.

Few examples have shown that farmer’s fear is acceptable.  Lays, Amul is one of those examples. Corporate/contract farming is creating problems in few areas.

How It Should Be Done?

Corporate farming is good for two things: It brings money to corporations and makes most of the land. So for locations where food is scarce and needs massive operations to run (like Irrigation), it makes sense. Where not, it will suck the soil empty and move on – corporations need huge profits, much higher than family farming. In conclusion from our observation, the best results are where the mass of small and medium farmers join in co-op and do it together, then it can be done professionally, but still has to do with proper care. Read More.