NEW SOCIALIST MOVEMENT

Pauperizing the rural masses

Contract and Corporate Farming – Globalisation of Agriculture in India

(Exposing 743 million people in rural India to the exploitation by multi-national agro-industries.)

National Agricultural Policy (NAP) of Govt. of India announced in 2000 envisaged that “Private sector participation in Agriculture shall be promoted through Contract Farming and Land-leasing arrangements (Corporate Farming) to allow accelerated technology transfer, capital flow and assured markets for crop production (with emphasis on oilseeds, cotton and horticultural crops)”.

It proposes major intervention in the agriculture sector through contract farming by corporations rather than farmers growing their own crops on their own lands, consolidation of small farmlands into larger landholdings and introduction of export oriented cash crops.

The enabling role of the government seems to work only in one direction: assisting the export houses, processing units with public finance measures.

Gujarat Government issued two Govt. Resolutions (GRs) on April 11 and May 17, 2005 on Contract Farming and Corporate Farming respectively. The stated purposes (among many others) are to modernize existing agricultural production and bring under agriculture the culturable and unculturable wastelands that are lying “unutilized”. The Gujarat Govt. GR on Contract Farming is on the same lines as suggested by Govt. of India but with some modifications (the latter relates to the refusal of the Gujarat Govt. to break the monopoly control of all trading in Agricultural Produce by the 225 Agricultural Produce Marketing Committees (APMCs) operating in as many talukas in the State. This GR allows tripartite seasonal, annual or long-term (3-5 years) contractual agreement between a farmer, a contract sponsor and the APMC of a particular region and with the sanction of the Gujarat State Agriculture Marketing Board the apex body controlling the state APMCs. A Model tripartite agreement on Contract Farming has been appended to this
GR.

The GR on Corporate Farming (expressing Gujarat Govt. policy on application of modern technology for converting Govt. owned wasteland to cultivable land) allows only big industrial houses and individual capable (big) farmers to take lease for 20 years, Govt. owned wasteland of 4.58 million hectares area to convert them to cultivable land, carry on agriculture production and produce value-added products. All incentives and encouragements will be provided by the state govt., which will charge nominal rents from the sixth year only. This GR makes no observation of current utilization of such land by communities and landless agricultural workers and only refers to DES report “Statistical outline – Gujarat State 2004”. This GR specifically prevents any initiative of individual small and marginal farmers in conversion of such wasteland into fit for agriculture and ignores any initiative already taken in this direction.

Unlike contract farming, this GR on corporate farming will allow direct involvement of big industries and financial institutions (and big farmers) in agriculture – including lease-ownership of the land for 20 years and controlling any use of such land in any way for “agricultural production”.

We will describe the two terms Contract and Corporate Farming which, if successfully implemented, will complete change Indian Agriculture irreversibly and complete the process of globalisation of India and the complete hold and rule of MNCs and Foreign FIs over India.

Contract Farming

This is a system for the production and supply of agricultural / horticultural produce under forward contracts between producer / supplier and buyers. Essential to this is the commitment of the producer/seller to provide an agricultural/horticultural commodity of a certain type, at a specified time and a price and in the quantity and quality required by a known and committed buyer.

There shall be a pre-agreement (the contract) regarding the price, quality, quantity (or acreage under the crop) and time of delivery of the produce.

The farmer/producer will be required to plant contractor’s crop on his land, harvest and deliver a quantum of produce (based on anticipated yield) to the contractor. He shall provide land and labour necessary for this. The contractor shall supply all required inputs for the production of the said crop.

Corporate Farming

Allotment of culturable and unculturable wasteland will be made to approved projects submitted for development of such land for cultivation and subsequent agricultural production.

A 20-year lease of such wasteland will be given to big business house and individual able (big) farmers.

The maximum limit of 2000 acres (810 ha) will be applicable for each allotment.

A mandatory clause for start of development activity within the first 5 years of allotment, otherwise it will lead to cancellation of the lease.

Easy loan shall be provided for expenditure on proposed development of land.

The allottee should develop modern micro-irrigation schemes and use techniques like drip irrigation, water harvesting structures etc.

The (highly subsidized) rental rates for the allotted land – free for first 5 years, Rs. 40 per acre for 6-10 years and Rs. 100 per acre beyond 10 years.

The allotted land can be mortgaged with prior permission of the concerned Collector and with conditions.

The allotted land may not be used for non-agricultural use, however, construction work on such land may be carried out with permission from competent authorities.

The expressed advantages of Contract Farming

The following are the main objectives of the system of contract farming

a) Increase in agricultural productivity / production due to organized and mechanized large-scale production, introduction of new/modern technology and assured inputs and outputs and improvement of quality of produce and larger capital investment in agriculture through banks and other financial institutions (domestic and foreign)

b) Introduction of value-added agricultural products and growth of agro-based industries. Export of agricultural products to world markets. (Currently India and China are classified as neither importer nor exporter of food grains and other agricultural products)

c) Enrichment of farmer-owner due to higher returns from his land and surplus generation.

The Real Issues

In one line - the issue is whether or not, Agriculture, the major sector in India’s domestic production, should be handed over to the MNCs and foreign financial institutes – i.e. complete globalisation of India (economic and political).

Out of India’s 1029 Million population (2001 census), 545 Million (53.2%) depend on agriculture generating Rs. 483 thousand crore out of 2249 thousand crore GDP (20.3% of GDP) (2002-3). This dominant sector has been relatively free from global exploitation, which is now being handed over in a planned manner through the NAP of Govt. of India with active cooperation of the State Govt. (including West Bengal which is on an overdrive to implement contract farming in consultation with foreign experts/consultants).

This NAP formulated by BJP led NDA Govt. in 2000 and re-emphasized in 2003 is actively pursued by Congress led UPA and all state govt.. Political positions have no bearing on this handing-over exercise. With the introduction of SEZ and AEZ (agriculture export zone) the message is clear – loot when you please, under the Indian Constitution and the garb of Democracy.

The NAP targets to bring 267 Million economically active persons involved in agriculture (out of 451 Million total – 2001 figures) under the control of global economy. No mention of “Second Green Revolution” is permitted now. This would have involved the process of doubling of food production in West Bengal, Bihar, Orissa, AP, Chhattisgarh, MP and eastern/central UP in a sustainable way by increasing the cropping intensity to 250 (from 135) and increasing the irrigated area from 40 to 60% of cultivated area.

“Disinvestment” of the Agricultural Sector

Just like exercise of disinvestment of the public sector under the garb of generating wealth and improvement of production under hi-tech and ultra-modern global private sector, agricultural production is similarly organized to promote ownership and control by private sector and specially the major global players.

All investments made by the central and state govt. in Agricultural Institutes, Agricultural Universities, Indian Council of Agricultural Research (ICAR), agricultural extension programmes etc. will then be either handed over to the private sector or dismantled. Just like in the process of disinvestment of the public sector, no thought will be spared for the immense role of such institutes etc and its shameless handing over to facilitate the enrichment of the private sector, mainly the global ones.

While corporate farming will be direct handing over land to the private sector for agricultural activities, contract farming will affect large number of farmers and area under active agriculture. The route to control over such productive land will be indirect through careful contracts, which will potentially be unfavourable to the cultivator in the long run.

The important outcome of successful contract farming system will be

Change of production relation in agriculture

Producer-owner reduced to worker-owner in a rental system by contract

Agricultural production for market and profit and not for need/consumption

New “needs” will be created – replacing conventional needs

Replacement of conventional stable production system

Transforming food grains-oriented agriculture to cash crop-oriented agriculture”, “Producing crops that are in demand in the international market”, and “Developing agricultural export zones

Destruction of self-dependence on food grains

Due to large-scale mechanization, contract farming would lead to larger number of landless peasants, who would then work as contact laborers in villages on in the cities.

Large-scale migration to urban areas – further depression of wages of industrial workers

Cornering of all inputs to production and markets by the big agro-industries (monopoly in agriculture)

Impact on agro-ecology

Rampant and short-sighted use of new varieties of crops will be used for higher yields with no consideration on the impact on existing variety and the agro-ecology

Destruction of bio-diversity of agricultural/horticultural crops

Marginalisation of millets and other local crops

High demand for use of inputs (viz. water) – question on sustainability will be totally ignored

Denial of resources like water and electricity to all but those conforming and supporting contract farming

Non-conformation of agricultural production to agro-climatic zones

This will lead to rapid decline to situation of diminishing returns and serious damage to the environment

Political Realignments

Working class in India will swell in size due to the conversion of peasants to workers (wage labourers)

Due to lack of leadership of the working class, the global industries and financial institutions will have the capacity to extract 145% more surplus unhindered (the number is arrived at by assuming all economically active persons will participate in manufacturing, agriculture, trade etc. (as of 2001).

Appendix

2001 census – in Millions

Pop: 1029, Rural 743, Agri. Pop 545, Agri. Worker 234 (Cultv 127, Labourers 107)

Eco. Active Pop 451 (total), involved in agri. 267 (20% of the world)

Indian Economy – breakup by categories

Rs. In thousand Crore: 2000-1 / 2002-3

Agri. 424 / 456, Forest. 22 / 27, Fisheries 23 / 27

Mining 45 / 62, Manufacturing 302 / 351, Electricity/gas 43 / 48

Trade 252 / 299, Construction 116 / 138, Hotels/Rest. 19 / 23

Railway 16 / 22, Other Transport 94 / 115, Communication 29 / 35

Banking/Finance 118 / 158, Real Estate 120 / 152

Pub. Admin & Defence 124 / 145

Other Services 153 / 190

GDP 1903 / 2249

Agri %GDP 22.3 / 20.3

NDP 1705 / 2014

FE -17 / -19

NNP 1688 / 1995

Per Capita Income Rs. 16,563 / 18,912

India – Area under categories – in Million ha

Geographical Area 328.73

Reporting Area 306.01

Forest 68.97 (22.5%) % of Reporting Area

Non-agri 23.27

Barren/Uncult. Land 19.13 (6.2%)

Perm Past./Graz. 11.04 (3.6%)

Misc. Trees 3.64

Cult. Wasteland 13.80 (4.5%)

Perm. Fallow 10.06 (3.3%)

Curr. Fallow 14.99 (4.9%)

Net Area Sown 141.10 (46.1%), Gross Area Sown 190.32 (CI = 134.9)

Net Irrig. Area 56.76 (40.2%), Gross Irri. Area 77.99 (41.0%) (% Sown area)

{Net Sown area can rise to 179.95 (58.8%) with 11.04 grazing land (3.6%) – a total of 190.00 million ha (62.4%) put to various agricultural use.)

Average Land holding pattern

National 1.41 ha (1995-6) [1.57 ha (1990-1)]

UP 0.86, WB 0.85, Bihar 0.75, Punjab 3.79, Haryana 2.13, Gujarat 2.62, Karnataka 1.95, Maharashtra 1.87, Orissa 1.30, TN 0.91, AP 1.36, MP 2.28, Assam 1.17, Raj 3.96

Possible Future Scenario

Agriculture Rs. 456 thousand Crore

Can be raised to Rs. 582 thousand Crore (increase in area under production) (28% increase)

Can be further raised to Rs. 872 thousand Crore (50% increase in productivity) as of now compared to joint Rs. 1333 thousand Crore in all other sectors including banking/financing (ex electricity)

Economically Active Population (2001) 451 M (total)

Involved in Agriculture 267 M

Other 184 M

Possible increase in extraction of Surplus 145%

Number of individual owners 127 M (apprx) to be brought under Contract/Corporate Farming

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