The declining average size of land holdings in India poses a significant challenge to the viability of agriculture for many farmers. In light of this issue, the promotion of contract farming and land leasing emerges as a potential solution warranting critical evaluation. Proponents argue that contract farming can offer small-scale farmers access to technology, capital, and markets, enhancing productivity and profitability. Similarly, land leasing can enable efficient land utilization, allowing larger farms to benefit from economies of scale. However, critics raise concerns about the exploitation of farmers by powerful corporations in contract farming agreements and the risk of land concentration in the hands of a few in leasing arrangements, exacerbating rural inequalities. Moreover, the loss of land ownership may erode farmers’ autonomy and exacerbate vulnerability to market fluctuations. Thus, while contract farming and land leasing offer potential benefits, careful consideration of their socio-economic impacts is imperative before widespread promotion in Indian agriculture.
Tag: Land reforms in India.
Decoding the Question:
- In the Introduction, try to write some data about declining landholding in India.
- In Body,
- Discuss the advantages and disadvantages of land leasing and contract farming.
- In Conclusion, try to write a positive note and what can be done to improve the effectiveness of land leasing and contract farming.
Answer:
The average size of land holding has been declining in India since Independence due to increase in population, diversion of agricultural land for industrialization and urbanization and also because of divisions within the family. The current size of land holding is 1.21 ha and 85% farmers are marginal farmers. To increase the productivity of land from the declining size of land. In this respect contract farming and land leasing can be useful to deal with these problems.
This has rendered agriculture unviable for the vast majority as: a) Small farms are not suitable for using expensive technologies, b) Irrigation becomes difficult, and c) A lot of fertile agricultural land is wasted in providing boundaries.
Contract farming can be defined as agricultural production carried out according to an agreement between a buyer and farmers, which establishes conditions for the production and marketing of a farm product or products. Land leasing, is a commercial agreement in which the user or less acquires the right to use the land in lieu of a certain amount of payment has advantages both for the farm producers as well as for the Agro-processing firms.
Advantages of Contract Farming and Land Leasing:
- It will bring more technology and modernization to agriculture as seeds and inputs are given by business houses.
- Stabilize prices for farmers as prices would be fixed in the contract.
- Higher Yield and Productivity, would increase the income for farmers and also give a boost to the Food processing sector, For example, the income of potato farmers in Punjab increased by 30-40% after they shifted to contract Farming by signing a contract with Frito lays.
- Contract farming ensures better optimization of price and increased shelf life of farmers’ produce to reduce price and marketing risks.
- In the case of the Agri-processing level, it ensures a consistent supply of agricultural produce with quality, at the right time and a lower cost. Ensured supply of raw materials and establishment of supply chains from villages to cities makes the sunrise sector’s growth possible at its expected level.
- Corporatization of small farmers would allow small farmers to participate in contract farming and also would increase their bargaining power. – The KISAN insurance scheme should be made mandatory for all the farmers participating in contract farming. It would reduce production risk.
Agri-based firms can be benefitted in the following manner:
- Optimally utilize their installed capacity, infrastructure, and manpower, and respond to food safety and quality concerns of the consumers.
- Make a direct private investment in agricultural activities.
- The farmers enter into contract production with an assured price under terms and conditions.
Disadvantages of contract farming:
- Contract farming arrangements are often criticized for being biased in favor of firms or large farmers while exploiting the poor bargaining power of small farmers.
- Problems faced by growers like an undue quality cut on produce by firms delayed deliveries at the factory, delayed payments, low prices, and pest attacks on the contract crop which raised the cost of production.
- Contracting Agreements are often verbal or informal, and even written contracts often do not provide the legal protection in India that may be observed in other countries. Lack of enforceability of contractual provisions can result in the breach of contracts by either party. New Farm laws try to set this issue right.
- Single Buyer – Multiple Sellers (Monopoly) may shift the power away from the farmers.
- Adverse gender effects – Women have less access to contract farming than men.
Disadvantages of Land Leasing:
- Absence of Proper Land Records: It is the biggest issue in land leasing as there is lack of tamper-proof land records. This is the main reason why farmers fear losing land.
- Diversion in Land Use: Once land is leased the land will be used to grow commercial crops and less focus can be given to food crops. This will further add tension to the food security of the country.
- Absentee Landlordism: The model land leasing act will prevent land redistribution through the transfer of ownership. As the real owners will prefer to lease out land rather than give it to others.
- Exploitation of Small and Marginal Farmers: Small and marginal farmers are very prone to exploitation as they don’t have good bargaining powers, so it is fear among these farmers that they will get exploited.
- Lack of Uniformity: As land is state subject disparity and abundance of laws will further create confusion among farmers and corporates.
Thus, even though contract Farming has significant potential to turn around in the Agriculture sector, it has a number of lacunae that needs to be rectified. Hence contract farming and land leasing can be used for increasing agricultural productivity, but the government has to take steps to make it more friendly to small farmers than the big corporations. For example the issue between potato growing farmers and Lays company. Thus it is imperative to build trust between farmers and corporations and new Law can be a right move.
In case you still have your doubts, contact us on 9811333901.
For UPSC Prelims Resources, Click here
For Daily Updates and Study Material:
Join our Telegram Channel – Edukemy for IAS
- 1. Learn through Videos – here
- 2. Be Exam Ready by Practicing Daily MCQs – here
- 3. Daily Newsletter – Get all your Current Affairs Covered – here
- 4. Mains Answer Writing Practice – here
