Amidst the Covid-19 pandemic, the Government of Odisha has brought contract farming into the limelight by approving the same in the Cabinet. Contract farming has been an age-old practice and being extensively practised in various advanced countries, but this method hasn’t yet been exploited to the fullest in the country. Moreover, India was also enforced for contract farming of Indigo during the colonial period. However, this has also been introduced after green revolution in some parts of the country.
The Appachi Cotton Company from Coimbatore, Tamil Nadu is a classical example of contract farming commenced in 2002 which has been successful to such an extent that the Tamil Nadu Government is now trying to take forward this to various cotton growing districts of the State. As such Odisha had also undertaken contract farming for high value crops like cotton and oilseeds in the year 2006-07.
Few more successful privately operating ventures like Pashupati feeds and Suguna hatchery in Odisha have efficiently performed contract farming in poultry sector and now have the potential to produce broilers in surplus and help making the State self-sufficient. So, this proves that not only agriculture rather its allied sectors could also be cent percent successful through this. Contract farming could also be fruitful in case of sugarcane, groundnut, til, other high value crops including horticultural and floricultural crops in the State.
Taking into consideration the consequences of the lockdown and the crisis due to Covid-19 which adversely resulted in the downfall of the economy and difficulty faced by fellow farmers, the Odisha Government has encouraged contract farming. The Odisha Agriculture Produce and Livestock Contract and Services Bill has already been drafted to encourage various farmers and firms to voluntarily come forward. This could in turn uplift the status of the farmer in terms of dignity and socioeconomic condition. Moreover, it will let the economy of the entire State to upsurge.
Now, the question comes what contract farming basically is? Contract farming is a legal agreement between the farmers and agrobased firms in which the farmer engages his land and the firm in return supplies with improved seeds, modern inputs, advanced technology with proper guidance in order to harvest specific quantity of a commodity fulfilling the quality standards at a predetermined price. So, it ensures marketing of the produce of the farmers.
Contract farming aims at satisfying the demand of both companies and the farmers. India being an agriculture dominated country comprises small and marginal farmers, resulting in small fragmented lands, poor inputs,deprivation of advanced technologies, exploitation by middle men, no market access, facing distress sale, pest and disease attack, lack of proper intercultural practices, wrong harvesting and post harvesting practices, improper storage and transportation facilities, crop failure which sum up to ‘No profit and burdened with debt’.
On the other hand, the agrobased industries lack land for cultivation. So, to make each other profitable they should go for a mutual agreement where in, the farmers being capital starved engage their land and the company supplies them with proper inputs, modern technologies, improved seeds and proper technical guidance. Above all, it insures the crop and bears the risks depending upon stage of the crop it desires.
The bill drafted covers production, post production, marketing and help the firms get involved in producing various commodities in an efficient way. The farmers will show interest since there is a buy back guarantee of the produce, no risk of distress sale, assured prices, easy disposal of perishable commodities, access to markets, no issue in transportation and storage and lastly no influence of the inevitable market fluctuation. So, there is an overall benefit of the farmer, the firm and the society. It fills the gap and establishes link between farming sector and corporate sector.
Though contract farming will have a lot of opportunities and challenges in its initial phase its outcome and acceptance is yet to be observed in the State after its commencement. It could be feasible only when there would be a positive response from the farmers and they would take interest in this profitable venture.
Nevertheless, it sounds quite easy to understand theoretically but is way challenging when it would practically function. Despite everything there is a dire need for dispute settlement system as it involves farmer and the firm, besides there should be proper regulations and relevant protocols to discourage disputes which could be quite alarming in the midway. If everything goes well and fine, contract farming could give momentum to modern agriculture and would pave way to achieve Vision 2020 ‘Doubling the farm income’.
(The writer is a 3rd year BSc (Hons) Agriculture student, College of Agriculture, OUAT)