Agribusiness can be a way to solve the supply chain disruption crisis that farmers are facing due to lockdowns and give jobs to the labourers who have returned to their villages
Two significant developments have taken place in the rural as well as the agricultural sector after the outbreak of Covid-19. One, is the massive disruption of supply chains due to the slow movement of goods and commodities and the other is the reverse migration that is currently taking place. Both of these taken together could lead us to a crisis as well as open up new opportunities in agribusiness. A large part of the world’s agribusiness is controlled by a few giant firms. Some of them work as middlemen like ADM, Bunge and Cargill, Louis Dreyfus and Olam International. They harness efficiency, based on large-scale operation and thin margins. The global food production and processing network is extremely complex as the crop is produced in one country, milled in another and the food product is produced in another nation. The recent Covid-19 outbreak has crippled this process, with transport facilities coming to a near halt across the globe.
In India, the farmers are struggling to sell their agricultural produce like potatoes, onions and vegetables. Save for a few, most of them are perishable, leaving growers with no bargaining power before sellers. One way to tide over the crisis is by encouraging water user collectives to upgrade themselves from a user group to an agribusiness one. Participatory Irrigation Management (PIM) through formation of Water Users Associations (WUA) has been identified as a key vehicle for increasing agricultural productivity in India. As many as 15 States have already formulated legislation to support PIM and form WUAs. According to the Network on Participatory Irrigation Management (NPIM), established in 1998, by the Ministry of Rural Development, there are 57,000 functional WUAs covering 13.5 million hectares across 24 States.
The World Bank has also promoted WUAs in different developing countries, including India. One of these is being promoted in West Bengal through a programme called the West Bengal Accelerated Development of Minor Irrigation Project (WBADMIP). Under the WBADMIP, there are 2,349 schemes and 1,674 WUAs with a potential of covering 68,347 hectares of land and 1,07,707 farmers. These WUAs are not mere user groups of water supplied by the Government’s irrigation department but collective institutions based on principles of cumulative actions. Since these groups form institutions, they may reap the benefits of economies of scale in agribusiness and at the same time distribute benefits to the poor and marginalised farmers.
Along with encouraging and facilitating these WUAs to engage in agribusiness, the Government may endeavour to promote them as a medium-term strategy.
Formation of WUAs: Water associations may be formed by the Government providing micro-irrigation systems like tubewells, river lift irrigation systems, surface flow minor irrigation schemes, check dams, watersheds, water detention structures, sprinklers and so on. The command area of each WUA may be around 35 acres. On average, it may cover 50 beneficiaries with one-third representation of women. The number of members of each WUA may vary between 30 to 70, depending on the command area and the size of land holding. The members could be landowners and their families. Sharecroppers may be included as the beneficiaries. Two-thirds of the members could be marginal farmers and one-third small and large farmers. The members should contribute land or bear some expenses of the micro-irrigation structure. They should be made solely responsible for its operation and maintenance.
The WUAs should form a governing body or managing committee of six to eight members with two to three women in it. The role of the managing committee would be to supervise the day-to-day activity of the WUAs. The resources for regular activities of the associations may be mobilised through yearly membership fee and water charges.
The associations should maintain maximum transparency in water distribution and fund collection by keeping the required records, documents and public display of the water distribution roster. They should organise periodic general body meetings and maintain the minutes of those meetings.
Economic improvements: The availability of additional water, especially during the Rabi and pre-monsoon season, would increase the production and income of WUA members. Moreover, as agricultural production increases, demand for agricultural labour would increase as well. It may generate 1,000-2,500 additional labour days per year, per WUA. The associations may be engaged further in agribusiness, with additional manpower and skills available from labourers who have returned to their villages. They may bring back some managerial and other skills as many of them have been exposed to myriad activities. The WUAs may form a sub-group of beneficiaries who may be involved in sorting, transporting, selling, and marketing agricultural products. Associations may evolve as an aggregator and subsequently as an agribusiness organisation by selling and marking agricultural produce in local and other regional markets. In this way, farmers may be able to cope with the disruptions of transport facilities. They may deal with a specific buyer, based on contract farming.
When farmers form a group, they may pursue organic farming under the Collective Guarantee Scheme where each one would guarantee for the other’s practice of cultivation without fertilisers and/or pesticides. They may develop their own brand of product or may work based on a contract with some other private company dealing with organic products. Apart from agribusiness, the WUAs may earn by simply renting out their agricultural implements such as tractors and harvesters to other farmers who are not part of the WUAs.
The members may engage in other income-earning activities such as fishery, rearing livestock, orchards and horticulture. Being a collective, they would be able to get better prices in the market. They may produce processed food such as dried fish and fruit and cheese. The women members of the WUAs may be engaged in horticulture, vermicomposting, hatchery and polyhouse farming. Women may be engaged in making milk products, pickles, jam, jellies and so on. In general, food processing should be brought nearer to the farm. The men and women engaged in these activities should be given their due returns out of the surplus generated from these activities.
The institution of collective organisation would enable them to get their fair share. Women of the WUAs may form self-help groups (SHG) for developing saving behaviour and for easy access to credit. The collective initiatives of women would develop trust and confidence among themselves. They would be able to engage in other non-farm activities such as stitching and embroidery. This would empower women and improve expenses on health and education.
Role of the Government: The Government should support the WUAs by providing an enabling environment. If the associations are not formed, then the Government should provide one-time expenses for micro-irrigation systems and form WUAs in areas where monocropping is practised. They should provide guidance for at least one year for conducting the operation of the association, including financial and non-financial record keeping. The Government should facilitate the WUAs with an appropriate legal environment and other kinds of support to sell their agricultural produce through the National Agriculture Market (eNAM) and in other agricultural markets. The State agricultural departments should support WUAs by imparting training and knowledge on farming with less water and skills in agribusiness management. They should provide quality inputs to the associations. This would reduce the incidence of farmers selling their produce at cheaper rates to the input suppliers. The Government should organise and encourage the members to visit agricultural fairs and other WUAs for cross-learning of agricultural and agribusiness activities. Credit should be made available to the group of farmers at low interest rates.
All these initiatives are more effective if made for a group of farmers intertwined by institutional norms rather than for individual farmers. The money raised for assistance and relief, such as the PM CARES Fund, may be used to incur expenses for these initiatives. This would relax not only some of the immediate strains but also generate long-term gains.
(The writer is Associate Professor, Institute of Rural Management, Anand, Gujarat. Views expressed are personal)