Contract farming did no good to farmers, says IIM-A study

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Contract farming in the country has not benefited the farmers. Appropriate institutional arrangements, legal provisions and government intervention are needed to protect the interests of farmers, said a study conducted by an expert from Ahmedabad-based Indian Institute of Management (IIM-A).

The study conducted by Sukhpal Singh of the IIM-A’s Centre for Management in Agriculture noted “contract farming, in political economy, is one mode of capitalist penetration of agriculture for capital accumulation and exploitation of farming sector by the agribusiness companies.”

It said that new concept is the result of the recent developments in marketing, food habits, technology and agriculture in the new economic environment.

The entitled study ‘Contract Farming for Agricultural Development’ was commissioned by the Centre for Trade & Development (Centad), an initiative of Oxfam GB in India.

The study noted contract farming is being practiced in India by MNCs like Cadbury in cocoa, PepsiCo in potato, chillies and groundnut, Unilever in tomato, chicory, tea and milk, ITC in tobacco, wood trees and oilseeds, and Cargill in seeds.

There are also domestic corporates in the field like Ballarpur Industries, JK Papers and Wimco in eucalyptus and poplar trees, Green Agro Pack, VST Natural Products, Global Green, Intergarden India, Kempscity Agro Exports and Sterling Agro in gherkins, United Breweries in barley, Nijjer Agro in tomato, Tarai Foods in vegetables, M Todd in mint, and Namdhari Seeds in seeds. There are also various government and semi-government agencies involved. Financial institutions and banks assisting contract farming. The new changing dynamics of contract farming was the consortium approach note by the study.

It noted a general monopsony of corporates and contracts being loaded against the interests of farmers. It also dwelt on the problems faced by contract growers, particularly in Punjab and Haryana.