Contract farming and Corporate farming have been encouraged by the government as possible solutions to problems of Indian Agriculture. The small sized, fragmented, uneconomic landholdings and lack of competitiveness of agricultural produce are main reasons for eroding profitability of the agricultural sector. State governments across different states such as Andhra Pradesh, Tamil Nadu, Gujarat, West Bengal and many more are amending laws to encourage the practice of corporate farming. Prime agricultural land and wastelands are being purchased or leased in by corporate houses, to undertake agri-business ranging from seed supply, agrichemicals to storage, transport and retail sales. The large corporates, primarily motivated by profits, invest huge amounts of funds towards research and modernization of agriculture and with complete control over land holdings are able to maximize produce for both sale in the open markets as well as their own retail food processing. Reliance Fresh, Tata agri-chemicals, Sterling Agro, Mcdonalds, Hindustan Lever are only a few examples of entry of private sector into the primary sector.
The problem of the Indian farmer is that the farm land should be owned by the independent farmer and input costs like farm machinery, crop insurance,fertilizers,irrigation,pesticides, fuel, and seeds should be borne by the corporates. But corporate farming at present is bringing back feudalism as corporate farmers are working as contractual labourers of the corporates that have bought their lands and employed them. The small farmers, now landless, continue to be plagued by problems of hunger and debt.
Corporate farming can be economically and socially beneficial if it gets the marginal farmer a remunerative price. It adds to the export capacity of the country by discovering international markets for the fresh produce, fruits, vegetables and processed primary goods of consumptions thus contributing to the growth in agriculture. Credit requirement is not a constraint for the big corporates as they have huge funds at their disposal as well as ample support of the financial institutions and banks. They can undertake large-scale investments necessary for marketing from packaging to warehousing to transportation of primary goods. There is a huge demand for organic foods among consumers today and such cultivation is being taken up by the businesses to cater to changing preferences
However corporate farming has it’s fair share of pitfalls which can reverse trends of growth and increase social injustice. Since the corporates continue to operate on the motive of profits, they will not be too concerned with the welfare of the farmers. Production will become completely market-oriented substituting subsistence cropping by commercial cultivation. More and more of the farm output produced will be for the export basket rather than satisfying domestic needs of consumption. It is already observed that there is an increasing trend of casualization of labour causing a shift in employment from the agricultural sector to the urban informal and service sectors. Concrete steps need to be taken by policymakers to ensure the farmers’ status in the country doesn’t worsen.