You are a great Indian company doing great business that contributes to the GDP. In the agriculture sector, I have a suggestion that you could mull over. Instead of dealing with selling seeds, providing inputs etc., you can do a great job of creating farmer collectives and create a producer company with numerous farmers. Farmer’s lands can be professionally managed by installing a vibrant and professional team and create wealth for the Producer Company. This name is familiar undoubtedly and you will be wondering as to how to get small farmers into a collective! There are difficulties and I am trying various means to locate one for launching a professionally competent Producer Company. You have all the resources to make agriculture produces, market locally, export and possess an excellent Management wherewithal to conduct business successfully.
The advantage I see is that you will get to produce the crop you need to market either locally or export, farmers benefit by getting wages all their lives and in addition receive annual dividends. They will give their best productivity and this arrangement will not hinder getting farm labor, which is causality today. I see a win/win situation and most importantly, you can contribute to the PM’s vision of doubling farmer’s income by 2020. One successful venture will fire interest in many in the country.
My suggestion is that you could try one such example to evaluate its success. I am in the process of locating a suitable collective and if you can join hands to further, it can be worth a trial. I shall be just as a volunteer and have no monetary interest in making this suggestion.
Can I know your mind in this suggestion? My website, http://www.farmeremancipation.in will elucidate
Agricultural activity in India for small and marginal farmers currently is unsustainable. This phenomenon stems from fragmented lands that cannot:
1. Absorb technology nor mechanisation
2. Suffers from perpetual indebtedness that cannot provide the inputs
3. Unable to source labor. Tough to get productivity out of them, if engaged
4. Poor storage to keep produce safe from parasites
5. Harassing strings of middlemen who deny the worth of farmer’s meagre produce
6. Bureaucratic ineptitude, to tackle their problems, to mention a few
Central and State Governments provide help and assistance to these farmers through consistent budgetary allocations every year besides providing adhoc reliefs when either floods or draughts strike. However the delivery mechanism is slothful and ridden with corruption. Bulk of the provisions is siphoned off. This is a big reason for the abysmal state of these classes of farmers. Ironically some Government staff becomes rich at the cost of poor. A pathetic state!
Logically Government must exit the agriculture sector as this has done more harm than help. Instead Government must concentrate on more useful and endurable work in building roads, connecting rivers, build canals, from these canals create an intelligent network to ensure all lands gets irrigated, provide continuous power supply, simplify and speed up the process of land registration / transfer, simplify legal system, bring digital technology of internet browsing facility and the like. Money spent on these will benefit the farming communities more than the current measures. These will build capital assets and avoid revenue expenditure (loss) through doles. The direct benefit to farmers will begin to get rid of poverty sooner and eventually resurrect them from penury. This will also create more jobs and consequently arrest migration. The farms sector will begin to contribute to the GDP growth in a significant manner.
The other worrisome factors that encumber farmers are unpredictable weather, depleting water resources adulterated seeds, inefficient power supply and lack of availability of the farm labor and farm debts. All these collapse the farmer and disillusion them and drive them to extreme poverty. The youngsters desert their older ones in the villages to migrate to larger towns, ostensibly seeking employment and with poor education and lack of skills required for an urban environment they fail and fall a pray to tumultuous activities. The plight of farmers with large land holdings up to 10 acres of lands, are not different..
A plethora of local NGOs many with foreign origins have been in operation in India for long in the agri-space. All of them are engaged in advising farmers on applicable / available technology, farming methods to improve their skills and develop managerial abilities to run their vocation better; all of which do not help these classes of farmers. In fact there are many narrative about fund misappropriation of the NGOs barring a very few. Thus such measures have failed to alleviate the miseries of farmers. It appears that they are ‘barking the wrong tree’ to mention the least; knowingly or unknowingly!
Many authors and theorists including business managers of repute, say that “In our opinion, the real problem in agriculture is the absence of a holistic framework, incorporating technology, risk mitigation, institutions, policies and technical training”, say the authors of ‘What India cad do differently in agriculture’, in their book. The authors have not identified the vehicle and the methods through which these can be done. However these are the ideas that can form a part of the curriculum of agriculture schools in the country and not applied to small and marginal farmers who are sweating out in their fields. Why the subject of agriculture cannot be taught in village schools in addition to the present curriculum. After class 8, when they usually branch off to science or arts or commerce streams agriculture could be one addition stream? This may create a strong preference and students can go up to the college levels in Universities and get employed in rural India. They will get immediate employment in the type of institutionalised form of agriculture we will talk about later in this note.
Present Agriculture Universities teach students only good agricultural theories but with little or no practical classes, their education remains incomplete. So how will students coming out get to work in agriculture environment? That is one reason that annually graduating 19000 students from Agriculture Universities do not remain with Agriculture, even if they are passionate. ICAR and many such R & D institutions create new varieties of crops, seeds tissue cultures with excellent credibility but all are a bundle of wasteful efforts, if these cannot be applied real time farms. R & D is done on the University’s farms with ideal conditions that may not be so in real fields of farmers. This is corroborated by statistics showing that new varieties of researched seeds had varying yields in different parts of the country. An eminent Agronomist in the country, Mr. KPP Nair once said long time ago that the difference between the Chinese and Indian scientist in agriculture is while in China, the scientists go to the villages and hand hold farmers in teaching their findings, in India the scientists send out their finding sitting from the comfort of their offices to their subordinates in the field. The large land holder and big farmers benefit by these nuances.
If one stays in the villages and make efforts to study farmer’s problems, it would be apparent that the theoretician’s panacea for alleviating the farmer will be unworkable. It is because the suggested steps will be impossible for individual farmers to go about as he is deep into distress already. To compound, the farmer faces indebtedness and is hounded by money lenders. There is not much left for him to get his inputs for the land to produce meaningful crop / yield. Further it will be uneconomic to apply technology or mechanisation on fragmented lands.
Economist Prabhat Patnaik observes in Outlook Magazine: “Our share of cultivators has fallen since 1951. A whole set of people who might have been independent peasants…have been pushed into the ranks of agricultural labor. They have no rights, no security of income; they are subject to the worst kind of drudgery because it is all manual work. They cannot organise. It’s just a miserable and painful state of existence.”
Since the stagnant rural economy offers meagre opportunities for employment, a large segment of these households are footloose, circular distress migrants, evocatively described by labor anthropologist Jan Breman as ‘hunters and gatherers of work’. To stay alive, they will go to any corner of the country, to do any work, with any remuneration, on any terms. How true, as we see these migrants from lands far away, with different languages, cultures reside by road-side to seek work! It s indeed pathetic and painful to see such fellow Indians who once fed us, suffer from penury, now. Their children loiter and have lost opportunity to be educated.
Admittedly only large farmers are finding this vacation sustainable and emerge as real producers of food grains in the country. They produce whatever is best suited for them. They are an influential lot and often seen to be behind framing policies on agriculture. Many are politically connected and consequently are the biggest beneficiaries from this vocation. In contrast to small farmers, large farmers in our country with large tracts of lands conduct profitable agribusiness. Besides farming they have innovatively done value addition and successfully tapped opportunities for exports. They have large financial resource and can organise local labor easily. They also benefit from Government’s largess in terms of waiver of Income Tax, benefit the subsidies and take loans even though they may strictly not need one but await a loan waiver.
Also, there seems no system to communicate with farmers to produce what is needed in the country. For example, if there is the shortage of pluses, there is no mechanism available to communicate with farmers to grow pulses. Even if there is one, is it possible to get farmers to grow pulses to fulfil the demand? What price will they secure? Is the farmer who never grew pulses before, prepared to take risks? The fear of middlemen playing havoc will frighten farmers. Organising skills is yet to develop to tackle such eventualities. Hence, the Government has no other alternative but to import. There appears no system to assess, guide and fall into a norm for food production in India. With generally poor administrative machinery, one wonders if the statistical information provided by the Government is authentic. It is thus clear that the Management of the affairs of agriculture needs refurbishment to get around the issues eluding the right answers.
One of the progressive measures relates to the Government amending the Companies Act to incorporate a new section 581 to promote a concept of Farm Producer Company (FPC). Essentially this was to overcome the problems relating to cooperative society system that was initiated soon after independence. FPC gives a structural form to enable farmers to create a corporate form of enterprise so that famers can be issued equity shares against their land value and become owners of the enterprise to the extent of the equity holding. While it was intended that groups of farmers would form such FPC and operate with a vision to produce common good, it was a non starter because the structure lacked managerial expertise to operate in that form it was conceived. FPC was created to enable the company to, for instance, meet bank officials to arrange for loans for individual farmers, negotiate with input suppliers to deliver at reasonable prices and with good quality and so on. In other words what individual farmers lacked in doing independent farming, was to be done by a structured enterprise for the farmers. Deficiency of leadership, enterprise and cohesion were lacking. Thus it remains in an indeterminate state.
Many corporate like ITC, Mahindra, Birla, Reliance, HLL, Rallies, Godrej, and Pepsi to name a few have got into agricultural business. All of them have gained considerably from agriculture that signifies that wealth can be created from agriculture. However they are done with large land owners only.
However corporate farming has earned more criticism amongst the writers and observers of the agriculture industry because they feel that corporate collude with international agriculture companies. This may not be true entirely. Without exploitative mind an existing corporate can form a FPC and install a professional team to do agriculture on the farmers’ lands and derive benefits for themselves as well!
In Andhra Pradesh, under the aegis of the then Chief Minister, Chandrababu Naidu, who was perhaps inspired, coincidentally by the idea presented in this paper, agreed to let BHC Agro India Private Limited to conduct agricultural on lands belonging to farmers. Around 200 acres of lands belonging to small and marginal farmer’s lands were given to this company. The company had a tie up with an Israel Company for the supply of drip irrigation, even though, irrigating fields with drip technology has been in vogue in the country for long and certainly before this experiment. The land-owner farmers were asked to leave the village. A few were however engaged as labor but for a low wage and treated shabbily and poorly. They operated with a huge budget and spent money like water in pesticides and high-value fertiliser. They had no systematic plan for growing crops and did not engage any agricultural personnel but carried on with whatever manpower they had. This resulted in a total failure of the project and ultimately, had to be wound up. The farmers felt cheated at the end of the experiment. These details are in public domain. This is the result of a good model, but improperly executed.
Having virtually exhausted all avenues to resurrect small and marginal farmers, the way ahead can be summerised as follows:
Agriculture in India needs to be institutionalised in a manner that would be conducive to build the structure of the required paradigm. Individual farmers are too tired and worn out, confused at the array of rural interventions by NGOs and exploiters. Skill development, training and professional jargons do not enter their minds. They need resurrection from penury. They need hand holding and encouragement and assurance. Individually farmers cannot do agriculture and make a living. So the only way ahead for them is to group them together and let the farming be done on their lands by some professionals with whom they can engage for a wage.
They need to be convinced that formation of Farmer Producer Company is their option and they must understand this concept clearly. Mechanism to communicate the concept to the farmers assumes a challenge and a way need to be found to transmit the idea properly. When farmers’ lands will not be taken away or leased or sold, they must be assured. Besides, they will be resurrected from penury by getting wages all round the year. The other challenge is to secure an investor with passion and possesses a non-exploitative nature to partner with farmers. The proverbial storey of “goose laying golden eggs” comes to mind. It is a hard work and satisfaction always comes out in hard and sincere work. Institutionalisation, of agriculture is required to use large tracts of lands with use of technology, financial resource, management and engaging the best in the field of agriculture to develop a profitable model. Benefits can be shared by all constituents. The efforts of individual farmers thus get eradicated and joint effort with the cooperation of everyone will move the engine of development. This will alleviate small and marginal farmers, restore the village sanctity of peaceful and health living and create more jobs. Youth will desist migrating to cities and be a part of the entire system to joint effort that will build and develop villages.
A FPC can be registered between entrepreneurs and farmers under section 581 of the Company’s Act.
1. Entrepreneur(s) bring in cash for equity share and farmer’s land value is considered for issue of shares to him.
2. A Management Team will consist of farmers endowed with good knowledge and a sharp eye on farming techniques, investor(s)’s men with professional qualification or experience and lastly, eminent agricultural professionals.
3. All members will stay at the farm where comfortable dwelling accommodation shall be built.
4. Farmers’ lands will remain unaltered. It shall not be sold nor leased to the FPC. A written undertaking if necessary can be given to this extent. Real-time Satellite picture of the entire lands will be taken and exhibited on a big board in the FPC’s premises..
5. Cereals consumed by farmers will be produced on the lands of FPC, so that farmers need not go to fetch their food elsewhere. Farmers will be treated with dignity and respect by the Management Team and whoever is outsider into the system. A team of HR professionals will be entrusted to oversee this aspect.
6. Farmer’s cattle will be taken care by the FPC and milk from the cows and buffalos will be given to the children of the farmers.
7. Farmers will work on the lands according to the directions given by the management and wages will be paid for all those who are able to work. Children will not be allowed to work and must attend school. This will immediately sustain the farmer and his attitude towards a team work will ensure productivity.
8. People other than members will also get employment full time in the project. The aim will be to ensure employment for all those willing and employable. In addition to farming the FPC will go in for developing non-farm activities and value addition measures to improve the bottom line of the enterprise.
9. Success with one project will energise interest in many to form such PCs all over.
The foregoing proposal immediately alleviates the misery of the farmer from penury. He is mentally peaceful and blissful! Once the organisational plan is firmed up, results can be expected within 18 to 24 month. As farmers are paid wages, the risk factor is not weighing against him. Farmers will soon realise that the gold laying goose should be nurtured!
FPC can expand their horizon in terms of community development and when others also come in the fray, there will be competition amongst on showing one-up-man ship. The key is to collect and convince first group of farmers to collectively engage themselves and see the benefit it brings. Automatically many surrounding villages will take this up. I am waiting the first move.
The writer of this note is prepared to be a member of the Management Team or as a guide to see through the first such enterprise.
Former Director (Petroleum)
Indian Oil Corporation (IBP Unit)
Chennai : May, 30, 2016
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