Posted by: Aadisht on: February 21, 2006
Today’s Deccan Herald talks about the popularity of Gherkin farming in Karnataka and how contract farming might exploit farmers. The article goes on to say that there are certain days when the Gherkins are not picked up on time by the trucks because of which they tend to get spoilt. (Gherkins have to be processed within 24 hours of picking, else they can rot). The article also talks about circumstances where farmers lose out in case of lack of water and similar circumstances.
A similar situation prevails in the case of chicken in India. With the advent of the bird flu, more than a million chicks have been slaughtered in Maharashtra. Farmers are protesting heavily over this and have taken to the streets. Not that one must blame them, since they stand to lose out heavily on investment.
With the growth of contract farming (given weird land laws, a large number of exporters are sourcing their stuff through contract farming), the rights of the farmers in cases of produce not being picked up on time and other losses become even more significant. Is there a solution to this mess?
Can you see a parallel between farm produce and power? What is the unique propety of electricity that makes it so tough to handle? Just like Gherkins, it cannot be stored. It has to be consumed instantaneously. What have the policy-makers done about this? There is something called a “take or pay” policy; where the generator’s fixed costs are reimbursed in case of non-withdrawal of electricity.
Is it possible to extend something like that to farm produce? Can the buyers of farm produce pay farmers for goods not picked up or for delayed pick up? Can farmers be partly compensated for some costs in case of a bad monsoon or pest attack? In short, can something which combines an insurance policy and a take-or pay agreement be effective in this sector?
Of course, proper framing of prices is essential, else one could end up paying farmers for vegetables not grown, a la Major Major Major Major’s father. However, if exporters and other purchasers of farm produce can come up with some innovative “products” in this space, it would go a long way in boosting contract farming in India.
And increased contract farming can only improve the state of the agricultural sector in India, especially for stuff like fruits and vegetables. It can provide a major boost to farm sector exports, and also improve the state of fruits and vegetables retailing (which, but for a few stores like the “greens and grains’ chain in Bangalore, is largely unorganized and follows a long supply chain).