CHENNAI : With Tamil Nadu enacting a law on contract farming, farmers and economists say that the State Government would do well to anticipate and address the array of issues that may arise with the move. Although the law has its critics, there are many who also believe it could benefit farmers. The statement of objects and reasons in the Tamil Nadu Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2019 says that contract-farming is a pre-production agreement between farmers (either individually or collectively) and sponsor(s) which would transfer the ‘part of risk of post-harvest market unpredictability’ from the former to the latter.
The Act says the contract farming producer may also get support from contract farming purchaser for improving production and productivity by way of inputs, feed and fodder, technology, etc. Prices will then be fixed, accordingly. However, experts such as R Rengalakshmi, director of Ecotechnology at MS Swaminathan Research Foundation, cautioned that while contract farming may help farmers by way of removing need for ready cash at the time of sowing or to turn to a credit system, it may also have economic and social consequences.
Corporate take-over?
“When food corporations were formed and the concept of a Minimum Support Price was introduced, it was called a revolution. Now, they are turning it upside down by giving the power to corporates,” said economist J Jeyaranjan. “Companies will not reject the produce outright. If, for instance, they are purchasing cucumbers, they will lay down specifications such as shade of green, shape and size that the cucumber needs to be or else, they will walk away,” he said.
Rengalakshmi said leftover produce may get rejected at the market. “As far as vegetables are concerned, first and second grade quality produce are easily taken by companies. When farmers take the remaining produce to markets, they are often rejected because markets look for produce that is a mix of all qualities not simply low quality vegetables,” she said. Meanwhile, farmers associations in Thanjavur opposed the act saying it would pave the way for the government to discontinue procurement of farm produce leaving small and marginal farmers vulnerable.
Can disputes be settled?
The contract may not be enough to protect farmers. “The contract system exists for sugarcane but has not stopped arrears to farmers from accumulating in States like Uttar Pradesh and TN,” said economist Venkatesh Athreya. Sami Natarajan, State secretary of Tamil Nadu Farmers Association and a farmer from Orathanadu area in Thanjavur echoed these fears. “Farmers had to wait for many months to even get the Fair and Remunerative price from the private mills, even with the backing of the law,” he said.
“In the cases of contractual farming in gherkins, the risk mitigation strategies, in case the crops are lost due to natural calamities or other reasons, are not built into the contracts,” Rengalakshmi noted. To address such issues, the Act states that the Government may, by notification, constitute a Dispute Settlement Committee.
However, experts said the committees may be of little help. “The negotiating power of farmers would remain lower than the contractors because they have perishable commodities. Even otherwise, they will need money for the next cycle of crops,” said Jeyaranjan.
Issues not yet visible
The Act states that while recording the agreement, the Registering and Agreement Recording Officer shall ensure that the title of land is, as reflected in the latest record of rights. This would mean that the bulk of the contracts go to men, said Rengalakshmi. “There was a case that I encountered where the company took an initiative to register the contracts with women which is seldom the case either because the land is not in their names or because of the social stigma attached to interaction with unfamiliar men,” she said.
Moreover, with field agents of contractors making regular visits to the fields, intensive application of fertilizers and pesticides may be encouraged, so as to ensure maximum yield. While this may benefit farmers as far as profit maximization is concerned, it may prove detrimental to the soil in the long run and affect future yields.
“The State must also be concerned with food security and have a land use policy in place since the quest for profit may lead to monocropping which in turn, may lead to undesirable ecological consequences. In the case of monocropping, if prices crash, it may lead to a huge social issue,” said Athreya.
Some farmers support Act
Some farmers think that the move would be beneficial. Ajeethan, farmer and executive of a banana processing farmer producer organisation in Thottiam, Tiruchy, said prices of banana tend to fluctuate. “The Act would enable farmers have an assured price,” he said. TN small and marginal farmers association state president KR Sudandararaju said that the Act could be welcomed if the government fixed prices for all the farm goods which could be bought by the firms. As most farmers were semi-literates with small land holdings, they may not be able to bargain with firms with crores of rupees in turnover, he said.
“The firms could lure the ryots by citing high prices initially and once the ryots depend on the firms, they could reduce the price. Since other small traders would vanish due to entry of corporate firms, the ryots would be at the mercy of corporates,” he rued.However, Cauvery Farmers Association leader Mahadhanapuram Rajaram believed that as the agreements could only be signed in the presence of District Agricultural Officers, farmers would not be allowed to fall into a trap.
‘Consultation needed’
TN turmeric growers association national president P K Deivasigamani urged the government to implement the Act only after clearing doubts of ryots. Chairman of Farmers Producer Organisation (Udumalai and Gudimangalam) S Paramasivam concurred. Gagandeep Singh Bedi, Agricultural Production Commissioner and Principal Secretary to Government, assured farmers that the State was in the process of holding consultations with ryots to frame rules for the Act. “What I would like to highlight is that the Act does not make contract farming compulsory.
Even today, we get complaints from farmers that they didn’t get the prices they were promised. In such cases, if they are willing to come under a protection clause, we will be able to hold the sponsor accountable,” he said, adding that dispute settlement would be done within 15 days.
“It is true that, in the 15-day-period, a farmer may lose his produce. But without the Act, it is even worse — they lose their produce and they don’t get due compensation either. At least through the Act, they would be able to get their money back. We are not saying this is ideal, but it is better,” Bedi said.
Inputs: Nirupama Viswanathan (Chennai), Aadhithya M S (Karur), P Thiruselvam (Perambalur), Antony Fernando (Nagapattinam), M Thanaraj (Tiruchy), Ramesh N (Thanjavur), Baranidharan C (Erode) & Deepak Sathish (Coimbatore)
Protection or risk?
nThe Act states that it is a pre-production agreement between farmers and sponsors
nExperts say it may bring both economic and social consequences
nThe Act states that farming producer may get support from farming purchaser
nThe support is to improve production & productivity by way of inputs & other services
Redressal committee may offer little relief
The Government may, constitute a Dispute Settlement Committee, comprising an officer in-charge of Revenue Sub-division of the District as the Chairman. However, experts said that as owners of perishable goods, the dispute settlement committee may be of little relief to farmers.
Redressal committee may offer little relief
The Government may, constitute a Dispute Settlement Committee, comprising an officer in-charge of Revenue Sub-division of the District as the Chairman. However, experts said that as owners of perishable goods, the dispute settlement committee may be of little relief to farmers.