PREFACE

The history of agriculture is a central element of human history; as agricultural progress has been a crucial factor in worldwide socio-economic change. Wealth building and militaristic specialisations rarely seen in hunter-gatherer cultures are commonplace in agriculture and agro-industrial societies-when farmers become capable of producing food beyond the needs of their own families. Others in the village/city-state were freed to devote themselves to projects other than food acquisition. Historians and anthropologists have long argued that the development of agriculture made civilizations.

On the 26th January 2008, ET captioned as” Global Economists predict that India’s going to be a standout in global economy”. It was though very pleasing to read but the hard facts are that the growth is far from inclusive in India. How can small and marginal farmers in India be considered as inclusive if they live in dungeon.

We are talking about the vast majority in our country-men who are small and marginal farmers. Their voice is never heard. Unfortunately, the Government thinks otherwise based on which it creates programs that never reaches these communities or at best reaches in trickle that makes little difference to their lives. Unfortunately Government is oblivious to the manner how its monies are spent or squandered! Their efforts have so far failed to alleviate the down trodden. The

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comments made in the preface of the Report of July 2007 by the Expert Committee on Rural Indebtedness commissioned by the Banking Division of the Department of Economic Affairs, Ministry of Finance, Government of India, is indeed striking. A portion of the report is reproduced.

‘The two faces of the emerging distress are the manifestation of agrarian crisis that threatens the livelihoods of farmers, particularly those of the small and marginal ones; and the agricultural development crisis of reduction in its overall growth rate accompanied by declining profitability. The support systems to farming have weakened, public investments in agriculture have declined and institutions have become unresponsive. In the absence of any breakthrough in cost reducing technologies, the rising input prices have made cultivation un-remunerative. The result is the manifestation of agrarian crisis, often, in the extreme form of distress that results in suicides by some farmers’.

In contrast, in the same soil a very small number of farmers with large holdings are wealthy. Those are the ones who have money and other resources, large tracks of lands that give them the benefits of the scale and have the wherewithal for providing the needed resources. They are the ones who benefit from the largess rendered by government and attendant tax breaks. In fact, they are invariably powerful and influential in drafting of the agricultural policy. It is thus apparent that farming per se is profitable. It can still be bettered with effective R & D and good management that forms an essential part of the profession. Contrarily farming for small and marginal farmers are tough and unremunerated. Another significant but a latent factor is the emergence of a pattern of country’s food grain production. It is entirely the aggregate of the food grains produced by farmers in India as against a

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planned production. In other words, if for instance, the country faces shortage of pulses, as it the case to-day, there is no way to communicate this to the farmers and get them to increase its production. It is discerned purely by profits available in the market place. Hence there is no concerted action on food security that the nation can plan, however much the Government may contend, that it does!! Thus it is indeed being scary.

It is seen that amongst developed economies in the world, the US, got to its present position by attaching prime importance to development of agriculture after the end of its civil war. Sumit Kumar. Mazumdar in this article published in The Hindu, of 10th May 2006 argues that from 1865 after the civil war reconciliation and reconstruction started between all factions. Mechanization of agriculture, improved technology in terms of seeds, fertilisers and the economy of scale in production reaped the desired benefits and there was no looking back. In later times many grant universities led to institutionalization of capacity building. This enabled knowledge creation in large scale. Heavy investments were made in research and extension activities, leading to such gargantuan effect on the productivity. By the turn of the 20th century, US became an economic behemoth. Unbelievable as it may seem but in reality good and sincere efforts pave way for the benefits. Synergies between the developing agricultural sector and the then nascent manufacturing sector were very profound. The railroads were developing to transport grains and other commodities over vast distances to markets in the east. The learning that occurred on the financing and organization of railroads were immediately transferred to the financing and

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orgaisation of sectors such as steel, chemicals and investment banking. Thus there was a symbolic relationship in the evolution of agricultural sectors, railroads, manufacturing industries and financial services sector in the 19th Century such that by early 1900s, the US was an economic powerhouse. It is further interesting to note that the Ohio Department of Agriculture on March 18, 2005 commemorating the symbolic relationship of railroads and agriculture released a Press note from the desk of the Governor saying “The rail road is a critical part of the success of our food and agriculture industry, which is an economic power house for our state, adding more than $79 billion to the economy and employing one in seven Ohioans. This partnership began in the mid-19th century has continued through to the present day and will carry us into the future”. The press release further adds that this commemoration was done to educate the present generation of the fact as to how agriculture was important to build the strong economy of the US. It is time we take lessons from such commendable examples and restructure our agriculture. The trigger was agriculture, argues Sumit K Mazumdar in his article, elaborating the symbolic relationship. He further argues that the growth of agriculture and manufacturing sectors in the US then led to transfer of skills in establishing one of the world’s largest defense industries. Thus US attained not only economic but defense superiority as well. A lot needs to be done to bring the Indian Agriculture into a vibrant position that will raise the income of the average farmer, make the intellectual connect between the village and city lifestyles seamless, makes growth inclusiveness a reality and make the farmer and important constituent like any other professional in the country. It will

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only be then that the kudos given by the world economists about India will be deserving. Otherwise it is not an inclusive growth by any means but we seem to say this more often in many forums and writings, and with great emphasis.

The growth of the India economy in terms of Industrialisation and other activities has actually put heavy burden on the farmer. The population growth without the concomitant economic growth has added the farmer’s burden in terms of growing more food. We just do not seem to realise this truth at all. When this was taking place the Government’s attention was uppermost in the development of the industrial economy and not on the farmer to build a strong rural economy. This inattentiveness over the years led to the deleterious effect on the farmer. Farmers remained isolated from education, health-care and infrastructure development around the villages, in the first place. In addition, they were isolated from the growth of technology related to farming. The lessons of technology also did not find its way into the understanding or economics of the farmer to make it productive and useful. With farmer’s growing family, overtime, the land got sub-divided and fragmented to an extant now that it has made the average holding of land extremely uneconomic for the farmer to use the land in any profitable manner. The extent is such that the farmer is even unable to use the land to feed his own family, leave alone produce and sell to make some cash in hand for him. As years passed by, the problems of the individual farmer only became murkier than ever before with no tangible solutions emerging from anywhere. Financially the farmer is distressed and has given-in to the money lender’s generosity of doling loans across. Thus a middleman in money

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business and middlemen in transacting the farmer’s meager produce were born to stay and exploit. This put in more pressure on the farmer and led him to extreme acts such as suicides. He has felt highly alienated, angry and helpless with the environment. In some places this has turned into militancy that manifested into movements such as the Naxalite movement. Praksah Singh, an IPS officer who was posted some time in Naxalite infested areas to oversee the operations, in his book The Naxalite Movement in India says "...[s]horn of politics, it (the Naxalite movement) represents the struggle of the exploited peasant, deprived tribal and the urban proletariat for a place in the sun, for social and economic survival." While looking at the genesis of the ups and downs of the movement he adds, "Naxalism arose from certain basic factors-social injustice, economic inequality and the failure of the system to redress the grievances of large sections of people who suffered and continue to suffer as a result there from". This menace has become so worse that the Government is just unable to get rid of, despite its best efforts. If no solution is found to the farmer’s plight this menace will increase and will just go out of hands and may even result in a civil war, even if it sounds silly enough!!

What was once described as ‘divine activity’ farming has turned into a night-mare for farmers. Is this not sad that over sixty years of independence the farmer life remain so impoverished? Can you imagine farmers going on strike and not producing any food crop for say one season? It would be catastrophic. Why go far, can you imagine agriculturist not producing vegetables for say a month or 45 days? It will be difficult to carry on our lives in urban areas peacefully. The

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fact that they cannot afford to go on strike or not produce merely due to their living conditions, is making us complacent on them. Individually none of us think in these terms at all as we are so engrossed in our day to day lives that keep us away from the farmers who produce the basic item needed by us. It is indeed very sad that we tend to ignore and can hardly find time to think of this important constituent of our society.

Let us first see the profile of an average Indian Farmer, in the yesteryears. Many of us would have heard that in our grand father’s time or for some, great-grand father’s time, wheat, rice sugar and many such like food / other items could be bought at such low prices, that are unheard of to-day. The reason for such a phenomenon is that in the past the population was small and land sizes were large. The number of mouths to be fed was small in abundant availability times. They produced large quantities and kept stocks for the rainy day. Each house in the Southern villages used to have a huge storage at the entrance, to stock grains and sometimes these preserved stocks would come handy to trade and get some money for the household expenses during times of need such as marriages and so on. Industrial activities were small and mostly were village centered industries as against modern ones of current times located in large towns and cities. Money supply was abundant and profiteering was virtually absent. Greed was relatively less and little exposure was available to average citizen about the developed world around. However communications though were abysmally poor, they were reliable. Thanks to the efficient postal services. Families lived happily and the length and breadth of the rural areas looked prosperous and enjoyed life. They were generally healthy as

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they ate good and unadulterated food that was produced with organic manures and no chemical fertilisers were in use. They were able to keep the environment clean. They were pious in nature and free from fear. They embraced nature and fed and respected animals. They married within close relatives or from those living not in too distant areas and the weddings used to be a five day affair. It was a time to meet all their relatives and make merry at the wedding. They also longed to be close to being able to see one another frequently at the festive occasions. They expressed compassion towards each other and wished well being of all around. Peaceful living and learning by experience was their education. Respect for elders was an obsession. Moral value systems were evolved in villages initially.

In modern times these values have eroded considerably. We simply justify this to the enormous growth of population and often theorise that there are more mouths to share the same size of cake. We never think in terms to how to enlarge the size of the cake!!

The effects of Industrialisation did not affect the rural economy much initially. It has however affected the farmer in terms of the need to produce more for greater consumption of the growing population. If he was unable to meet this demand, the Government imported food grains. Progressive increase in the population without concomitant education, poor medical attention, and inadequate infrastructure, poor marketing opportunities of his produce, perpetual indebtedness and poor finances are the real causes for the misery of the farmer to-day. Compounding this is the poor or lack of infrastructure in

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villages for storing the grains, holding them without much destruction from rodents/pests. Capping this is poor roads that inhibit smooth movement of his produce to consumption centers. These deficiencies create bottlenecks and deny much deserved rewards for the toils of the farmer.

There are more mouths to feed and with poor land productivity, the farming community in India faces a down-trend in their living conditions. Due to lack of education, the farmer is unable to switch to other vocation bravely to support the family. He is averse to taking bold risks. The children seldom go to schools and even if they do, the quality of education imparted is far from satisfactory. “The average Government school in India is so bad that if a child can learn to write more than his name, it is something of a miracle. Learning to read and count is too much to hope for. If state schools and colleges have gone from very bad to very much worse, the situation with health care is even more terrifying. According to the Government of India’s own estimates, more than 80% of Indians are forced to use private health care because government hospitals and healthcare centers are so bad. In rural India sickness is the main cause of debt. In poorer families the situation is so appalling that sick girl children are often allowed to die because medical costs are too high” says Tawleen Singh in her article in the Indian Express of 3rd January 2010. While the Government tried to lay out schools, they are dilapidated and are provided with low skilled teachers. One can see children loitering around instead of attending schools.

The miss-match of the roles between the Central and State Governments is compounding the implementation of various

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schemes to emancipate the average Indian Farmer. Every ill concerning the farmer is placed at the door step of the State Government by the Center. It is like “kettle calling the pot black” The PM is on record at the speech given during the McKinsey director’s meet in New Delhi. “This is where the role of the State Government comes into focus. The implementation of many of our social and human development programs is in the hands of state governments. The capacity of the governments to effectively plan and implements these programs varies from state to state” So no one to take responsibility. The political equations also play a significant role. The PM has categorically said that we make excellent programs to help farmers and announce various measures all that look so good and benevolent and yet the farming growth is stumped as the state governments do not implement these as visualized. This is the fundamental reason in my opinion that all these benign programs fail successively year after year and yet the Government does not brook delay in announcing all goodies about their programs to the farmer in India. This is why critics mention about the politicizing the agriculture in our country. The recent loan waiver is thus branded as a political gimmick. Take the Bharat Nirman program where every year the budget allocation keeps increasing and nothing tangible is seen on ground at the villages that it is supposed to aid in building ponds, roads, schools and what not. Let us see what the Union Minister of Panchayati Raj, Government has to say; “There can be no two views that the acceleration of growth on a sustained basis, combined with major tax reforms, has resulted in a miraculous augmentation of Government revenues, particularly over the last four years. Buoyant revenues have resulted in buoyant spending on the social

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sector. In his address to the National Convention, the Prime Minister estimated the increased spending on poverty alleviation and rural development, including the flagship Bharat Nirman programmes, at “four times” the spending in the last year of the previous government. In absolute numbers, this works out to an exponential increase in nominal terms from around Rs. 34,000 crore in fiscal 2003-04 to about Rs. 1,20,000 crore in the current financial year”. This was his speech in University of Stanford on June 5, 2008. Do we see any semblance of such huge expenses being done in our villages?

The PM adds on to say that “If we improve the administrative capacity of the state governments, we can do much more in making the growth process more socially inclusive. While there is still an unfinished agenda of reforms awaiting our attention at the center, the real action will have to be at the level of the states”. Is the PM of this country not saying clearly that the Government programs do not work? We all know how the center and state governments function. Dust of enormous quantity lie around the various Committees’ reports, on improving relations between State and Center Governments. Without any accountability from any levels of its hierarchy, the fate of these initiatives is unknown. The Planning Commission is also helpless. No wonder the farmer is where he was or even more impecunious than ever before. Who can help him? He struggles and this goes on and on.

Consider another issue. We now know that pulses grown in our country is in extreme short supply. According to Mr. R. Gopalakrishnan, whose article in The Industrial Economist

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[November 2009 edition] mentions that the WHO recommends 80 grms of pulses consumption for Indians who need proteins. But India currently produces 15 mmt of pulses a year whereas at the recommended consumption rate the demand for pulses will be around 38 mmt p.a. by 2014, which is not too far distant in the future. However, the key questions are, as to who will get this work done out of the farmers across the country? The Government has the machinery through its State Government’s Agricultural Officers to educate the farmers about the efficacy of growing pulses but can they influence the farmers to produce a crop that he is not used to? Even assume some farmers go ahead to produce these pluses, are they sure of a guaranteed price that will be cost effective? Does the farmer have the propensity to change crop that he is not used to and can he afford the risk involved?

These are the real issues that bug the farmers and the Government in achieving a target that is useful for the country. The priorities are entirely different. Thus there is a mis-match between the goals of the farmers and the government.

The only way to work this most difficult area is to bring in private partner-ship. The Agricultural policy mentions this. This has also been stressed by the PM in the same forum. He says, “The successful implementation of our social and human development initiatives requires greater public-private partnership (PPP). Both in infrastructure development and in social and human development, we have encouraged partnerships. A synergy between public support and private initiatives can help multiply the productivity of resource

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utilization. In a democracy like ours, the government is duty bound to focus on equity. At the same time, in an open economy, we cannot ignore or neglect the efficiency dimension”. What is clearly coming out is that for the social and human development process of the economy, productivity of resource mobilization is essential and this can be brought about only by public-private participation. The Government perhaps realises that it is unable to govern effectively in this area, as well in many others too. The political asymmetry, of party at the center and parties in the states complicate these further. A few a decades ago, ‘inclusiveness, private-public partnership’ etc., would not have been said at all. Government took on the responsibility for everything and the term inclusiveness is relatively a new term in use!! Not only Governments have begun to use this term freely even the private sector has too begun the sing the same tune. But where are we moving? No where. As we see the rural folks are as bad as or worse than ever before. The suicides are on the increase and the farm growth has decreased, instead. How long can this continue? How long will the policy makers or private sector will take to remedy the situation? When can we see a rural India prosper and be joyful and content? Will the inclusiveness really come about? Is it possible to find a solution to the rural India at all?

These are the questions hopefully this book will attempt to answer. The plausible answers attempted will look like unorthodox suggestion at first sight and will tend reject the idea. Not a day passes without agriculturist’s plight or about the banes of agriculturists or agriculturist’s vows, agri-business and so on get published in the media. Today’s ET [5th

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Feb 2008] carries an item of news that “For a change, IIM-A students try to tackle global poverty” “The key areas are agribusiness, creating decentralised distribution systems, innovations in micro-finance, improving communication and enterprise networks. IIM-A students are participating in each of these four field studies which involve preparation of ‘live cases’ on various companies. In each of these four areas, private sector ESP [Enterprise Solutions to Poverty] Innovation Groups has been formed. These innovation Groups comprise of top managers of leading companies. The corporate who have already extended their support are Mr. S Sivakumar, Chief Executive, Agribusiness, ITC (leading the group), Tata Chemicals, Mahindra Shubhlabh Services, Godrej Agrovet and Reliance Industries to state a few big corporates. This underlines the change in the thinking of the mind set. Many corporate are interested in the business of agriculture but have all tackled in a different way.

This book attempts to suggest an alternate method that could possibly achieve the desired results. A flavor of the solutions in this book, I think, partly resonates with the theme of the book written by Prof. C.K. Prahalad, “The Fortune at the Bottom of the Pyramid; eradicating poverty through profits”. He says that the notion that business rather than the Government hand-outs represent the most effective solution to poverty. He further says that we need to connect the poor through entrepreneurship, which enables wealth creation through transparent and legitimate means. He emphasized that business could create wealth for themselves too, through poverty alleviation. The poor deserve world class products and services. It is indeed true that the poor in the world that

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represent 4 billion in numbers are potential consumers for large corporate for their goods and services but the challenge is, how to empower these large masses to become a means to consume what is offered by large corporate.

Dr. B.L. Mungekar of Planning Commission in an interview given to Frontline Magazine of Aug 26-Sept 8, 2006 says, “When people talk of corporate farming, I stand stubbornly for the ownership of land, for all time to come, to remain with the farmer. Let farmers contribute their land, use their family as labor... let there be contract farming, but land is to be with the farmer. I am not speaking up for contract farming per se, but between contract and corporate farming I will agree to contract farming. In corporate farming, the land and resources are acquired by industry. Even in contract farming there should be strict conditions. Farmers should have a share in the produce”.

The practice so far is that the farmer does not have a share in the produce in Contract Farming in India but in corporate farming this is possible, as can be seen in the following chapters of the book.

I do hope that one day some will venture into this business or some corporate will bite this suggestion to get into conducting agriculture themselves and reap the benefit for themselves and farmers. Alternatively this book hopefully will induce some entrepreneurs to take to the model described and develop agriculture appropriately to benefit themselves and the farmers. In the process, I am sure they will emancipate the farmers who are so browbeaten to-day in India. This is in turn

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will make India a great, powerful and a proud nation in the world and truly will be sustainable.

S. RaghavanAuthor

Former Director (Petroleum), IBP Company Limited, Mumbaivijurags@gmail.com

Chapter 1

Agriculture in our Country

Our country essentially is heavily reliant on Agriculture and its influence over the health of the economy is significant. About 71.4% of our population [during 2004-2005 it was 1092 million] is engaged in this vocation for a living, according to a Report of Government of India on rural indebtedness by DEA, Ministry of Finance, during 2007. The total land area in India is 2973190 sq kms and the agricultural land is 1620388 sq. kms, about 54.5%! [as per Govt. SEZ notification] The agricultural growth has not contributed significantly to the economic growth. It is meager 2.3%. For the efforts put in by the Government both at

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the Centre and the State, the growth from agriculture ought to be higher. Our farmer’s [small and medium sized land owners] state of affairs is pathetic to say the least. They are in a quagmire. Suicides are rampant and is on the increase ever year. This does not augur well for a nation of such great historic preponderance. It is certain that something is terribly wrong and the need to alleviate is certain. Hence some radical steps are necessary to change the face of agriculture.

In the economic front we have moved well after the process of liberalization initiated in 1991 and achieved an all-time GDP growth. We have made great strides in the services sector and have created good foundations to strong economic edifice but in the process, have missed out on the farming sector. The GDP growth at 8% is impressive and is buoyant. The stock market resonated country’s good will amongst the FIIs. A concomitant agricultural growth in tandem with the growth in Industrial production and Service Industry, could take our rating in the world, could become a colossal.

Let me delve into the history on this subject, in India for a perspective. Like all developing country, India too has a large proportion of its population dependant on agriculture for a living. Between, 1901 – 1971, a fairly long stretch 68% were dependant on this vocation. This implies that alternate Industries had not come up to provide employment for the rapidly growing population. This is true as of today as well. However agriculture has been a source of providing raw materials like cotton, jute, sugar, plantations and vanaspati. These products also kindled exports when the country needed foreign exchange. From the beginning, our planners felt that

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for the economic development of India, agricultural development would be essential. Ragnar Nurkse argues that the agricultural productivity would create surplus of labor that should be utilised in building Industries around villages. While this hypothesis was questioned long before, now it is clear that this did not happen for more reasons. Therefore for the general economic development, comprehensive agricultural with high productivity is extremely essential. The Government learnt bitter lessons in the Second and Third Five Year Plans that failure of the agricultural sectors to deliver goods will spell disaster to the entire planning process. Despite this realisation however the change that has taken place since is that there is no food shortage in the country but the Management of the affairs of Agriculture has been suboptimal. Foods produced are rotting in the go-down and rat infested. Sometimes to grains in the government godowns are thrown into the sea, to accommodate fresh arrivals!!

Mr. S. Gopalakrishnan in an article in the Business Line on ‘Challenges and Opportunities’ says that The present situation only indicates that the planning and marketing strategy requires to be fine tuned after thorough research and study. In the past the country had been following a policy of exporting whatever was left over after meeting domestic consumption. No serious attempt was ever made to produce what the importing countries required. Perhaps the time has come to correct the present strategy. A change in the pattern of cultivation in favor of items required by global consumers will offer tremendous scope for the export of agricultural items at a good price. The WTO action in striking down U.S. cotton subsidies will definitely force the developed countries to

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reduce all agricultural subsidies though this may be a gradual process. This means that world prices for agricultural products will rise, Indian food grains will be competitive and their export will be profitable to the farmers. The dilemma is how to go about doing this?

Another area that could bring substantial income to farmers is the production of fruits and vegetables which can be exported. However, the following steps are required to be taken:

Adequate infrastructure in the form of roads, electricity and running water should be made available.

Creation of farmers' groups who are prepared to undertake contract farming. This will enable the group to reduce costs and ensure quality of the finished products. In fact, an attempt has already been made in Punjab in this direction and the results have proved to be encouraging.

Quality of packaging has to be ensured so that the items exported will reach the destination in good condition.

Provision of refrigerated trucks for transportation of the produce from the farms to ports.

Provision of adequate refrigerated storage facilities at ports to ensure that quality of perishable items is not affected”.

However to undertake all these measures, the management of agriculture needs drastic and out of the box solution against the current day methods adopted by individual farmers. Some collective action is vital and how to bring about this change is all about this book. Whatever is happening in the country on

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this front are the businesses of large land owners having resources and manpower to undertake this business profitably.

The farming communities in India, who now constitute 71.4% of the population, are in abject poverty or close to it, barring a few large and wealthy farmers. They are the ones who are in-charge of Agriculture. The entire farming communities have to perform in tandem for recording the much needed growth. With current abysmal state of affairs of the farmers, it is difficult as one can see, for agriculture to add any muscle to fuel the economic growth. Hence alleviating such fellowmen and to bring them to mainstream of quality living is very essential for giving a boost to Agriculture. Only then can we usher in an egalitarian society in our country. This could truly be called as inclusive growth. This is also the key to sustained economic progress and growth of the economy. The saying, “the rich are becoming richer and poor are becoming poorer” is indeed true and the gap will become wider, if we fail to do something drastically to change this situation. We need to at least narrow this gap considerably. It would appear that this is possible. This is confirmed by the 11th Plan Approach Paper, which states in unequivocal terms that the "actual growth of agricultural GDP, including forestry and fishing, was only 1 per cent per annum in the first three years of the 10th Plan and even the most rosy projections for 2005-06 and 2006-07 would limit this below 2 per cent for the full five-year period. The challenge posed is to more than double the growth rate achieved in the 10th Plan."

The FM in his Budget speech on the 27th February 2006 has mentioned that if agriculture cannot grow at 4%, it would be

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difficult to achieve a 10% growth in the GDP, which is the next step to take India forward from its present bullish status. Hence the importance to fuel agricultural growth needs little emphasis. In the 2008 Budget the FM has merely waived the farmer’s loan thinking that it will uplift all the farmers and that the growth in coming years will be 4% and above!! It will be far fetched as already the hard debate as to how this waiver will be financed is raging like fire, particularly with the general elections a year away.

Growth in Agriculture cannot come the way it is structured to day. According to Mr. K.P.P. Nair, who is a renowned agronomist and well versed with the subject, China has the world’s largest number of Farmer Agro Technology Extension Agents [1.5 million], who work with the farmer on the field employing a “Bottom-Up” approach. It is a far cry from India’s Krishi Vigyan Kendra [KVKs], whose approach is primarily “Top-Down” whereby the “package of practice” developed by an agricultural scientist on the experimental farm is dished out to the farmer for adoption. According to latest study, it is mentioned that only 0.9% of our farmers access information from the KVK. This makes the situation graver from the pitch ‘of passing on information to the farmers by the KVKs on our scientist’s work’. ITC’s e-Choupal can be credited with a good initiative that it took in the area of dissemination of information of value to the farmers. They are growing at a fast pace and hope to cover the whole country by 2010. This is where I argue that Corporate can manage the affairs of Agriculture, just as they would do in their business, in a meaningful form and create value all through. After all who provided information on weather, markets and buyers for the

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farmers before the initiative of ITC through installation of a system as in e-choupal? We shall later see in the book, the plight of the average farmer in our country and with such a state, where is he in a position to take sound advice? Hence Agricultural practices also need restructuring immediately.

In order to meet the targeted growth rate of 4% in agriculture, our Farmers will have to adopt to high-tech agriculture using bio-technology, information technology and nanotechnology, argues Dr. Anil Pandey and Dr. Anil Kumar in their article in ‘The Hindu’s Survey of Agriculture 2007’. They continue to add that another challenge is to cater to the need of the quality conscious middle class through strengthening of the linkages between produces and consumers. In the present market structure the consumer is so distanced away from the farmer by layers of intermediaries that the farmer is hardly market responsive. Hence ‘consumer demand’ is not something that he is aware of. He is aware of his immediate buyer who is often the money lender who pays whatever he likes to the farmer. The glut or the scarcity is the function of the manipulation of the middlemen.

Just as a business is restructured to improve its bottom-line, Agriculture also needs similar intervention to recuperate its present health and vitality. However the moot issue is how to restructure with such large numbers of individual farmers. When countries like China have restructured their Agriculture to support their economy, there is every reason for us doing similarly. By accelerating and improving agriculture, China is turning to be an Industrial giant in the world. In fact we could do it better than China only if we create a ‘will’ in us and are

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able to see Agriculture as a way of business proposition and not as a farmer’s problem to produce and distribute. We saw earlier the symbolic relationship between agriculture and rail road existed in the US and what difference this made to the US’s economy.

There have been numerous documents and debates about the state of Agriculture in this country and many in this field have eloquently articulated the ills. Many successive Governments have also focused and continue to focus on this important segment. However, the results are not commensurate with the inputs the Government has provided. This has resulted in millions of rupees going into this sector year after year without concomitant returns and in turn alleviating the farming community. The Budget of 2006 focused on agriculture by enhanced the outlay for Bharat Nirman program substantially from the previous year. The FM passionately articulates that "we cannot continue to be Bharat with patches of India. He says that it is important to provide capillary links, take growth to the villages and make it more equitable". He further elaborates that "India spends over Rs.60,000 crores on poverty alleviation but outlays don't translate into outcomes. It cost the Government nearly Rs 4 to deliver Re. 1 to the poor.

Israel has turned its desert into a vibrant agricultural country. This is a great success in the development of Agriculture and the whole world admires this achievement. The phenomenal success of Israel’s agricultural growth in the last 60 odd years can be attributed briefly to:

A commitment to food security

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Extraordinary water resource development by using latest technology

Innovative technological development in agriculture Steady increase in the available work force A unity of purpose in Israeli’s Agricultural settlement

movements Unconditional political/economic support Growing availability of export markets

If a small country like Israel can do it, we too can do it and even better as we have larger land area than Israel.

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Chapter 2A shift seems necessary in our agricultural practices

Tale of two villages that appeared in the ET of 16th February 2008 caught my attention. This is an excellent starter for explaining the plight of the average Indian farmer of our country. The article compares two contrasting villages, one in Madhya Pradesh and another in Haryana, both in the Northern India. Narasinghkeda in M.P is said to be prosperous and hence captioned as ‘Diamonds from Dust’. On the contrary, the village in Haryana is still limping and hence titled as ‘The long and lonely road’. In the context of developments per-se, the country has little to write home about, as even in Narasinghkeda, the resource poured into by the Government do not seem to have reached this village to be able to make it work for the community. The buildup in this village has been, as per the article based on collective action of the residents of this village. Narasinghkeda, in M.P was a remote outpost since

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log time of India’s Consumer economy, but now small group of villagers, cycle every day to the nearby rural mall to experience push-cart shopping. From tooth-paste to television, a growing range of consumer goods is finding favor with the farming families and shrinking Narasinghkeda’s mental distance with the city. The article goes on to say that the economic growth that India may have left behind many villages but has taken Narasinghkeda under its wings!! Here, it appears that a farmer earns about Rs. 4000.00 per acre per annum after the villagers built a dam before which the income was Rs. 2000.00 per acre per annum. [These levels of incomes appear very small]. What happens to Abheypur then? About Abheypur the article mentions that this village is a ‘symbol of a decaying rural India’. Infrastructure and Governance are a blur and life is a daily struggle for villagers. Most of India is the Abheypur type as are marginal farmers struggling by the every passing day. Somewhere when the struggle is extreme, suicides follow and it is dreadful to hear the news of such happenings. I would think that these two contrasting villages speak volumes about the rest of the country. Is this not painful enough for every Indian who is benefited by the fruits of economic growth, to witness the abysmal state of affairs of the poor farmer to whom nothing has reached? By the way Abheypur is in Haryana, which was at one time in the Green Revolution belt!!

One wonders where all the money the Government allocated for this village disappeared? It would amaze readers to know that the Government which allocates huge sums of money to various schemes are just not able to spend or do not know how to spend. Every other day politicians make statements about

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several schemes being launched and who knows where all these monies go? Case in point is the Backward Regions Grant Fund [BRGF] announced by none other than the PM to benefit across 250 backward districts for addressing regional development imbalance exactly one year ago, is today a non-starter!! Why because the state government did not exactly know how to implement this scheme that was announced by the PM in Nainital in September 2006 that this would become “the single biggest instrument for effecting participatory planning at the local level”. From this example we can easily deduce that the intention of the Government is indeed a laudable one but the execution is so appallingly abysmal that some time it casts aspersions on the very thought itself, for wrong reasons. It is well known that the Minister for Panchayat Raj [Mani Shankar Iyer] has been struggling ever since he took over the portfolio in the UPA Government to bring in big time reforms at the grass root level but he is stumped at every single stage for non-compliance. With no accountability with the civil servants and the lot down their hierarchy, what can happen other than what is happening largely? Such instances are far too large to write it in a text book! Taking a cue from this example it is clear that the numerous policies of the Government for emancipating the farmer are not going into the right track but into wrong lane and thus enabling the rich become richer and the poor become poorer in this country. A recent newspaper report mentions that the CAG is looking into the use of such large amounts of funds allocated in the Budget by various institutions including the state government.

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All along, the Government has formulated policies for agriculture on the premise that small and marginal farmers will remain perpetually caught in poverty. Else, why would it give subsidies on inputs — fertilisers, irrigation, power, seeds, etc., year after year? But umpteen studies show that the bulk of the input subsidies are appropriated by input suppliers/manufacturers on one hand and rich farmers on the other. Some of this is even cornered by the States. Clearly, millions of small and marginal farmers gain little from the Government support extended in their name. Further, the doles prevent them from thinking big, becoming enterprising and being a part of the commercialisation process, argues Uttam Gupta in The Hindu of April 14, 2006.

Delivering the 28th convocation address of the Tamil Nadu Agricultural University in Coimbatore on 13th May 2007, the Finance Minister of India pointed out that the income inequality between persons dependent on agriculture and those dependent on industry or services was bound to increase.

“Should we resign ourselves to the conclusion that farmers in India will remain poor and, as land holdings get more fragmented, become poorer? Or, can we rise to the challenge of agriculture by harnessing knowledge, technology and new management practices?” he queried.

“There is an urgent need to adopt a new development strategy and address the needs of the farming community,” he asserted. These ideas cannot be implemented by farmers with small holdings and beset with other problems that have been enumerated.

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On the large scale debt waiver recently by the Government of India, in the fiscal budget of 2008, columnist U.R Bhat writes in the Economic Times, “The background to the scheme is the increasing realisation that the decade and a half of economic reforms have left the Indian Farmer behind and the benefits of reforms are being inequitably appropriated by the urban population. The reform period has in fact, coincided with increasing distress among farm households on account of declining agricultural income and rising debt burden leading to erosion of debt repayment capacity”

Let us see what our Prime Minister says while inaugurating a research and development center, Fieldfresh Agri Center of Excellence, promoted by Bharti group and Global financial services company Rothschild at Lodhowal near Ludhina. Terming the R & D center a creative adventure, Dr. Singh said the result of this experience could go a long way in banishing poverty from the country side. The public-private partnership in the agriculture sector required “a unique combination of entrepreneurship, technology and commitment of political leadership”. Spread over 300 acres, the Fieldfresh Agri center is a state of-the-art integrated R & D facility focusing on crop and progressive farming techniques and adaptation of appropriate technology. The PM further said that the high rates of economic growth would depend on achieving higher rates of agricultural growth. Everyone seems to know the problem but the way to secure the answer is rather illusive.

This demonstrates that the Indian Agriculture suffers severely from sound management of this vocation by the farmer himself. This is not to discredit our farmers but the circumstances that have manifested overtime have made their

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lives miserable and needs emancipation urgently. This will be seen adequately in the following comparisons.

China with a population just ahead of India spends almost similarly like India in R&D for Agriculture. If one sees the harvests in these two countries, China produced over 550 million tones of food grains compared 150 million tones in India. This gap with the small difference in population between the two countries appears incongruent. In the rice genome, while China is racing towards hybrid rice, our scientific community is talking about chromosome number 11. The hybrid rice that was much talked about some time ago has not come to a final stage yet. There is a vast difference in Management of issues relating to how the farmer will be educated in China and India. In China for instance the scientist or people concerned with agricultural development will live with a group of farmers in the field and spend as much time as is necessary for the farmer to be familiarised with the new variety and its exact implementation procedures. In India the Scientist or people concerned with agricultural development will be in the office and communicate through the Thesildar of the villages. This makes a qualitative difference in communication and Management of the innovativeness and its transformation to the ground that reflects in the production figures, mentioned above in the two countries. Tarun Khanna a Professor in the Harvard Business School writes in Mckinseyquarterly.com, writes, thus “Rural development is crucial for overall development. China’s economic revolution started with the reform of its village enterprises; foreign direct investment followed. Agricultural development in rural areas generated economic surplus that in turn fed light

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manufacturing in rural and semi urban areas and ultimately Industrialisation in urban ones. A virtuous cycle ensued. The economic surplus promoted reinvestment in new technology and released human capital for broader development. This was China’s path, as it was Indonesia’s path and Vietnam has taken it since in 1989. In Indian this was not practiced this way. The nation’s Government has failed to invest in its villages”.

Many experts mention that the Green Revolution has failed to deliver what it was intended to. They further say that it has failed to provide a sustained process of Agricultural reformation that it was originally intended to and has unfortunately left serious marks of deformation in the form of soil contamination / erosion, ground water contamination with excessive nitrates, drying aquifers and vanishing bio-diversity. Green revolution was initiated in the Northern India, in the States of Western Uttar Pradesh, Haryana and Punjab during 1971 and it is said that in these states, vast stretches of land cannot grow a blade of grass any more due to the above mentioned devastations. Increasingly many continue to comment on the effects of Green Revolution. The director general of the Indian Council of Agricultural Research (ICAR), Dr. N.S. Randhawa has warned that the entire area of Punjab and Haryana will turn into desert if the underground water sources continue to be over-exploited by the highly intensive agriculture practiced there. Mysterious blight is spreading as crops are weakened by gigantic doses of chemical fertilizer, and indiscriminate use of chemical pesticides has caused new pests to breed out of control, as they did in Andhra Pradesh and destroyed almost the entire cotton crop. According Shambu Ghatak in his Agricultural & Rural Development in India - A Rejoinder writes “It is increasingly felt that Indian

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agriculture is currently suffering from “technology fatigue”, due to which the earlier gains made during the Green Revolution has withered away. Moreover, Green Revolution itself has been criticized for being Euro-centric, environmentally unsustainable and being apolitical (it never addressed the issues of land and tenancy reforms, and other related institutional reforms). Green Revolution actually tried to improve yields and production, without taking into account the needed change in rural and social institutions. Since it offered a high-valued package, it helped only the rich farmers (owning large landholdings) from assured irrigated areas. Areas where rain fed irrigation takes place could not gain much from the Green Revolution. Green Revolution only promoted production of certain crops, which are agro-climatically suitable for certain region which some say have affected biodiversity. It relied excessively on major irrigations (instead of minor irrigation and rainwater harvesting), chemical fertilizers and pesticides. In order to sustain Green Revolution, huge subsidies were given on inputs (for producers of inputs—firms, and consumer of inputs—farmers) like electricity, fertilizers etc, thus making the entire effort economically unsustainable. It was the large farmers, which benefited from the subsidies provided at the cost of the small and the marginal farmers. The Bollgard Bt cottonseed and other such seeds, which have recently been introduced, have failed to cater the needs of the rural farming community who belong to the lower income group (as well as socially backward groups), and possess small-sized farmlands and cropping fields. In fact, there are allegations that due to the liberalization of the Indian economy, multi-national corporations (MNCs) from the North got the opportunity of

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plundering the farmers of the global South, by patenting and giving 'new names' to the indigenous varieties of plants (such as turmeric, basmati rice) and animals (via genetic engineering) from the South, thus leading to bio-piracy. Issues and debates surrounding bio-ethics, bio-piracy and violation of intellectual property rights (IPRs) have come to the forefront during the recent years, which are still needed to be resolved at international forums like World Trade Organisation (WTO)”.

The Tamilnadu State Agricultural Secretary mentioned recently in a public meeting “We made a basic mistake in the Green Revolution. Putting in more seeds, more water, and more fertiliser can’t solve any problems. The Green Revolution advocated by eminent scientists, including M.S. Swaminathan, is a myth for Indian Agriculture today”, quotes The Hindu of 15th February 2008. In the same report, Sharad Joshi an eminent activist of agriculture and agro-economist mentioned that ‘reforms were needed to allow operational consolidation of and, so that land could be brought together for cultivation without any change on owner ship. He is known to have mentioned that looking at small and marginal farmer’s sufferings it would be better if they gave their lands to corporate to conduct agriculture without taking away the land from the farmers. This is in fact the central theme of this book/initiative.

The above mentioned facts have arrested the growth and to compound the misery, the sheer incompetence of the Government adds further misery to the farming public. As an example, the FCI that stores massive quantities of wheat is filled with economically unrealistic high prices, in the form of Minimum Support Price (MSP) to the rich grain farmers of

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Western UP, Punjab and Haryana. This cost the National Exchequer a fat sum of RS 23000.00 crores during 2003-04. The costs to the exchequer for subsequent years can well be imagined. Of this, 75% goes towards the MSP and the balance towards storage cost of the grains. Food export is a pretense. This is because when the formative per capita food availability is lower than the prescribed 500 grams a day by 70%, the Government indulges in export of food grains at below poverty line prices. So far India has exported food grains of over 35 mmt fetching US$4bn. This works out to be a paltry Rs. 5 per kilogram, writes K.P.P Nair in his article, R&D Challenges, in the book titled Indian Agriculture, complied by N.Janardhana Rao and published by ICFAI press. It is said that the grain merchants get the grains from the FCI go down in the name of export and route it to the local market. When such malpractices exist, how can one find a panacea for the Indian Farmer? Still worse is farmers committing suicides. A recent report says that thirty farmers in Andhra Pradesh commit suicide -- ironically, by consuming the same poisonous pesticides which were partly responsible for the loss of their crops. Over one hundred thousands farmers demonstrate furiously in Meerut ... in Gujarat restive farmers burn buses ... in Maharastra they stop rail and road traffic. Underground water sources are being drained dry, fertile agricultural lands are becoming wastelands at an ever-increasing rate, crops are being blighted with mysterious diseases--and overall production has stagnated over the past two years. To paraphrase Hamlet, "Something is rotten in the state of Indian agriculture." So, on one hand we see poor Management of the affairs of the business of agriculture by the agriculturist and on the other hand the Government does not know how its

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programs are progressing and what really needs to be done and how?

Agriculture in India has been in the despair for a long time. Various methodologies adopted so far to find a panacea has not worked and are unlikely in the near and long term. To cite an example, the strategy of the Green Revolution was lauded as the solution to the nation's food problem, but this hope has been devastated and has left deep unsolvable scars on the face of the Indian earth. The ground water has been poisoned and cannot be used by even cattle leave alone feeding the country’s crowded millions.

The FM in his Budget speech on the 27th February 2006 has mentioned that if agriculture cannot grow at 4%, it would be difficult to achieve a 10% growth in the GDP, which is the next step to take India forward from its present bullish status. Hence the importance to fuel agricultural growth needs little emphasis Professor V.K.R. V. Rao, said the same several years ago. To meet Indian’s growing food needs, the agricultural growth has to be over 4% a year. Current rate of growth at 2.5% or even lower is abysmal. How can Indians in the villages and poor be fed with?

All studies and statistics reveal the increasing pauperization of the rural masses, as small farmers in deep debt, sell out their lands to large landowners, and swell the ranks of the landless laborers. In the past twenty years all Indian states, without exception, have experienced a massive increase in the percentage of rural people living below the poverty line--which now ranges from 50 per cent to 85 per cent. In the ‘holy’ land

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of the Green Revolution, Punjab and Haryana, the percentage of rural poor has nearly quadrupled!

A report from the United Nations' Food and Agricultural Organization, in 1983, revealed that by the year 2000, if India's lands are managed properly, they could feed a population of 2000 million- twice the projected population for that year. Yet at present the utilization of land in India is miserably poor, and its labor productivity dismal compared to other countries, largely due to inefficient patterns of land use. It is therefore evident that the Management of agriculture as emphasized before is the center point in focus that needs quick redressal.

The increasing pressure of population in recent years has reduced the average size of land holdings to less than two hectares -- and these too, so fragmented that in certain parts of the country the plots are too small even to move an ordinary tiller. Moreover, the insecurity of the tenants and absence of proper incentives for the poor farmers and landless laborers has resulted in abysmally low productivity--a gross waste of human resource potential.

India’s potential for a systematised process of irrigation is enormous by the connecting of all rivers in India and manage them so that every bit of land gets the due share of water for producing the best variety of crops that will not only feed the masses but also will be so economical for competition in the world trade in food grains. This will ensure that over 76 per cent of India's irrigated lands are under-utilized due to water logging and salinity which leads to soil degradation. Water and soil conservation methods must be employed, such as trickle-drip irrigation, and the maximum use of ponds and tanks in the

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traditional Indian pattern, to avoid digging too many tube wells which drain the water table and precipitate drought. Bio-fertilisers must be used instead of the chemical fertilisers to arrest further deterioration of lands’ fertility. One cannot imagine the grave mistake our Government committed in bringing in a MNC, Monsanto to provide Bt cotton seeds along with pesticides and other dangerous chemicals. Apart from the fact that the seeds were sold to farmers at such high prices, the mistake was that despite the best of technical department of Biotechnology we have in agriculture research at National Research Center on Plant Biotechnology with a fat annual budget running to crores of rupees, our scientist could not think of Bt cotton that Monsanto did and walked away with millions of dollars. Within the ambit of Indian Council for Agricultural Research, a cotton project directorate exists that constantly does research in cotton up gradation technology. The damages caused by the fertilizers and chemicals to boost cotton production have be vast and irreparable. It can thus be seen that the various solutions have successfully eluded the answer to the question of finding a solution for the Indian small farmer. It now seems the turn for Bt. Brinjals!!

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Chapter 3Core issues of the farmers

The farmer’s problems have been eloquently articulated by many and in multitudes of forums. The Government is fully aware of these issues or at least it thinks so. However the solutions that have come forward from the Government are far away from alleviating the problems of the farmers. I quote a very succinct writing of an expert group constituted by the Government of India to examine the ‘Agricultural Indebtedness’ and it is enough to explain the plight of the farmers. The report’s Preface and opening sentence reads as:

QuoteThere has been a distinct slow down in agricultural growth during the past two decades, in spite of substantial acceleration in the growth of the Indian economy. The slow down is accompanied by a significant reduction in the share of agriculture in national product, but without much reduction in the share of workers depending on it for their livelihood. The two faces of the emerging distress are the manifestation of agrarian crisis that threatens the livelihoods of farmers, particularly those of the small and marginal ones; and the agricultural development crisis of reduction in its overall growth rate accompanied by declining profitability. The support systems to farming have weakened, public investments in agriculture have declined and institutions have become unresponsive. In the absence of any breakthrough in cost reducing technologies, the rising input prices have made cultivation un-remunerative. The result is the manifestation of agrarian crisis, often, in the extreme form of distress that results in suicides by some farmers.Unquote:

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It will be painful to know there were at least 16,196 farmers' suicides in India in 2008, bringing the total since 1997 to 199,132, according to the National Crime Records Bureau (NCRB).

Let us systematically examine each of these and look at the core issues in detail.They are summarized as under:

1. Sub-division and fragmentation of land.2. Perpetual indebtedness of the farmer in the hands of the

local money lender and lately with the banks.3. Lack of aptitude and knowledge to grow the best suited

crop on the land and hence continue what their forefathers put the land for use.

4. Inability to market the farmer’s produce that would give him the real value.

5. Lack of water facility due to poor monsoon [barely 22% of our lands have irrigational facility]. Farmer’s inability to provide alternate source of irrigation like bore well compounds the problem. There is also a fear in the farmer’s mind to turn towards crops that need low quantum of water, as he is unsure of the success of its profitable cultivation and thus has no propensity to take any sort of risk. The dispute over water sharing between states is snowballing and is likely to bust leading to irreparable loss to the nation.

Let us take a close look at each of these and analyse each of these.

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1 With the enlargement of the farmer's family, over the years, land gets subdivided. The average size of the holdings dropped to about 1.7 hectares from 2 hectares in 1978-79. The same has come to abysmal 0.1 hectares today. The total number of land holdings in 1981 was around 89 million and currently it is estimated to be around 110 million. This has resulted in progressively making land holding smaller, overtime. Smaller lands are not conducive to mechanized farming and/or using technology to improve productivity. Constant land disputes disrupt enhancement of land use. Some land area is taken away with every bund constructed for separation of the land and with successive fragmentation, the land area gets reduced. If this is freed, the extent of additional land area useable for cultivation will increase tremendously.

2 Banking Industry for long years has lent full support to the farmer in providing loans for agriculture. Even the current Budget [February 2006] makes a big story of granting loans at 7% interest to the farmer. Yet the farmer continues to take loan from the money lender at much higher rate of interest. This is because the money lender has the farmer's land on lien, from his father’s days! This farmer is unable to get away from the hold of the money lender. The farmer is so immersed already with the loans he has taken from money lender in the village that sometime he is forced to take bank loans to pay the nuisance off. In this process he defaults the bank loans. He is then left with no other means except to borrow again from the lender, who serves the farmer at his doorstep. On many occasions bank loans that remain

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unpaid are written off. Appallingly, many political parties make promises to write off these loans during canvassing for election. The Government in Tamilnadu, soon after assuming office after the last state elections has simply written off Rs 6500 crores of Farm loans. This is such an erroneous practice as some who have been diligent in paying loans feel embittered. This will breed dangerous consequences in corrupting the society. Diligent farmers who have been paying the loan regularly feel disenchanted and are tempted become potential defaulters next time around. Many times the farmer takes loan for agriculture purpose and deploys for other purposes. If one were to attend the Collector’s meet with the farmers once a month that occurs regularly, it will be an eye opener to understand the problems of the farmer, as to why he is unable to repay. I heard one of them say, Sir, ‘the land is a curse on us left behind by our forefathers and we are struggling with it; unable to keep or sell we live with this curse’. It saddens one to hear and if this is the plight of most of farmers; something needs to be done in absolute terms to alleviate the farmer. Agro economist and M.P, Sharad Joshi says that “Almost all the farming communities continue in that occupation because they have no other choice”. ET of August 7, 2006 has front page news that RBI is contemplating lending money at softer rates to the “money lender” so that he can provide softer loans to the farmer at his door step. This means Government recognizes that more than banks the “traditional money lender” plays a key role in financing the poor farmer. The Government’s reported move will however promote corruption and make the life of the

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farmer more miserable.3 With low levels of education and adverse attitude

developed by the average farmer, he grows the crop that his forefathers grew. There is also a fear of changing the crop even if tempted, as successive crop failure haunts him. Government has village level offices to educate the farmer but attitude works against sane advice for fear mostly than to adhere. Sometimes water resources also make the problem more acute. Many a times he has no energy or the attitude to seek a good market for his produce. He often sells his produces to the middlemen who come to fields and pick away at prices dictated by them and not he farmer.

4 With so many issues to tackle, the farmer is indeed weary to manage the marketing of his product to realise the best value. He is often dependant on the ‘aratis’ or the mandi’s merchant to buy and give whatever price is settled by the merchant. He is in no position to bargain and get the best price for his produce. Many times the person who lent money to the farmer himself comes and acts as a middle man to dispose off the produce and take the interest due to him.

5 With respect to irrigation he is solely dependant on monsoon or the river water from the dams. The river water sharing disputes adds to the misery of the farmer. Those who could afford have gone in to bore well in their lands and though this will slowly deplete the water table, there seems no alternative. He is unable to switch to crops that need little water.

Let us take a look at the initiatives that the Government has

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taken up. The first National agricultural Policy was brought out during 2000. It has said that by the end of next decade, it shall bring self-sufficiency in agriculture. Some of the major policy directions proposed is removal of controls in the agricultural sector, up gradation of technology in order to accelerate agricultural productivity and facilitating active participation by the private sector. Installation of Agricultural Price Commission to fix farm produce prices indexing with the input costs. There are a host of other measures that are pronounced in the National Agricultural Policy that does not read any different from the host of other such documents by successive Governments in the center.

Let us se what Uttam Gupta a well known writer in agriculture has to say in The Hindu of April 14, 2006. “All along, the Government has formulated policies for agriculture on the premise that small and marginal farmers will remain perpetually caught in poverty. Else, why would it give subsidies on inputs — fertilisers, irrigation, power, seeds, etc., year after year? But umpteen studies show that the bulk of the input subsidies are appropriated by input suppliers/manufacturers on one hand and rich farmers on the other. Some of this is even cornered by the States. Clearly, millions of small and marginal farmers gain little from the Government support extended in their name. Further, the doles prevent them from thinking big, becoming enterprising and being a part of the commercialisation process”

It can be seen clearly from the above that intentions of the Government are indeed good and well documented as well. In all these programs, the action has to come from the farmer. With several problems cited above, it has become virtually a

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non-starter for the farmer to develop his vocation. It is mentioned that the Bharatia Kisan Union, a very vibrant agricultural Union in India is oblivious to the changes brought about by the Government with respect to some provisions on the Agricultural Produce and Marketing Act. This shows the apathy of the farming community, despite a strong union.

From the above it can be summerised that the failure in this area is a failure in Management of the Agricultural vocation in India. Any failure in the Management of any activity in general parlance could connote improper use of resources to generate the intended purpose of the actions. If we apply this understanding to Politics, poor political process, poor human relationships within and outside the party, poor strategizing of political goals and management, poor performance of its constituents to effectively forming a team to build an effective Organisation and the many that one may like to add on, are all causes of failure to effectively function as the ingredient in the game of politics. Similarly, failure in Education, sports, City improvements, construction of roads/dams and general infrastructure can be traced to poor management of the affairs of the relevant organisation, who are in-charge to conduct its affairs effectively. Given this understanding, Agriculture also suffers similarly from poor Management of thousands of farmers. This is not to discredit our farmers ability in their profession; they suffer a large part from various quarters, commencing from lack of funds, lack of information on technological improvements, lack of attitude to change, lack of infrastructure and lack of marketing ability and besides all lack of energy and enthusiasm. They feel cheated by governance and have no one honest around to look at their interests.

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These are the facets of agriculture, which need mending.

In order that I do not get biased with reports and writings on the subject, I undertook personal visits to our village in South India. My cousin does farming for the past 18 years along with his father. As his father has become very old and unwell, my cousin personally conducts farming. The extent of land holding with them is about 9 acres. In olden times, say about 50 years ago, a farmer with this size was able to conduct the farming operations with the help of labor that was available in abundance and get the produce that would suffice their needs and also remunerated his labor handsomely. It also facilitated sale of excess produce and get money for other uses, including for education and getting bare necessities for life. Further more, they were able to buy Jewells for marriage and managed to save some money in hard cash as well. When we were young and used to visit our village, we found that they lived in good comfort and were regarded as one of well to do people in the village. However as years passed by, labor availability progressively dwindled. Some of the younger generation began to move to better pastures than work as field labor and this put pressure on the availability of labor. They became costlier too as days passed. The balance younger generation who remained in the villages became disillusioned. The consequences of which gave rise to frustration, militancy, highhandedness, fights and the many such bickering in the villages. These forces became disruptive agents in societies and farmers found it difficult to carry on smoothly their vocation. So my cousin’s father let his lands on lease to intending cultivators. This lease is not bound by any documentation. Over-time such arrangements gave rights to

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the tiller of the land and land lord virtually loses the right of ownership. They only get a certain quantum of the produce and that too declines progressively. The tiller invariably will come up with some excuse or the other all the time during the harvest times and the owner’s share will decline progressively.

Looking at this process my cousin who belongs to the current generation slowly got all the lands back by paying monetary compensation to the tillers and consolidated them in one huge block of 9 acres so that his attention on them can be more focused. As he began to cultivate the lands he faced multitudes of problems that came in one after another. He would cut pathways for the stream water to pass to his lands. Overnight this would be changed to some other farmer’s lands and his lands would remain without water. He would contract for thrashing the produce after the grains have matured and the labor would ask him for a bottle of liquor as an additional incentive for doing this work. Unbelievable as it was in the beginning, my enquiries revealed that these are the current practices amongst most of the villages in the Tanjore area. Finally at dinner time I asked his wife as to how much do they make in a year. She hung her head down and said,’ my husband’s brothers send us money every month for our sustenance’. This is the plight today of a 9 acre farmer.

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Chapter 4

Models tried in India for Rural uplift

Mahatma Gandhi envisioned that along with the Independence of India, a strategy needs to be adopted to provide the rural folks a sustainable agro industry for their living and attaining economic progress. Even to-day it is a central part of National Development Plan by the Planning Commission. The objective was to involve the rural people in the process of development. However it failed to pick speed as the then nationalists favored

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less efficient techniques to modern technology and methods of production of goods, in the name of ‘not meeting consumer demands’

Between 1950 and 1980 the agro industry was dominated by Pandit Jawaharlal Nehru and his economic think-tank, Prof. Mahanalobis. Their focus was to bring in large scale industries to be able to make capital goods for modernization and growth. The consumer sector industry was primarily for small scale industries and rural agro industry. It was also low on capital and labor intensive. This was consistent with the need to reduce the demand on limited capital and savings and to expand on employment. However due to out-dated technology inadequate management and weak capacity to invest, rural agro industry often failed to meet the demand for quality goods coming from the rapid growth in population and rising incomes.

Starting in the 1980s, there has been a renewed effort in promoting agro industry laying emphasis on market demand, up-to-date technology, and efficient management of supply chain. The Government has also made quite some relaxations on import of technology and private foreign direct investment. However this current trend towards large private agro industrial units risks bypassing small and rural poor. In addition constraints of supply of raw materials from the agro industry turned out to one of the biggest draw backs towards development of agro industry. In addition the growth for agro industrial products have also shown a declining trend. Yet another constraint in the development of the agro industry in India has been the poor quality of raw materials making it

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unsuitable for it to build on and thrive. As an example, India can grow good amount of fruits and vegetables. However the quality of these produce is so poor that they are unable to sustain its growth and profits. Infrastructural bottlenecks are additional impediments to sustained growth of this industry. Then there is the technology that is obsolete and with the tardy growth prospects the development of technology has also been poor. The problem in improving technology has been due to small sizes of average agro industry that suffers from affordability to get higher technology. Lastly the regulatory process is unkind to this industry by Government’s perception that agro industry is in the production of luxury items and hence heavily taxed. There are myriad of regulations and licensing requirements such as Milk Powder Order for the dairy industry and such procedures for agro industry that it make it difficult for the entrepreneurs to be enthused. The financial constraints also play a critical role in dampening the interests. Typically agro industry needs more working capital and less of fixed capital. The banks however do not charge a soft rate of interest for the loans they may advance with difficulty to the entrepreneurs.

The above challenges notwithstanding, the Government has been trying various ideas to find some solutions to bring in the rural masses into the inclusiveness of the growth process. The unfortunate part is that the trial has been unending and the solution has been eluding for long now. Let us the see the various models that were worked to bring the needed change.

Co-operative Organisation Model: AMUL Storey: This is one model that has been successful and is called as Anand Pattern

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Model. This model is evolved successfully over time and has three main structures. The primary cooperatives operate at the village level, a cooperative union at the district level and cooperative federation at the state level. Farmers sell milk to the village level cooperative and they are transported by the district level union and marketed by the federation at the state level. At the state level the federation also formulates strategic planning and investments. The cooperative is run by a governing board selected by the farmers and is run in a professional manner by engaging professional managers in the organisation. The model benefits from the committee suppliers because they are members and relatively low on input costs. The model also benefits members with employment and income from primary production and value-added. Major problem that emerge usually is that the Governing boards are being voluntary one, often gets politicized, detracting from the objectives and goals of the cooperative and thus compromising on good quality business practices. In addition the antiquated laws governing cooperatives bring in undue interference from the Government further dampening the quality of Management of the enterprise.Government Organisation Model: HPMC Himachal Pradesh Fruit Processing Corporation Limited is a Government owned Corporation engaged in setting up of infrastructure and processing, storing and warehousing of apples and apple juices throughout India. Government staff manages the enterprise. Apples are purchased from farmers at announced prices and the marketing of produce is by wholesalers and retailers both of whom are private. Even though this enterprise was successful initially lately due to bureaucratic tangles and other Government interferences it has not been able to attract

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enough farmers to supply apples, beyond the storage centers they have already created in Mumbai, Chennai and Delhi. Here again there is failure of Management of the enterprise to create promote and distribute the apples throughout the country and help poor farmers in the process.

Pepsi Model: This is a model of backward integration between Pepsi Foods a multinational with a strong marketing expertise and farmers in growing tomatoes in Punjab, at Zahura in Hoshiarpur in 1989. It set up a processing plant in this place. By 1994, 350 farmers cropped more than 2700 acres and 650 tonnes of tomatoes were processed a day. Contracts were made with small farmers for procurement of tomatoes and it was more a moral binding than a contract initially. In due course Pepsi sold the enterprise to HLL as the product did not suit their quality stipulations for export. Lots of hurdles were faced in the process in terms of fouling in agreements and resultant disputes with the farmers’ et al. Contract Farming was practiced in detail in the states of Punjab / Haryana and Tamil Nadu. The comment of the World Bank at these models mention “A recent report of the world bank also points to the deficiencies in the contract farming program launched by the Punjab State Government. It states that for the program of contract farming to be successful, it should take into account the aspects of selection of crops for contracting, development of quick and effective contract enforcement and dispute resolution system, limiting fiscal risks to the state government, limiting the number of parties in a contractual agreement and developing farmer organization’s capability of contracting with sponsors, with a view to reducing transaction cost and increasing information flow and improving the

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farmer’s negotiating position”, writes Sukhpal Singh, of Indian Institute of Management, Ahmedabad.

Contract farming cannot be attempted with small and marginal farmers. However it is seen that even with large land owner-farms this system has not been successful. The practices of each farmer are bound to be different and hence for the corporate, consistence in quality of the produces are a casualty. This leads to disputes with the farmers. Corruption, is the natural fall out and such similar issues tend to obscure the system of contract farming. Thus in my view contract farming has not been a success to mitigate farmer’s vows.

Vasant Gandhi, Gauri Kumar and Robin Marsh have made a paper that has been published in The Agriculture-Issues and Perspectives published by ICFAI. In that their study on the subject of Contract Farming concludes as under.

“Conclusions and Implications:Agro Industry has been given significant priority in economic development in India. Mahatma Gandhi’s emphasis on developing village-based agro industry in the movement for independence marked the beginning. Is the priority given to agro industry justified to-day? The study finds that the agro industrial sector in India contributes a large share of overall employment in industry as well as value addition and income generation. Its continued role in promoting development and reducing poverty will depend on its capacity to contribute to small farm income and rural employment, particularly amongst landless labor”.

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Managerially one of the major challenges lies in organising sustained production and procurement from large number of small farmers. A partnering approach appears to be most promising in overcoming multiples constraints. It can be implemented either through building Cooperative Organisations, or by building confidence and trust through a mutually beneficial business relationship involving private enterprise and farmers. In both cases and with other successful models the Government must play a facilitating role through enabling policies, regulations, financing options and research and development. The least it can do is to not interfere with the initiatives except for a whistleblower’s role.

There is a need for new indigenous model to emerge for the re-organisation of agro industry. Government models alone do not show good record of performance. The AMUL Cooperative Model is one promising model that brings benefits to small farmers and gives them ownership of the enterprise. This element of engaging professionals to conduct the business is missing in other forms of cooperative society models in the country and this is one sole reason for their failure. Nevertheless it needs to over come political, legal and managerial limitations. The Pepsi Model that involves cogent backward integration by a private company to the farmers from a strong product market offers another alternative. However it requires long-term commitment and financial strength with limited scope of affecting large numbers of rural poor. It is critical that alternate agro industrial models are encouraged to emerge and receive strong government backing, especially those models that contribute positively to rural employment, poverty alleviation.

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In order to present a true picture of the contract farming model’s failure, I am quoting a media article on the subject.

The Signs of Struggle: as appeared in Business World in 2003.

“The signs of struggle are all too apparent. More than three years ago, attracted by the agri-business opportunity, some of India’s best known corporations like Mahindra & Mahindra, Rallis, EID Parry, Tata Chemicals and Nagarjuna Fertilizers and Chemicals jumped into the fray with their own innovative business models. But many of these models are struggling to scale up.

Most of them - the Mahindras, Rallis and the Tatas - built their model around the concept of a one-stop shop for agri-inputs like seeds and fertilisers and extension services for farmers. Shubh Labh, the Mahindra venture, has so far set up 36 centres in 10 states. On a turnover of Rs 7.2 crores, it posted a loss of Rs 5.24 crores in 2001-02 and is unlikely to improve its position significantly this year either. Rallis, too, has had a hard time. "We are in a pilot mode and have not managed to break the profit barrier. We are spending more than what we are earning," says J.S. Oberoi, vice-president (agri-business), Rallis. Even the Tata Kisan Kendra (TKK), launched by Tata Chemicals, has not overcome the teething troubles. "The revenue streams required to sustain the investment are difficult to come by," says Kapil Mehan, vice-president, Tata Chemicals. EID Parry's Indiagriline.com and Parry's Corner (the physical avatar), and Nagarjuna Fertilizers' ikisan.com, which tried creating an e-marketplace in rural India, have also come a cropper.

So what's prevented these players from scaling up? A plethora of issues continues to dog these initiatives. First, there is, in some cases, a lack of trust with the farmer since many of these models rely on intermediaries whom the farmers don't quite trust. “Credibility is an issue as many of them are working the same dealers who have been cheating the farmers” says a Mumbai based consultant.

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So ramping up volumes is painfully slow. Besides, many models have high fixed costs. The fixed cost of a Rallis Kisan Kendra is close to Rs 5 lakh-6 lakh, while the variable cost could be Rs 10 lakh. This includes a telephone, a PC, furniture, 2-3 motorcycles for the field staff, and costs like rentals, overheads and salaries (for 6-8 employees). "If they have to recover their cost, the revenue should surpass it. The scale at which they are operating doesn't allow them to do that," says a banker.

In fact, in states like Madhya Pradesh, Rallis has done 20,000 acres. "But even then it doesn't have the confidence to scale up. For that it needs to hire more people, as one agri-extension worker cannot cover more than 250-300 farmers," adds an observer. Just consider the costs: every centre has 6-8 employees. So if it has 10 centres, it would need 60 people. Taking an average salary of Rs 1.5 lakh, that would mean an outflow of Rs 1 crore per month in salaries itself. Besides, there are additional overheads. So, unless volumes go up, operating costs would remain high.Then, there is the issue of channel conflict, which all the input-driven models like TKK and Mahindra Shubh Labh have had to encounter. Tata Chemicals, which tried to run the TKK model parallel to its fertiliser sales and marketing organisation, realised that its wholesalers would tend to undercut the TKK franchisees. "We need to have a structured way of disengaging and lowering our stakes in the traditional channel.

Replacing the traditional channel of input and output dealers throws up its own issues. The biggest of them is credit. The farmer needs credit, but who would be willing to take on the credit risk? One option is to route the credit through corporates like Rallis or Mahindra as inputs and trap the receivables through a marketing company like Hindustan Lever or Cargill as ICICI is doing. The recovery has been high (ICICI says it is 100% though market sources peg it at 85%), but it is difficult to pull it off, especially since there is no way to bind the farmer to sell the produce by contracting to buy his produce. Farmers tend to go to the trader, as they need cash immediately - they often borrow from rural co-operative banks, and never paid back. So, recovering the money from the farmer is far more difficult for a large corporate than it is for a local moneylender. "A corporate is an invisible guy. A farmer won't cheat or fool around with a local guy," says an executive.

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Many corporations do not have the requisite knowledge in procurement. "Corporates need the organisational knowledge of handling samples. The market does not reward you for scalping, but for taking positions. You have to understand the fundamentals of commodity trading," says a sourcing expert. So if you are sourcing coffee, you should know what's happening in the consuming markets and have people who can interpret.

All these models have a long way to go. Already, some fine-tuning is being done to correct the flaws. To reduce the burden on its franchisees, Mahindra Shubh Labh has switched to a two-tier model of franchisees and sub-franchisees. "This has allowed us to scale up much faster," says Kairas Vakharia, CEO, Mahindra Shubh Labh Services. Being a local person, the sub-franchisee is able to mobilise grassroots contacts and drive volumes. Rallis, too, has tried to reduce overhead costs. "We are looking at issues of sourcing, getting the back end in place and streamlining credit disbursals. If we don't solve them, they add to our costs and eat into our meager income," adds Rallis' Oberoi

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Chapter 5Need for a new model

Having looked at the existing models the need for a new one is obvious. In fact one wonders why a new model has not emerged as yet. The new model also needs to be tested to be able to emphatically say that it will work better than the ones tried.

The World Bank Report “Growth in high-value agriculture in Asia and the emergence of vertical links with the farmers” submitted in December 2005 has made some very interesting observation that make it more than necessary to evolve a new model for India. It says,

“Throughout the developing world, the relative importance of grains and other starchy staple crops is declining, while that of high-value agricultural commodities is increasing. High-value agricultural goods are generally defined as agricultural goods with a high economic value per kilogram, per hectare, or per calorie, including fruits, vegetables, meat, eggs, milk, and fish. This transformation of the agricultural sector has profound effects on the nature of agricultural supply channels, the opportunities for small farmers, and the role of public policy

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and investment. In particular, the growth in high-value agriculture implies a greater need for close linkages between farmers, processors, traders, and retailers to coordinate supply and demand. Examples of institutions for vertical coordination of agricultural supply channels include grades and standards, price information services, inspection and certification services, contract farming, farmer cooperatives, professional associations, and vertical integration. The growth of high-value agriculture, the development of institutions for vertical coordination, and other structural changes in agricultural supply channels present both opportunities and challenges for small farmers in developing countries. They create opportunities for small farmers to raise their income by participating in the growing markets for high-value agricultural commodities. At the same time, the changes pose challenges to small farmers because high-value agricultural commodities often involve higher costs of production and greater production and marketing risk. Vertical linkages between farmers and buyers can serve to overcome these obstacles, but in some cases buyers decide small farmers cannot satisfy new demands from consumers for quality and food safety, leading to the exclusion of these farmers from supply chains. These trends raise new issues for policymakers who wish to promote pro-poor agricultural growth”.

Many developing Asian Countries are following this approach and if we have to make progress, we need to fall in line. This envisions a new approach altogether and thus needs ‘out of the box’ thinking.

The suggested model in this book hopefully will precisely

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address these concerns. Fundamentally Management of the affairs of the agriculturists needs improvement. This implies that a systematic and holistic approach is vital for the success of conducting the business of agriculture. It also has to be a team effort to obtain and aggregate result. It has to be abreast with the changing times and technology. A highly coordinated effort between R & D and grass-root realities is highly essential. Education and knowledge base has to widen to be able to synthesize, offering the benefit of advancement in the field of agriculture.

Of all the models that have been described, the Spice Board in Karbi, in Assam bears resemblance to the model that is being suggested. It would be heartening to note that of all the places, in Assam a joint farming made a successful storey. The Hindu of June 25, 2007 reports that the Farmers and Spice Board set up firms for growing commercial crops. Inspired by the Commissioner of Customs Mr. Donald Ingty and Mr. F.R. Ingty former adviser of North-East Council, both hailing from Tikka Karbi village in NE, formed Coinonya Farm Producer Company Limited, a joint venture between the Spice Board and the farmers in the villagers. Union Minister for State for Commerce Shri Jayram Ramesh handed over Rs 33 lakhs as 49% equity contribution. The company has been set up under section 581 of the Company’s Act 1956 for growing turmeric, ginger and Chilli on commercial scale.

A recent model has emerged in Dharmapuri District in Tamilnadu where 200 farmers have contributed Rs 10,000.00 each and have formed a private limited company, to grow vegetables and sell the produce themselves on the highways

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abutting their lands. They have been assisted by the Tamilnadu Agricultural University who have developed Precision Farming Technique and have provided this to the company.

The Suggested Model:

A well prepared group of farmers offer their land as equity to be joined by an investor who will bring in cash required for the operations of farming business. Jointly a firm will be set up as a private limited company. The promoters will set up a professional team comprising of agricultural professional and Management professionals to run the enterprise. The professional team may comprise of some enlightened farmers. The corporate may also bring in technology from outside countries as may be appropriate and adopt technologies that are tested and tried elsewhere, including from outside the country.

The capital for the project shall be contributed by a group of Venture Capitalists or any Investor or a group of investors bringing in cash for working capital. The promoters will take due care to ensure that the investor described above, will be like minded in approach to development rather than making a quick return on their investment. There will be significant representation on the Board from the promoter’s side to ensure fairness and equity in operations and management of the enterprise. The local farmer’s capital will be in the form of lands. Their lands can be valued at the local rate determined by the Revenue Officials of the district. The farmers will also be beneficiaries of receiving rentals for the land that the

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corporate will use for agricultural production.

The advantage seen in this model is that the land aggregation will provide large tracks of land that can provide advantages of large scale operation in a profitable manner. The farmers of the area will work in the corporate as farm workers as a second role, in addition to being an owner of the enterprise. A sense of pride will own him to be able to concentrate and work diligently for the common good of the corporate, thus raising the productivity. With the two income streams the farmer now is a satisfied person from the point of view of having some disposable income in his hands that which was a big constraint earlier with the most. The operations will ensure to grow the traditional food varieties of the farmers in the area so that they do not suffer from availability of ‘their’ food that they are used to. One can visualise the tension free farmer who now can plan his life style appropriately. He can educate his child an activity he has neglected so long.

The corporate will study the area and assess the potentials to conduct the business of agriculture from a multi-faceted angle. Just as a corporate will lay out a plan for production of any item of manufacture, here too the corporate will make out well laid out plan to grow crops that are most appropriate. It will lay its infrastructure for ploughing, seeding, watering, application of manure, plant protection and application of labor and machines to kick-start the process. During the process of growth of the produce, the corporate shall devote itself towards building necessary infrastructure for the storage and distribution in an appropriate manner.

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History tells us it is not income transfers but productivity shifts, trade and markets that can raise median incomes and resolve the current agricultural crisis on a sustainable basis. With inherent advantages in biotechnology, information technology, energy input-output ratios and labour costs, Indian agriculture has tremendous potential that can be unlocked through new opportunities thrown up by the current global food crisis which is once again shifting the terms of trade in favour of farmers. It shall embrace the cattle of the farmers and undertake dairy farming activities concurrently.

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Chapter 6

Corprotise the Business of Agriculture

Corporate India has entered into the agri-business for some time now with sizeable investments that suggest that they are

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to stay for a sustained and long term prospect. They wish to have a retail model to make an impact and visibility in the market that is in a competitive arena. They are set to compete with a host of small and medium stores and vendors of vegetables and fruits. Big names in the corporate world are associated with this business like Reliance, Birla, and Bharti to name a few. They can bring the state of the art of logistics, buying techniques, money power and costly window display to attract urban customers who traditionally have been buying from Kirana shops and wayside vegetable/fruit sellers.

It has been reported that these large corporation are yet to meet the targets in terms of their visibility in the market and are just about 50% in terms of meeting these dead lines. They do recognize that this business has long gestation time and are prepared to look at breaking-even in the next three to four years. They also find the competition with the local vegetable / grocery vendors, are firm and strong. In my opinion they have miserably miscalculated and assumed that the backward integration is not necessary to associate themselves with the land and its farmers who grow these items. They have some idea to make this work but may not have thought of doing the business of Agriculture, themselves. Such a step can improve the Management of Agriculture effectively, bringing in greater productivity and profitability. This will make the business viable for the corporate and in turn will remunerate the farmers continuously. Progressively these actions will emancipate the farmer and he can become a part of the big venture in his village. The larger picture of such initiatives in many villages around the country side will usher in a great Nation with great corporate actions, unparallel in the world.

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The following tell us why a good Management in Agricultural affairs is essential for our farmers and country.

In 2003, 45 million tones of food grains were stacked in the open. Much of it rotted away as there was inadequate storage space.

Two years before, the country had a record 65 million tones of food surplus, at a time when nearly 320 million – a third of the world’s estimate 840 million hungry – looked in disbelief at the mountain of food stocks that lay decaying in front of their dry eyes.

In 2001, starvation deaths were reported in 13 States while Food Corporation of India was full of grains, some of it was rotting and rat infested. There was a proposal to dump these grains into the sea to make storage space for the next crop as not export opportunity could be tapped to dispose this surplus.

According to Ms Nooyi, CEO of PepsiCo, 40 per cent of India’s harvest — literally of every crop — spoils before reaching the marketplace: as quoted in The Hindu Business Line of September 25, 2008 edition.

The terms Corporate and Agriculture are likely to detract the reader to suggest that the Corporate are drawn into fulfilling some social responsibility while doing their business. In fact this note is far from this notion. Corporatisation is fundamentally driven by an enormous opportunity in the Agri-Business and it is an opportunity to seize the idea to build a behemoth model. The model suggested will also emancipate the poor and marginal farmers in the country. In fact Ms Indira Nooyi who is on a business visit to India with her entire global

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top team of her company has remarked,” Ms Nooyi listed out three core areas where she wanted both organisations to do more. These were fostering inclusive growth, infrastructure development, and scientific and technological collaboration. In the context of inclusive growth, she pointed out that initiatives in agriculture would help farmers, or a third of the 68 per cent of Indians living in rural areas. How to get this to work? It is indeed a phenomenal task? Who is to take the lead; the Government or the farmer? I guess that the private sector like the Pepsi can take this lead.

All the experiments on emancipating farmers or uplifting his life so far advised the farmer to do agriculture the way this vocation should be scientifically done. With such depleted resources these advises fall in deaf ears of farmers. The way to move forward will be to for the formation of corporate partnering with the farmers and doing agriculture by the corporate in scientific manner. They should look at agriculture as a business proposition rather than a social uplift. With the resources that the Corporate can bring in this field, the business is bound to be successful and should generate adequate revenue that will begin to see the bright side of the actions. It is my belief that Corporates in doing this as a business will be enthused in thinking about the social environment by themselves, as they will be operating in the rural milieu. The very atmosphere will kindle them into action towards related areas of social uplift at an affordable cost, thus be linked to receiving consideration not operate as a way of charity. To the farmer, it will be unshackling from the dungeon of sorts that he lives in and infuse enthusiasm and rekindle a sprit to live and not die. For the new generation of

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young farmers, who are children to-day, this process will start seeing themselves as ‘resilient and creative entrepreneurs as well as value-demanding consumers’, says C.K. Prahalad the famous Strategist and Management Guru of current times, who was in Delhi with his wife Gayatri for the IILM Distinguished Global Thinker Award, told 30th March 2008 Sunday ET.  “A large part of Dr Prahalad’s research is based on cases in rural India and it is mentioned that he travels a lot in Indian villages, often with his wife. She has a Masters in education from Harvard University and often brings a fresh perspective to my research,” he adds that his son and daughter, too, have been his biggest strength and great critics. However, he feels that his business models have made a far greater impact in areas such as Africa, Latin America and Vietnam rather than in India. “The ideas are also very accepted among young researchers in the West and I can name at least 50 of them in the US and Europe who are working in this area of study,” he says. Dr Prahalad’s Fortune at the Bottom of the Pyramid model highlights that businesses, governments, and donor agencies need to stop thinking of the poor as victims and instead start seeing them as resilient and creative entrepreneurs.

Let us take a look at what Dr. B.L. Mungekar, Member Planning Commission has to say to media published in Frontline of Aug.26 – Sept 8, 2006 (Volume 23 – Issue 17) has to say to Lyla Bhavadam. “Quote”

Dr. B.L. Mungekar, a member of the Planning Commission, is a specialist in agricultural economics. He has specifically studied

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the economic problems of Maharashtra. Excerpts from an interview he gave Frontline:

How viable is agriculture in its present form? In the next 10 years, will it be viable for the small farmer or will corporate farming squeeze him out? More importantly, is it the government's intention to let corporate farming take over?

This question has been agitating me for the last 30 years. A minimum 75 per cent of farmers are small and marginal. No credit, no irrigation, no marketing facilities, totally disorganised, no political lobby of their own. Even in a democracy you need a political bargaining power. Making these farmers viable is a stupendous proposition in India's political context.

But it is essential.

Yes, and that brings in the role of the corporate sector. First, we should strengthen the cooperative movement of the small and marginal farmers. We should work on a model of cooperative socialism. Nowadays it is a bad word, but I believe strongly in socialism... and by this I mean the happiness and welfare of the largest number of people. If there is some room to involve industry in this, then I support that too. What is important is to manage the industry-agriculture relationship. We fail in the management and then we blame the institution.

I am categorical about this. Going for any policy in which farmers' interests are subservient to anything will be most undesirable.

But are we not going that way?

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No. We talk of viability. Viability requires technology, management, marketing, packaging and advertising. The state and the farmers may not be able to manage all this on their own. Bring in industry. Without allowing it to make agriculture an appendage... let them give inputs. I repeat that this is my second choice - the first is still cooperative socialism.

When people talk of corporate farming, I stand stubbornly for the ownership of land, for all time to come, to remain with the farmer. Let farmers contribute their land, use their family as labour... let there be contract farming, but land is to be with the farmer. I am not speaking up for contract farming per se, but between contract and corporate farming I will agree to contract farming. In corporate farming, the land and resources are acquired by industry. Even in contract farming there should be strict conditions. Farmers should have a share in the produce. “Unquote” Nothing seemed to have sprouted since then!!

Corporate that think of inclusiveness in their business model are not only visionaries but also great Managers of business environment. Just as corporate share profits with shareholder by offering dividends and bonus shares for using shareholder’s capital in their current business, they shall do so similarly when they begin to use the lands of farmers to develop agriculture and turn it into a behemoth business, generating mammoth profits. The additional and larger benefit that will accrue to the Corporate is that they would be closer to the centers of consumption. When this will happen they will make every farmer wealthy to be able to buy items that urbanites use!! Is this not a big opportunity to the marketers who may take to agri-business along with their other core activities? ITC

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in their e-choupal initiatives went the other way about. They wanted to procure good quality Soya and Wheat from the farmer for them to export. Seeing several intermediaries in the way and boosting the price, they planted e-choupal that produced benefits to the villagers and benefited ITC, tremendously. This is exactly how ITC went rural in developing their e-Choupal initiatives and are thus reaping the benefits, albeit slowly. It is certainly not the other way around. The suggested model to take to agriculture by the corporate, will afford an opportunity to make profits and maybe even diversify into areas to meet their other demands. It would be difficult to fathom the power this model is likely to generate. It will not only energize the existing business but build a powerful India in one stroke, if a number of enterprises take to this way of business development along with their existing ventures and spread the activities in all the states of India. The example set by the Spice Board in equity partnership with villagers of Assam must be an example worth emulating.

There is another opportunity for the corporates to be in this business. This is clear from the report of the World Bank of 15th

December 2005, reference of which was also made earlier. The World Bank’s study of the agriculture in the developing economies suggest that the causes of growth of high value agriculture in these countries are driven by the fact that there is demand for high-value food commodities, driven by high demand, rising incomes and perhaps changing preferences. Secondly the developing countries have begun to liberalize trade by removing all barriers which in turn has opened up several markets in various countries offering opportunities for exports of various commodities. The means to get high-value

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food commodities is to institutionalise agriculture. The present farmer communities in India are not geared to do this at all.

For a moment, take Godrej as an example who are into agri-business already but in a different way. If they were to do in the suggested way, they would benefit by the ready market for all their other products that they sell in the urban towns, which the farmer goes to buy from the towns traveling miles away and carting them to his place of stay! This is the difference in being in the scene by doing the farming themselves. Contract farming has not attracted these nuances. It does not seek to enrich itself with the abundant opportunities the available to the corporate having gone into deep interiors to fetch agricultural produces for their enterprise. When one thinks of the business of the corporate, strategies become the central theme to begin with. If a business already exists, again strategy is essential if a diversification is planned to make it operate more effectively. It was argued before that an intervention is necessary for agriculture to be revitalized through a well thought of strategy. Agriculture will need to be thought as an Industry. Just as steel making or cloth making was initially started by nomads, and later improved by the businessmen in the organized sector, it is suggested that Agriculture also be corporaised similarly. The corporate could take to agriculture as a new field or diversification, retaining its core activity. Take the example of ITC. They have a paper board factory in Bhadrachalam and needed wood [tree trunks] as raw material for making paperboards. It is a tribal area with very poor farmers not having enough money to grow anything.

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They had two options to get their raw material. They could either to buy from the neighboring state, Maharastra or grow it in their areas. They opted for the later. They bought cloning technology and planted saplings themselves and distributed these free of cost initially to the tribal with land and made them grow the tress needed for their purpose. After some years, when they wanted to get more and more raw material, they found that scalability posed a severe threat to procurement as they have to deal with a large number of farmers who have one and two acres of land, mentioned a company employee in a TV channel. The magnitude of problem farmer faces revolves just in utilizing his land. This is the central issue that needs attention with deep understanding. This is the failure in the Management of farming by the farmers for the reasons mentioned before. In addition to create a critical mass, all farmers need to work in tandem to achieve the big picture of agricultural production.

Look at what some Management experts have mentioned of the existing initiatives of some corporate. In a recent article published in CIO, Mohanbir Sawhney of the Kellogg School of Management says: "ITC's long-term vision for e-choupal is grand. But the company started with a modest and focused value proposition - helping farmers gets a better price for their crops. This phased approach allows ITC to gain credibility through early successes and learn from its mistakes." Harvard Business School professor Krishna Palepu shares Sawhney's sentiments: "It is a brilliant idea. If this experiment works, you will have for the first time, enough communication capacity to connect with a market segment that is currently underserved, but clearly has the purchasing power. On this backbone, one

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can imagine other FMCG services and products being offered. But, like everything else, it depends on execution." For students at the Kellogg and Harvard B-schools, the model is a case study. In all these cases, the attempt as only been to help and assist the large holding farmers. That is not the central problem at all. The core issue is of the marginal and small holding farmers, whose plight is misunderstood even by large corporations like the ITC. The e-choupal merely provides a platform for the ITC to buy at prices that they provide of the mandis and other markets and eliminate middlemen.

In a recently conference in Chennai the State Agricultural Secretary Surjit K Chaudhary said the underlining problems of the agriculture sector lay not in the marketing, but in the existing methods of farming itself. “We made basic mistakes in the Green Revolution. Putting in more seeds, more water, and more fertilizers cannot solve any problems. The Green Revolution advocated by the eminent scientist including M.S. Swaminathan is a myth for the Indian agriculture to-day”. According to Mr. Chaudhary, instead of wasting money on fertiliser subsidy, the government should focus on bio-composing. Similarly, instead of inter-state dispute over water, the focus should be on increasing irrigated land by micro-management of water to provide necessary nutrients. The Lok Sabha Member, Shri. Shard Joshi said in the same meeting that land reforms needed to allow operation consolidation of land, so that land could be brought together for cultivation without any change in ownership. “We want corporatisation of agriculture and not Ambanisation”

All these efforts have failed to provide the desired results.

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They have benefited if at all only a few large farmers with large holdings. The problem is with the small and marginal farmers and it is their plight that is most affected and we need to get them into the inclusiveness. The large farmers are however doing a profitable business in agriculture and are most benefited by the largesse that Government doles in the name of the ‘farmer’, including not paying income tax and enjoying free electricity and waiver of loans. How can we solve this problem?

Let us examine the proposition of corporate taking to farming as a business model.

Before one proceeds an important first step will be necessary. It will be necessary to sell this idea first to the farmers through an innovative way. A fine strategy to effectively communicate the core idea and get their consent will be very essential. Otherwise the project may be non-starter. Engaging retired village administrative officers, as change agents, may be an option to ponder over. These change agents may enlist like minded persons to form a team to disseminate the information and influence the local farmers of the idea. These change agents must be first convinced of the project efficacy. Consequently, this will enable them to perform their job of convincing the villagers, somewhat easy. This will generate employment as well as a large number of such change agents will be required. They could also be trained to be communication links with the villages and can be deployed in more virgin areas in the future.

To begin with, a company can select a group of villages, with

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an aggregate area of say 10,000 hectares, to conduct farming. This is because large holding will afford the economies of scale that is essential. Selection of an area will be the most important aspect of the whole project, at least for the first one to commence. This can be done with the help of the Agricultural University of Tamil Nadu if the first project is to be commissioned in this state. The Agricultural University has done some very useful work in their extension department in Coimbatore that has motivated a small group of farmers in Dharmapuri village. They have formed a corporate and have made profits for the past three years, without any gestation time. Their third AGM is to be held in the first week of November 2008. It is presumed here that the first project can commence in Tamil Nadu.

The outline of the corporate shall be as under:

1. It shall be a partnership between farmers on one hand and a venture capitalist(s) or an investor on the other hand. While the venture capitalist will provide cash, the farmers will contribute their lands as capital by ascertaining the land valuation by Government authorities and converting this value as share capital contribution by the farmers.

2. The Corporate will need to engage with the concerned State Governments and convince them of the efficacy of the project. Government sensitivity must be anticipated from a protectionist point of view. To begin with the collector of the district may need to be convinced of the project. They will need to tackle the bureaucracy and the politicians effectively. This is crucial and needs to be

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done with extreme care. Government’s assistance will also be needed for making changes to the land documents from the present form to the demat form, eventually. In addition a crucial need exist to provide assurance to the farmers that the project of the Corporate is genuine. Government could also need to act as a Regulator. In these circumstances, the farmer is likely to part with his land to the Corporate easily.

3. The ownership of land of the farmers will not undergo any change whatsoever. The only significant change that will happen is that as the lands will need to be aggregated, its existing boundaries will be removed for the purpose of integrating. This could have a psychological bearing on the farmer. This will need careful handling, again. If a farmer desires to sell his holding, he could do so as freely as ever. Land documents that will be in the form of Demat account [if and when this is done by the government] will facilitate the sale and purchase with ease. Thus hopefully the farmer will be encouraged to integrate his land with the rest and let the corporate to conduct the activities of agriculture through best practices. By this way the farmer’s confidence in the work of the corporate will be authenticated fully. This is perhaps clear any fears the farmers.

4. In addition to issue of shares against the land, the company can also consider paying a ‘user rent’ for the landowner for utilizing his land. This will guarantee some income to the farmer on his land immediately. Obviously the company will need to first understand the level of sustainability of the farmer before deciding the quantum of and rentals it can pay.

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5. The company can engage the farmer as an employee on the farm for a wage, as labor will be needed by the enterprise for conduct of the agri business, even though the activity could be highly mechanised. There will be a number of peripheral activities that will need workers. Corporate can start many non-farm activities in the area to generate employment besides being engaged in agriculture. Dairy business as an adjunct to agriculture will be a worthwhile subsidiary activity to the main and is a good employment generator. This is also an essential vocation for the farmer as he will psychologically feel the continuity of his work in a new context. This will be the second revenue stream for the farmer with which he can carry on his livelihood a bit more comfortably. This will also arrest the migration of laborer to the cities from the villages thus making laborer available for the company. One of the biggest ills of present farming activity is extreme shortage of labor available in the villages due to migration of youngsters. Eventually the congestion in cities will reduce. In addition the biggest gain that shall accrue to the society will be in terms of harmonious living. This likely to disengage certain frustrated people from Naxalism. Suicidal deaths that are rampant with failure of agriculture will begin to vanish.

6. Amartiya Sen in his book on Economic Inequity says “The relation between inequality and rebellion is indeed a close one and it run both ways. That a perceived sense of inequality is a common ingredient of rebellion in societies is clear enough, but it is also important to recognize that the perception of inequity and indeed the content of that elusive concept depend substantially on possibility of

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actual rebellion”.7. So by just these two measures the company will create a

psychological base for the farmer to live peacefully and participate in the activity of the company productively.

8. With a large land area without subdivision and fragmentation, its workability improves manifold and the concomitant economics of scale will accrue. Farming can be done with the latest technology available in the field and therefore mass production will be economical. Crops suited to the area considering the current weather conditions and water resources available can be assessed and suitable crops can be grown to reap the optimum earnings. The farming communities consuming food should also be grown in the area so that there is no shortage of such items for the farmer.

9. The Corporate can adopt innovative process of marketing. It can create downstream activities in packaging the food crops and send to its centers in the urban area. Such activities will generate greater employment for the local people. It can pack separately for domestic and export markets. It can innovate for expeditious means of transportation. For example Reliance was once toying with an idea of creating mini air-strips in the fields where it intended to buy vegetables! With these linkages, the Corporate can market its produce at a sizeable profit than what the farmer derives. In one of the initiatives, Bharti Enterprises experienced a ten fold increase in growing pulses than what the farmer produced. This was to demonstrate how corporate can use its skills to improve agriculture by infusing capital and human talent to improve productivity and profit as a consequence. This

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was recently telecast. If this is the extent of improvement, there is no reason why corporate cannot undertake farming profitably than the poor farmer.

10. With profits from the operation the corporate will be in a position to generate surpluses out of this business and declare a dividend after a full production cycle. This will form the third revenue stream for the farmer. Some surplus can be utlised in the village uplift measures. This will be truly inclusive growth.

11. One important factor needs proper appreciation. In our country a farmer grows a crop mainly for his consumption. They constitute around 55%. Others grow to consume and sell the balance of their produce for a profit. These constitute about 35%. Only the balance would fall into the category of undertaking contract farming.

12. Besides conducting agriculture the corporate can also takeover the cattle of the farmers and manage them profitably. This activity in itself will be a big opportunity for the corporate to diversify in related field into dairy farming and can generate additional revenues. Consequently this activity will generate additional employment of the farming community in the area. They would maintain better health of the live stock and produce milk to feed the children of the villages around. A white revolution in every village can be created! This will improve the health of the young ones and thus create health consciousness amongst people. The off-shoot of this operation is the opportunity to produce organic fertilisers for the farming operations. This will reduce the consumption of chemical fertilisers and improve the

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natural environment and make healthier over-time. Gobar-gas can bring in cheap power to every house in the village. Nestlé’s major share of business is in the milk-product segment and hence one can see the potential of this business.

13. These activates by itself will slowly ‘urbanise’ the rural India and will give rise to other activities that may be non-farm type. They will become growth centers and cater to a large area surrounding their operations. This will generate additional economic activities in the villages and corporates who operate in these areas will find consumption centre for other products that they may manufacture and market. Such villages will be a market for several manufacturers and with money empowerment of the farmers and hence become potential markets for other manufacturers. This can snowball into installing manufacturing units in the rural areas. There can be advantages to all. For the corporate, land availability will be good and friendly at lower costs. It can train manpower and build local skills. The inter-twining of such activities will generate great confidence in the rural public and this will usher in peaceful coexistence between the corporate and the working community. The consumption centers also being closer, the corporate can save costs in storage and transportation. This process could have ushered a friendlier disposition towards formation of SEZs in India. An extension of this development is likely to reduce the farmer’s involvement into farming as of present and hence the number of our population depending upon agriculture will reduce substantially once the corporates are well entrenched

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into agri-business. This is the way it happened in the US. From a large proportion of people who were into agriculture fifty years ago, the numbers have reduced to a small fraction and many multi-nationals have come into the business of agriculture themselves now. They however do an integrated farming and have developed a good value chain for ultimate food products. In his book Bottom of the Pyramid, “If we stop thinking or the poor as victims or as a burden and start recognizing them as resilient and creative consumers, a whole new world of opportunities will open up. Four billion poor can be the engine of the next round of global trade and prosperity. Serving the BOP consumers will demand innovations in technology, products, services and business models. More important it will require large firms to work collaboratively with civil society organizations local governments. Market development at BoP will also create millions of new entrepreneurs at grass root level-from women working as distributors and entrepreneurs to village level micro enterprises”.

14. With healthy revenues flowing for the company through such scientific / intensified agriculture, it can begin to build hospitals, schools and godowns for storage of produces. These activities can also be slowly commercialized and with growing activities, enhanced purchasing power the villages will slowly begin to look like semi-urbanised. Concomitantly, employment generation will improve. Eaton & Shepherd, however mention that with the corporate taking over the activities of conducting agriculture themselves will drive away

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farmers to urban areas. Some others mention that this activity will generate un-employment. With so many activities that can be generated around the villages, one can clearly see how employment can be guaranteed for generations of the farmers in the rural areas. A novel employment scheme that can be envisages is to train able bodied men and women for Security Services in urban areas and major cities. There is going to acute shortage of such personnel in times to come, looking at the growth of terrorism all over. The frustration of the youth for gainful employment can be satiated in this manner. This will totally negate the criticism of unemployment in villages if corporate take to agri-business.

15. This is also a great opportunity to the development of SEZs in India. Rather than take the route of acquiring the lands of the farmers in the rural areas that result in so much unrest and make difficult for the mission to accomplish, the corporate can seek for create equity ownership with the farmers in the activities of the corporate’s industrial activity, in and around the farming areas. This idea appears to be in the Government’s agenda after the Nano Car debacle in Nandigram.

16. Corporate can build educational institutions and promote knowledge acquisition in a variety of fields. It can effectively coordinate with the knowledge commission appointed by the Government in an effective manner. It is a well known fact that the quality of school education imparted at the most critical level to children is fraught with a big drawback. There are no proper schools,

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no proper teachers, no proper discipline to learn and all these add to poor knowledge creation amongst the village children. This needs to be brought up, if India has to maintain the position it has now created for itself, by commercializing the IT education that was initiated some ten years ago. An interesting observation made by Infosys CEO, Gopalakrishnan in TE of June 6, 2009 is “In a couple of years from now, India will have an intake of a million engineers per annum in its engineering colleges, but there appears to be no big hope on the quality of the students that are churned out. He further adds that “ He said, “India has a lot of catching up to do in terms of technology usage,” adding that the government needs to support technology infrastructure creation as well as improving educational standards. 

How to improve the competencies of our village children to rub shoulders with the urbanites? I am sure every parent will wonder how to make this dream come true at best. This must be the quest for the corporate in the field of education, while undertaking farming in rural areas. When this will happen, ‘inclusiveness’ in the growth process by the corporate will be widening its net to embrace more such areas of critical relevance. As an adjunct to this process, the grown up men / women in the villages can also be brought under the umbrella of education / skill building. Look at what the Strategist and Management Guru said about education. “Besides agriculture, Dr Prahalad feels that financial and education services, too, are areas in India where private enterprise is poised to tap into the “bottom of the pyramid”. “While micro-finance is now a globally accepted model,

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education in India is poised for huge growth. Just consider the huge amount of money that middle-class families are willing to pay for private tuition, education overseas and English education for their children. Too much of governmental regulation has to go from the educational sector even at the primary level. There needs to be a far greater degree of decentralisation in Indian education,” he says.

17. Health care in villages pose a great challenge. The facilities provided by the Government are abysmally poor. The concern is well expressed by Arum Maria’s article in the ET of 6th June 2008. “India is 66th out of 71 developing countries in the Mothers’ Index ranking — a composite of healthcare, education, and economic status of mothers in these countries. And with over 53% of children in India under five years without basic healthcare facilities, the country also ranks very low, alongside Ghana and Eritrea, in childcare. Indians aspire for their country to be a large, rapidly growing economy, and also to be respected as a great nation. Therefore these numbers should be of immense concern because the condition of mothers and children is fundamental to realising those aspirations” Thus a concerted effort in this area is needed in great urgency and it will be the corporate that will be able to perform bringing the needed change, as government efforts all these five decades have miserably failed to achieve any worthy progress.

18. With care shown in the area of health care, the other major activity that will blossom will be to build competencies of our children in the field of sports. The

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corporate can deal with this subject with good implant of skills in the rural area. The foundation of building excellent sportsmen can commence from grass roots. In the villages many children who do not possess interest in education can be drawn into activities in sports, trained in a professional manner. All these services can be at a cost to be paid by the recipient. Micro-financing a big tool that is emerging in a big way in India can come to the rescue of the villagers, who may supplement from their own income from the corporate activity. 

19. In addition to development of skills such as sports, another demanding skill exist in developing excellent school to train able bodied men for jobs in the urban areas that has lately caught on well is the Security Services. They need special training and need men with good physique as well. Such an activity will generate employment and will take care of all available workforces in the rural areas after absorbing the local needs or provide opportunity to those who may even take up such vocation in preference to farming. Once left in the hands of the corporate the farmer can feel safer about his and propensity to earn on a continuous basis.

20. In the same article Arum Maria says that in “India has 20% of the world’s children: but it also has 40% of the world’s malnourished children. Since 45% of Indian children (a number higher than most African countries) are malnourished and likely to grow up with health issues later in life, and since over 50% of Indian children do not have an adequate education, a large proportion of Indian children are unlikely to be the productive assets they are presumed to be in those estimates” This further

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emphasizes the need of the hour to build India from the grass roots, if what the economists say about India and its future growth to become a reality.

21. Through the help of Satellite, the entire land area can be pictured and records can be kept by the company/Government [Village Administrative Officer or Thesildar or Village Munshi]. Hence each holding can be retained on paper as Demat account. This is the comfort level to the farmer that his land is safe enough. It is acknowledged that to successfully implement this, the villager’s psychology needs to be carefully addressed. The vacuum that will be created in the land holdings of individual farmers disappearing could come as a shock initially to the farmer. However once he is convinced of the corporate’s genuine endeavors, the fear is likely to wither away, hopefully.

22. The land belonging to the farmers / owners is thus in tact and can be sold or bought as before. Eventually when they become listed companies their stock values will be governed by the rates quoted in the exchanges just like shares. This could motivate farmers for the psychological loss of land in physical form, overtime. This will be the key to motivate the farmers to Corprotise agriculture.

23. Companies who are in the consumer goods industry can find market for their other produces in the rural interiors, once they are entrenched in the farming activities. This will provide a great opportunity to market their products in wider geographical areas and improve their turnover considerably besides popularizing their products amongst the rural consumers.

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24. A portion of the profit can be set aside for community development in the area of education/health care. It would be argued that these are Government’s activities and the corporate must not enter this area. Government has tried to run these schemes for the last five decades with very slow progress and in some cases stagnated / deteriorated and surely not commensurate with the efforts and cost incurred by the Government in undertaking these schemes. After all many projects like road building, sea port construction and airport building which once predominantly in Government's domain are now undertaken by private enterprises. Therefore education and health-care can be taken up by the corporate sector. The FM has mentioned that it spends Rs 4 to provide Re 1 as poverty alleviation to the poor. These programs can stop and once this happens, the savings to the Government will be huge and it shall be possible to undertake more important projects by the Government. The corporate undertaking such activities can be suitably rewarded in the form of reduced taxes or any such incentives for saving the government from these expenditures. The Government can benefit in this scheme eventually as there will be no more loans seeking farmer left in the country! The financial health of many banks will bounce back and the Government need not go in for sops in financing the farmer. All subsidies that the Government is providing can be withdrawn and used for building roads and provide infrastructure that is so deficient today.

25.  While singling out India as a potential role model for a great society, the International Commentators

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invariably point to the values that Mahatma Gandhi lived by. Gandhiji had asserted that the best test of any major decision is the benefit it would give to the poorest person one could think of. And he insisted that the ends never justify the means. He was a great role model.

Creating a corporate or if some existing corporate takes interest, it will be a win win situation for themselves and farmers. The boom this will bring about will be greater than any boom witnessed so far. This process will truly be inclusive growth and emancipate farmers who will be the biggest beneficiary. The other big beneficiary will be the Government who can redeploy the money saved into bigger development that will make India a global giant.

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Chapter 7

The Khammam experience

Many of my friends and well wishers mentioned to me that the model I suggest will not work as the land is the closest asset for the farmer and it will be impossible for anyone to take away a non starter to aggregate lands into large tracts of land. This is indeed true as without land aggregation the economies of scale will not function to give the desired profitability. I was hoping that with the assistance of retired village officers could

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be a useful linkage for me to get to know the farmer’s mind to such a type of farming. As I was contemplating, I found a NGO put in a piece of information about growing Jatropha is large scale in Khammam, in a web site of Agricultural Information. Attracted by this piece of information, I followed this and eventually it became interesting in as much as it was a viable project to commence on the scale described in the above mentioned pages of the book.

In Khammam a NGO by the name ACTIVE has been doing good social welfare program by getting foreign funds for his projects. The projects handled by this NGO ranged from education to health care to initiating a sense of saving by poor for the rainy day. He was attracted towards agriculture by Reliance Life Science’s program of growing Jatropha plants to harvest bio-diesel bearing seeds from these plantations. In this initiative Reliance Life Sciences was providing seeds to farmers and asked them to grow Jatropha with an understanding that at the end two years they would buy Jatropha seeds so grown by the farmers at a certain price. Apart from providing seeds, Reliance did not provide and other assistance to the farmers. These farmers aggregated 6500 acres of lands for cultivating Jatropha, in and around many villages spread over large distances. In order to sustain themselves they were growing other crops of small durations. When I spoke with this NGO of the above model it immediately caught his attention. He saw immediately the difference between Reliance Life Science’s model and the one I suggested to him. This brought lands of Tribal in the same area for me to propose to an investor to partner with the land owners to begin Jatropha cultivation. The economics worked out to be

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interesting. Since then I have been on the lookout for an investor to take up this project.

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