1. 28/12/2013
Department of Agricultural Extension

2. COOPERATIVE VERSUS
CONTRACT FARMING IN INDIA
PRESENTATION BY
GOPALA, Y.M
PALB-1028
III Ph.D (Agril. Extn.)

3. INTRODUCTION
• Decline in natural resources has become a global phenomenon
and India is not exceptional.
• The per capita availability of land in the country has declined
from 0.89 hectare in 1951 to 0.32 hectare in 2001
• It is projected to further slip down to 0.20 hectare in 2035.
• The per capita availability of water and the nutritional status of
soil are also experiencing declining trend over the years
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4. SOLUTION?
• Judicious utilization of natural resources to ensure food and
nutritional security of ever growing population and improve
living condition of the farmers.
• This calls for organized arrangements for farming such as
cooperative farming and contract farming.
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5. OBJECTIVES OF THE SEMINAR
1
• To understand the concepts of cooperative
and contract farming
2
• To know the advantages and challenges of
cooperative and contract farming
3
• To review the studies related to cooperative
and Contract farming
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6. Concept of cooperative farming
Chandy (2001)
“A voluntary form of organization in which farmers and
landless cultivators pool their uneconomic holdings and other
resources with a view to facilitate the rational use of
resources, economies of scale, and adopt scientific methods of
cultivation”.
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7. FEATURES OF COOPERATIVE
FARMING
1. Members pool their land, man-power and other resources
into a single unit.
2. Ownership of land continues to be with the individual
members.
3. The society is formed voluntarily and is run on coprinciples.
4. Members receive remuneration according to the work
done and the land contributed for joint cultivation.
5. Members will have the option to leave the organization.
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8. CLASSIFICATION OF COOPERATIVE
FARMING
The Cooperative Planning Committee envisaged four
types of co-operative farming :
1.
2.
3.
4.
Cooperative better farming
Cooperative tenant farming
Cooperative joint farming
Cooperative collective farming.
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9. HISTORY OF COOPERATIVE
FARMING IN INDIA
1944- Cooperative farming was introduced in India through
action plan launched by Bombay Government.
1945- Cooperative Planning committee suggested four types of
cooperative farming societies.
1947- Economic Program Committee recommended a Pilot
schemes for cooperative farming.
1949- Congress Agrarian Reforms Committee recommended the
states to promote cooperative farming.
R.G. SARAIYA
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10. COOPERATIVE FARMING IN
FIVE YEAR PLANS
1st FYP (1951-1957) -2000 cooperative farming societies were
formed
2nd FYP(1956-1961)- Indian delegation sent to China to study
their cooperative farming. Target to setup
about 5000 for the whole country.
3rd FYP (1961-1966) -40% of the cooperative farms were not
functioning properly. 300 pilot projects in
selected district were implemented.
4th FYP (1969-1974) - Cooperative farming programs have not
made any substantial progress.
5th FYP (1974-1979) - No mention of cooperative farming.
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11. ADVANTAGES OF COOPERATIVE
FARMING
1.
2.
3.
4.
5.
6.
Serves as an instrument for planning.
Development of democratic spirit.
Reduces the cost of production.
Increases agriculture production.
Achieves the economies of scale.
Accessibility of services and technology.
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12. Status of Cooperative Farming in India
• 200 cooperative farming societies functioning in India
• The government of Andhra Pradesh prepared a draft policy on
cooperative tenure farming.
• The government of Kerala is promoting cooperative farming
through Kudumbasree project.
• The phud system of joint farming is widely practiced in the
Kolhapur region of Maharashtra.
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13. Why we need cooperative farming India
Average size of operational holdings
Source: Agriculture Census, 2011,Ministry of Agriculture, Government of India.
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14. DECLINE OF MANPOWER IN EXTENSION
• The extension worker: farmer ratio is very wide in India i.e. 1:
1000.
 At least, 25 percent of extension workers are administrators
/supervisors
 At least 50 percent of the time goes for administrative
work, official correspondence, reports and travel to reach
villages
 Excluding the leave period, holidays, an extension worker
attends office for about 250 days in a year
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Source: Gautam et al, 2006. Agricultural Extension in India: A Journey since 1952 .

15. Failure of Cooperative Farming in India
1. Indifference of state government
2. Lack of financial facilities.
3. Lack of co-ordination.
4. lack of administrative staff.
5. Lack of dedicated non-official leadership.
6. Opposition of political parties.
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16. COUNTRIES SUCCESSFUL IN
COOPERATIVE FARMING
•
•
•
•
•
•
The cooperative farming has been tried successfully in
various countries like
United Kingdom
Germany
France
Sweden.
Russia
Israel
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17. The challenges ahead of cooperative
farming in India
1.
2.
3.
4.
Impracticability of cooperative farming in India
Lack of trained person
Individual liberty
Increase in managerial and administrative expenses
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18. Suggestions for improvement of
cooperative farming in India
1. Strong policy back up
2. Establishment of societies in the areas which offer
potential for growth
3. Financial assistance for the cooperative farming
societies
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19. CONTRACT
FARMING
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20. CONCEPT OF
CONTRACT FARMING
Singh (2006)
Contract farming is an agreement between farmers and
processing and/or marketing firms for the production and
supply
of
agricultural
products
under
forward
agreements, frequently at predetermined prices
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21. TYPES OF CONTRACTS
1.


2.


3.


Marketing contract
Only purchase at predetermined price
No input supply
Partial contract
Provides only some inputs at predetermined price
Purchase of product
Total contract
All the inputs at predetermined price
Purchase of produce
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22. The advantages of contract farming
1.
2.
3.
4.
5.
6.
Provision of inputs and production services.
Access to credit
Introduction of appropriate technology
Skill transfer
Guaranteed and fixed pricing structures and
Access to reliable markets.
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23. History of contract farming in India
• British colonel period- First introduced indigo and opium
cultivation in the Bengal Region.
•
1920s -ITCs contracts with the farmers of Andhra Pradesh for
growing Virginia tobacco.
• 1990s-Pepsico started contracts on tomato farming in Punjab.
• 2003- Model APMC act was enacted.
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24. Models of contract farming in India
Three models of contract farming
1. Bipartite Agreement model
2. Tri-partite Agreement model
3. Quad-partite Agreement model
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25. Bipartite Agreement model
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26. Tri-Partite Agreement Model
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27. Quad-Partite Agreement Model
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28. Status of contract farming in India
• Nearly Five lakh hectares is under contract farming India
• More than 600 national and multinational companies are in
contract farming
• In Karnataka nearly 15000 hectares is under contract
farming.
• More than 25 companies have established contract farming
in Karnataka
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29. State-wise Area under Contract Farming in
India
STATES/UTS
Assam
Bihar
Goa
Gujarat
Haryana
Karnataka
Mizoram
Orissa
Punjab
Tamil Nadu
India
16/1/2010
AREA UNDER CONTRACT FARMING
(IN HECTARES)
160
20
1924
2000
1416
15000
2447
5900
121457
236610
475834
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30. PARTIAL LIST OF COMPANIES ESTABLISHED
CONTRACT FARMING IN INDIA
•
•
•
•
•
•
•
•
•
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HUL
ITC
SUGUNA POULTRY
VENKATESHWARA HATCHERIES
PEPSICO
RALLIS
NESTLE
NSC
KSSC
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31. Contract farming initiatives in
Karnataka
Sl.No.
Crop
Company
1
Ashwaganda
Himalaya Healthcare Ltd
2
Dhavana
Mysore SNC Oil Company
3
Marigold and
Caprica chilli
AVT Natural Products Ltd
4
Coleus
Natural Remedies PVT Ltd
5
Gherkin
20 Private Companies
6
Cotton
Apacchi cotton
7
Potato
PepsiCo
8
Fruits and
Vegetables
Rallis India
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32. Challenges ahead for contract farming
in India
1.
2.
3.
4.
5.
6.
7.
Diversion of inputs to other purpose.
Default of the farmer.
Ill effects of technology disseminated.
Monopsony in the locality by the company.
Farmers bear most of the risk.
scope for corruption.
Manipulation of quotas and quality specifications.
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33. COOPERATIVE VS CONTRACT
FARMING
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34. SIMILARITIES BETWEEN COOPERATIVE
AND CONTRACT FARMING
SL.
NO.
CRITERIA
COOPERATIVE
FARMING
CONTRACT
FARMING
1
Objective
Production through
consolidation of land
holdings
Production through
contract
2
Credit availability
Available through banks
Available through banks
and companies
3
Inputs for
production
Available through
cooperative society
Available through
company
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35. Differences between cooperative and
contract farming
Sl.
No.
Criteria
Cooperative
farming
Contract
farming
1
Income
Membership fee and
Percentage turnover
Sales
2
Customers
One or multiple
One or limited
3
Required
production
skills
High
Average
4
Price
Mechanism
Supply and demand
Fixed prices
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36. Model for Integration of Cooperative and
Contract Farming

37. Advantages of integrated model
1.
2.
3.
4.
Reduction in farmers defaults.
Facilitation by specialised NGOs.
Control over the companies specification and quotas.
Inclusion of small and marginal farmers in contract
farming
5. Backward and forward linkages to the farmers.
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38. SUSTAINABILITY OF THE MODEL
• Maintaining an revolving fund in the farmers organization
• Technical support from the developmental departments
• Financial support from the banks.
• Linkages with research and extension systems.
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39. Case studies
On
Cooperative farming
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40. CASE-1
Title -Cooperative Nature Farming by
Unemployed youth
• Adarsh Yuvak Swayamrojgar Sewa Sahakari Sanstha based in
the village of Tarodedi in Shegaon taluka of buldana
• Started in 2001 with the assistance of vikasa sahayog
prahtistana
• Registered in the year 2007
• 11 members started the cooperative
• Pooled in the share capital of Rs 1,500 each. Some members
are from families with medium-sized farm holdings;
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41. Cont…….
• Took seven-acre plot on lease from a relative of one of the
members for an annual rent of Rs 14,000 in 2007
• Crop insurance to avoid the risk of crop loss
• Returns
Year
First year
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Crop
Cost /acre
Sunflower 2700
Returns
/acre
5000
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Total
returns
35,000
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42. Case-2
Co-operative Farming of Organic Paddy
in Trissur:
• Around 2,400 small farmers in Thrissur of Kerala state started
organic paddy cultivation within a cooperative framework
during 2006.
• Interest free loan from Adat Farmers Cooperative Bank
(AFCB).
• Members pool in their holdings and jointly cultivate the land
using improved practices.
• Received wages daily.
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43. Contd………
•
•
•
•
The total cost of cultivation was Rs 2.10 crore
Gross returns were Rs 5.10 crore.
Rs 3 crore was distributed among the farmers
Based on proportionate to their landholdings and the labour
contributed
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44. RESEARCH STUDIES
ON
CONTRACT FARMING
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45. RESEARCH STUDY-1
TITILE OF THE STUDY
India’s Agrarian Crisis and Corporate-Led Contract Farming:
Socio-economic Implications for Smallholder Producers
RESEARCHER
SHARMA
YEAR
2008
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46. Methodology
• The study was conducted in three districts of Punjab
viz., Amritsar, Jalandhar and Ludhiana
• 87 contract farmers and 40 non contract farmers were
selected
• Econometric model was used to know the impact of contact
farming on productivity
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47. Fig 1. IMPACT CONTRACT FARMING PRODUCTIVITY
OF RICE AND WHEAT
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48. Table 1. Perceived Benefits of Contract Farming
as Reported by Respondents
(n=127)
SL. No.
1
2
3
4
5
6
7
8
9
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REASONS
Access to assured market
Assured price
Access to better seed
Access to better extension services
Less water requirement
Higher returns than competing crops
Inspired by other contract farmers
Less incidence of crop diseases
Personal relations
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PERCENT
76
67
50
42
26
18
15
10
8
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49. RESEARCH STUDY-2
TitleImpact of Contract Farming on Economic Status of Farmers in
selected Districts of Karnataka.
Researcher
Mallika Meti
Year
2009
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50. Methodology
• The study was conducted in Hassan, Tumkur, Kolar and
Koppal districts during 2009.
• 30 farmers from each district were selected as sample.
• Total 120 farmers were the sample.
• Compared economic status before and after contract farming
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51. Results
Table-1.Economic status of farmers practicing contract
farming in selected districts of Karnataka
(n=120)
Mean score
Districts
Hassan
Tumkur
Kolar
Koppal
Total
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Before
contract
farming
262.66
252.79
232.19
253.65
250.25
After
contract
farming
294.52
290.32
299.85
300.16
296.25
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Per cent
increase
12.12
14.85
29.13
18.34
18.38
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52. Table 2. Cost and Returns under contract farming in the selected
district.
(n=120)
Gross
returns
Districts
Total cost Net returns
B:C ratio
Hassan
(n=30)
Before
80,733
6,139
73,133
13.15
After
146,383
9,031
154,990
16.20
Tumkur
(n=30)
Before
57,700
4,474
48,087
12.89
After
108,667
7,119
91,535
15.26
Kolar
(n=30)
Before
77800
8419.83
69380.17
9.24
After
112066.7
9,706
100444
12.00
Koppal
(n=30)
Before
110,733
15,340
103,770
7.00
After
266,000
20,180
245,783
13.18
Before
81,741.5
8593.20
73592.50
10.57
After
1,58,279.7
11509
1,48,188
Difference
in B:C
ratio
14.16
Pooled
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3.05
2.37
2.76
6.18
3.59
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53. RESEARCH STUDY-3
TitleA Study on Contract Farming in Karnataka.
Researcher
Sahana
Year
2013
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54. Methodology
• The study was conducted in six districts of Karnataka viz.,
Chickballapura, Tumkur, Davanagere, Haveri, Gadag and
Bellary.
• Six crops selected for the study viz., tomato, marigold,
Gherkin, Cotton, watermelon and pearl millet.
• 240 respondents were selected
• Studied social impact and economical impact
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55. RESULTS
Table-1. Social impact of contract farming on farmers growing
crops under contract
(n=240)
Sl.
No
Crops
Mean score
Before
After
Paired
t value
1
Tomato (Chickballapur)
161.19
902.38
5.16*
2
Gherkin (Haveri and Tumkur)
391.73
3295.27
4.48**
3
Marigold (Davanagere and Haveri)
187.33
717.21
6.38**
4
Cotton (Gadag and Tumkur)
956.45
2606.77
2.47*
5
Watermelon (Tumkur)
749.98
2122.46
3.45**
6
Pearl millet (Bellary)
332.11
1451.47
3.12**
*=significant at 5 per cent
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*=significant at 5 per cent
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56. Table-2. Economic impact of contract farming on
farmers growing crops under contract.
N=240
Sl.
No
Crops
Mean Score
Before
After
Paired
t value
1
Tomato (Chickballapur)
22146.79
92731.40
9.82**
2
Gherkin (Haveri and Tumkur)
23621.22
693421.80
12.75**
3
Marigold (Davanagere and Haveri)
9985.05
281992.90
12.13**
4
Cotton (Gadag and Tumkur)
65583.47
878983.00
7.91**
5
Watermelon (Tumkur)
161918.90
1203545.00
7.06**
6
Pearl millet (Bellary)
41732.89
561962.90
5.49**
*=significant at 5 per cent
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*=significant at 5 per cent
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57. Implications of the study
• The contract farming is beneficial to small and marginal
farmers hence it can be popularized for the other crops
• There is a need of separate dispute handling mechanism for
dispute settlement.
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58. CONCLUSION
• Natural resources are shrinking in terms of per capita
availability year after year and the population growth is
increasing.
• Ratio of extension personnel with its clients is also
declining.
• Organized formal groups in farming becomes all the
more important now than before. Therefore, future
research in extension needs to work on this issue with
major focus on interdisciplinary approach.
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59. 17/11/2012
59

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61. Impact of farm size on land productivity
The results show weak correlations between
fragmentation and productivity. Land fragmentation seems
to be positively correlated to productivity due to more use
of fertilizers and labour input. The communes that have
consolidated their land are more productive, but this seems
to be explained by initial differences in productivity. Our
results suggest that there are no immidiate gains in land
consolidation.
• Keywords:
LISA ANDERSSON, 2006, A study of the impacts of land fragmentation on
agricultural productivity in Northern Vietnam. Bachelor thesis, DEPARTMENT OF
ECONOMICS , Uppsala University
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