Model Answer
0 min readIntroduction
India’s agricultural landscape is characterized by rapidly declining average land holding sizes. According to the Agricultural Census 2015-16, the average land holding size has shrunk to 1.08 hectares, and 86.2% of farms are marginal (less than 2 hectares). This fragmentation renders agriculture economically non-viable for a majority of farmers, hindering productivity and income. In this context, promoting alternative arrangements like contract farming and land leasing are often suggested as solutions. However, these approaches are not without their challenges and require careful consideration to ensure equitable outcomes and sustainable agricultural development.
Contract Farming: Pros and Cons
Contract farming involves agreements between farmers and buyers for the production and supply of agricultural products.
- Pros:
- Assured Market & Price: Provides farmers with a guaranteed market and pre-agreed prices, reducing price volatility and market risks.
- Access to Technology & Inputs: Often includes provision of seeds, fertilizers, and technical assistance by the buyer, improving productivity.
- Investment & Credit: Buyers may provide credit or investment for production, easing financial burdens on farmers.
- Infrastructure Development: Can incentivize investment in post-harvest infrastructure like storage and processing facilities.
- Cons:
- Exploitation & Power Imbalance: Farmers, particularly small and marginal ones, may be vulnerable to exploitation due to unequal bargaining power.
- Price Manipulation: Buyers can potentially manipulate prices or quality standards to their advantage.
- Land Tenure Issues: Contract farming can sometimes lead to de facto loss of land control for farmers.
- Lack of Legal Framework: Absence of a robust legal framework can lead to disputes and inadequate redressal mechanisms. The Model Contract Farming Act, 2018, aims to address this, but its adoption is uneven across states.
Land Leasing: Pros and Cons
Land leasing involves renting out land to another party for agricultural purposes.
- Pros:
- Increased Land Use Efficiency: Allows land to be cultivated even by those who do not own it, increasing overall agricultural output.
- Economies of Scale: Enables larger, more efficient farms, leading to higher productivity.
- Income Generation for Landowners: Provides landowners with a rental income without actively engaging in farming.
- Employment Opportunities: Creates employment opportunities for landless laborers.
- Cons:
- Security of Tenure: Tenants often lack security of tenure, making them hesitant to invest in land improvement.
- Social Implications: Can exacerbate existing social inequalities and lead to displacement of small farmers.
- Legal Restrictions: Many states had restrictive land leasing laws (e.g., prohibiting leasing out of agricultural land) which hindered its widespread adoption. Recent amendments in states like Haryana and Uttar Pradesh have relaxed these restrictions.
- Exploitation of Tenants: Landowners may exploit tenants by charging exorbitant rents or imposing unfair conditions.
Comparative Analysis
| Feature | Contract Farming | Land Leasing |
|---|---|---|
| Risk Sharing | Shared between farmer & buyer | Primarily borne by the tenant |
| Investment | Often by the buyer | Primarily by the tenant |
| Control | Buyer has significant control over production | Landowner retains ownership, tenant manages operations |
| Legal Framework | Model Act (2018), state-level variations | State-level Land Reforms Acts, recent amendments |
Both contract farming and land leasing can contribute to agricultural development, but their success depends on creating a supportive legal and institutional environment that protects the interests of all stakeholders, particularly small and marginal farmers. Strengthening farmer producer organizations (FPOs) can empower farmers to negotiate better terms in contract farming agreements.
Conclusion
Declining land holding sizes necessitate innovative approaches to enhance agricultural viability. While contract farming and land leasing offer potential solutions, their promotion must be accompanied by robust legal frameworks, effective dispute resolution mechanisms, and measures to prevent exploitation. A balanced approach that prioritizes farmer empowerment, secure land tenure, and equitable benefit-sharing is crucial for ensuring sustainable and inclusive agricultural growth in India. Further, promoting diversification and value addition in agriculture alongside these arrangements can enhance farmer incomes and resilience.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.