A model contract farming law will be framed shortly which will enable a partnership between farmers and industry and lead to increase agriculture in India. This was stated by Ajit Singh, minister for agriculture at the inaugural of the Agriculture Summit organised by the Confederation of Indian Industry (CII) in Mumbai today.
Singh said that while states such as Punjab, Maharashtra and MP had initiated contract-farming legislation, this has to be more widespread. Further the model law should provide for a tripartite arrangement between the farmer, industry and government.
This was important to give confidence to the farmers, he added. Cooperative farming rather than corporate farming would be the focus he added.
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Singh said there was a need for greater corporate sector involvement in agriculture. He identified three specific areas of input support, credit and marketing as possible priority areas for corporate involvement.
Companies manufacturing inputs such as seeds, fertiliser, pesticide and other inputs need to provide information and extension services to farmers to ensure that the advantage of technology could be applied to agriculture. Also farm implements and other equipment needed to be provided.
There was an urgent need to increase finance availability and interest rates. It was easier to get credit for a purchase of an automobile or house than get credit for agriculture. Further the rate of interest for the agriculture sector was higher than either cars or houses.
While the government had nearly tripled the outlay for agricultural credit in the 10 plan to 7,50,000 crores, reaching the farmers was the real challenge as the banks are reluctant to move to the rural areas and therefore the private sector has a role to play.
In Madhya Pradesh the Mandi Act has been changed; but other states need to follow the lead. In other cases while the center has relaxed or abolished laws, the states were yet to follow.
There has to be a closer cooperation between the center and the state. Another area to be addressed was subsidies. Any reduction should be so calibrated that there was no impact on the output.
Yogi Deveshwar, Chairman, ITC delivering the keynote address at the CII Agriculture Summit, said that there is a need to change mindsets in agriculture. Corporates should move away form core competencies to look at agriculture as first no Indian company can become world class unless the whole system becomes world class.
Also, no shareholder value could be increased on a sustainable basis unless it sub-served the societal value. He highlighted the fact the corporate sector investment in agriculture can be profitable and satisfying. Deveshwar advocated the utilisation of wasteland and creating a network of farmers as done by the e-choupal model as a means to make the small farmer more competitive.
Earlier, presenting a road map for Indian agriculture, Shankar Krishnan of McKinsey & Co. proposed a four-pronged strategy for accelerating the rate of growth of agriculture in India.
The strategy included first a shift from a piece meal approach to an integrated chain and look at all aspects for a particular produce. Second, it needed a shift of focus from production to market. Third it had to pursue a collaborative route to ensure success, and fourth, follow a do it and fix it model rather than wait for the ideal situation.
Presenting a six point agenda for the future done for the CII Agriculture Council, McKinsey suggested a six point action plan first each state should identify four or five products on a priority basis and then select eight to ten states and focus on the entire chain.
Thereafter, collaborative frameworks to enable partnership between, industry, farmers and government would be needed along with development of three or four key infrastructure areas.
Fresh focus on changing laws relating to contract farming, taxation and role of government in agriculture was needed along with creation of an environment to promote value addition by addressing issues relating to food laws and create local production centers.
Anand Mahindra, vice-president of CII, said there was a perception that 12 years of reforms have not focused on sectors other than agriculture and that there was a need to change this. There is also a feeling that the recent budget also did not address the needs of the agriculture sector.
Contrary to popular perception, there was a huge opportunity for the corporate sector to work with farmers and there is a need for both the central government and state governments to promote this, he added.
The needs, which were well known included appropriate policy that promoted free sale and movement of agriculture produce, increase in public investment particularly in agriculture infrastructure, and a hassle free production of food.
The CII Agriculture Summit showcases the success stories both by the private sector and the Government, stories that can be replicated by other to give an impetus for growth of the agriculture sector.