1. 28/12/2013Department of Agricultural Extension

2. COOPERATIVE VERSUS CONTRACT FARMING IN INDIAPRESENTATION BYGOPALA, 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 years28/12/2013Department of Agricultural Extension3 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.28/12/2013Department of Agricultural Extension4 5. OBJECTIVES OF THE SEMINAR1 To understand the concepts of cooperative and contract farming2 To know the advantages and challenges of cooperative and contract farming3 To review the studies related to cooperative and Contract farming28/12/2013Department of Agricultural Extension5 6. Concept of cooperative farming Chandy (2001) A voluntary form of organization in which farmers and landless cultivators pool their uneconomic holdings and otherresources with a view to facilitate the rational use of resources, economies of scale, and adopt scientific methods of cultivation.28/12/2013Department of Agricultural Extension6 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.28/12/2013Department of Agricultural Extension7 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.28/12/2013Department of Agricultural Extension8 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 28/12/2013Department of Agricultural Extension9 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. 28/12/2013Department of Agricultural Extension10 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.28/12/2013Department of Agricultural Extension11 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 theKolhapur region of Maharashtra.28/12/2013Department of Agricultural Extension12 13. Why we need cooperative farming India Average size of operational holdingsSource: Agriculture Census, 2011,Ministry of Agriculture, Government of India. 28/12/2013Department of Agricultural Extension13 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 year28/12/2013Department of Agricultural Extension14Source: 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.28/12/2013Department of Agricultural Extension15 16. COUNTRIES SUCCESSFUL IN COOPERATIVE FARMING The cooperative farming has been tried successfully in various countries like United Kingdom Germany France Sweden. Russia Israel28/12/2013Department of Agricultural Extension16 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 expenses28/12/2013Department of Agricultural Extension17 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 societies28/12/2013Department of Agricultural Extension18 19. CONTRACT FARMING 28/12/2013Department of Agricultural Extension19 20. CONCEPT OF CONTRACT FARMING Singh (2006) Contract farming is an agreement between farmers and processing and/or marketing firms for the production andsupplyofagriculturalproductsunderforwardagreements, frequently at predetermined prices28/12/2013Department of Agricultural Extension20 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 produce16/1/201021 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.28/12/2013Department of Agricultural Extension22 23. History of contract farming in India British colonel period- First introduced indigo and opiumcultivation 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.28/12/2013Department of Agricultural Extension23 24. Models of contract farming in India Three models of contract farming 1. Bipartite Agreement model 2. Tri-partite Agreement model3. Quad-partite Agreement model28/12/2013Department of Agricultural Extension24 25. Bipartite Agreement model28/12/2013Department of Agricultural Extension25 26. Tri-Partite Agreement Model28/12/2013Department of Agricultural Extension26 27. Quad-Partite Agreement Model28/12/2013Department of Agricultural Extension27 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 Karnataka28/12/2013Department of Agricultural Extension28 29. State-wise Area under Contract Farming in India STATES/UTS Assam Bihar Goa Gujarat Haryana Karnataka Mizoram Orissa Punjab Tamil Nadu India 16/1/2010AREA UNDER CONTRACT FARMING (IN HECTARES) 160 20 1924 2000 1416 15000 2447 5900 121457 236610 475834 29 30. PARTIAL LIST OF COMPANIES ESTABLISHED CONTRACT FARMING IN INDIA 16/1/2010HUL ITC SUGUNA POULTRY VENKATESHWARA HATCHERIES PEPSICO RALLIS NESTLE NSC KSSC 30 31. Contract farming initiatives in Karnataka Sl.No.CropCompany1AshwagandaHimalaya Healthcare Ltd2DhavanaMysore SNC Oil Company3Marigold and Caprica chilliAVT Natural Products Ltd4ColeusNatural Remedies PVT Ltd5Gherkin20 Private Companies6CottonApacchi cotton7PotatoPepsiCo8Fruits and VegetablesRallis India16/1/201031 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.28/12/2013Department of Agricultural Extension32 33. COOPERATIVE VS CONTRACT FARMING28/12/2013Department of Agricultural Extension33 34. SIMILARITIES BETWEEN COOPERATIVE AND CONTRACT FARMING SL. NO.CRITERIACOOPERATIVE FARMINGCONTRACT FARMING1ObjectiveProduction through consolidation of land holdingsProduction through contract2Credit availabilityAvailable through banksAvailable through banks and companies3Inputs for productionAvailable through cooperative societyAvailable through company28/12/2013Department of Agricultural Extension34 35. Differences between cooperative and contract farming Sl. No.CriteriaCooperative farmingContract farming1IncomeMembership fee and Percentage turnoverSales2CustomersOne or multipleOne or limited3Required production skillsHighAverage4Price MechanismSupply and demandFixed prices28/12/2013Department of Agricultural Extension35 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.28/12/2013Department of Agricultural Extension37 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.28/12/2013Department of Agricultural Extension38 39. Case studies On Cooperative farming28/12/2013Department of Agricultural Extension39 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;28/12/2013Department of Agricultural Extension40 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 ReturnsYear First year28/12/2013CropCost /acreSunflower 2700Returns /acre 5000Department of Agricultural ExtensionTotal returns 35,00041 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.28/12/2013Department of Agricultural Extension42 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 contributed28/12/2013Department of Agricultural Extension43 44. RESEARCH STUDIES ON CONTRACT FARMING28/12/2013Department of Agricultural Extension44 45. RESEARCH STUDY-1 TITILE OF THE STUDY Indias Agrarian Crisis and Corporate-Led Contract Farming: Socio-economic Implications for Smallholder ProducersRESEARCHER SHARMA YEAR 2008 28/12/2013Department of Agricultural Extension45 46. Methodology The study was conducted in three districts of Punjabviz., 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 productivity28/12/2013Department of Agricultural Extension46 47. Fig 1. IMPACT CONTRACT FARMING PRODUCTIVITY OF RICE AND WHEAT28/12/2013Department of Agricultural Extension47 48. Table 1. Perceived Benefits of Contract Farming as Reported by Respondents (n=127)SL. No. 1 2 3 4 5 6 7 8 928/12/2013REASONS 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 relationsDepartment of Agricultural ExtensionPERCENT 76 67 50 42 26 18 15 10 848 49. RESEARCH STUDY-2 TitleImpact of Contract Farming on Economic Status of Farmers in selected Districts of Karnataka. Researcher Mallika Meti Year 2009 28/12/2013Department of Agricultural Extension49 50. Methodology The study was conducted in Hassan, Tumkur, Kolar andKoppal 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 farming28/12/2013Department of Agricultural Extension50 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 Total28/12/2013Before contract farming 262.66 252.79 232.19 253.65 250.25After contract farming 294.52 290.32 299.85 300.16 296.25Department of Agricultural ExtensionPer cent increase 12.12 14.85 29.13 18.34 18.3851 52. Table 2. Cost and Returns under contract farming in the selected district. (n=120) Gross returnsDistrictsTotal cost Net returnsB:C ratioHassan (n=30)Before80,7336,13973,13313.15After146,3839,031154,99016.20Tumkur (n=30)Before57,7004,47448,08712.89After108,6677,11991,53515.26Kolar (n=30)Before778008419.8369380.179.24After112066.79,70610044412.00Koppal (n=30)Before110,73315,340103,7707.00After266,00020,180245,78313.18Before81,741.58593.2073592.5010.57After1,58,279.7115091,48,188Difference in B:C ratio14.16Pooled28/12/2013Department of Agricultural Extension3.052.372.766.183.5952 53. RESEARCH STUDY-3 TitleA Study on Contract Farming in Karnataka. Researcher Sahana Year 201328/12/2013Department of Agricultural Extension53 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 impact28/12/2013Department of Agricultural Extension54 55. RESULTS Table-1. Social impact of contract farming on farmers growing crops under contract (n=240)Sl. NoCropsMean score BeforeAfterPaired t value1Tomato (Chickballapur)161.19902.385.16*2Gherkin (Haveri and Tumkur)391.733295.274.48**3Marigold (Davanagere and Haveri)187.33717.216.38**4Cotton (Gadag and Tumkur)956.452606.772.47*5Watermelon (Tumkur)749.982122.463.45**6Pearl millet (Bellary)332.111451.473.12***=significant at 5 per cent 28/12/2013*=significant at 5 per centDepartment of Agricultural Extension55 56. Table-2. Economic impact of contract farming on farmers growing crops under contract. N=240 Sl. NoCropsMean Score BeforeAfterPaired t value1Tomato (Chickballapur)22146.7992731.409.82**2Gherkin (Haveri and Tumkur)23621.22693421.8012.75**3Marigold (Davanagere and Haveri)9985.05281992.9012.13**4Cotton (Gadag and Tumkur)65583.47878983.007.91**5Watermelon (Tumkur)161918.901203545.007.06**6Pearl millet (Bellary)41732.89561962.905.49***=significant at 5 per cent 28/12/2013*=significant at 5 per centDepartment of Agricultural Extension56 57. Implications of the study The contract farming is beneficial to small and marginalfarmers hence it can be popularized for the other crops There is a need of separate dispute handling mechanism for dispute settlement.28/12/2013Department of Agricultural Extension57 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.28/12/2013Department of Agricultural Extension58 59. 17/11/201259 60. 28/12/2013Department of Agricultural Extension60 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 28/12/2013Department of Agricultural Extension61