Corporate Shadow on Indian Agriculture


As recent developments indicate, global corporate giants are out to establish their dominance over Indian agriculture. In this they are being helped by powerful quarters from both inside and outside the country. It is needless to add that their success will lead to serious repercussions for the country.

Even though the Indian National Congress, the leading anti-imperialist organisation during the freedom struggle came into being in 1885, it could become a force to reckon with only when Gandhi brought peasantry into it. The first real mass movement led in India by Gandhi was the Champaran Satyagraha of 1917 in which he successfully pitted mostly illiterate and semi-literate peasants against powerful European indigo planters who had the tacit backing of the British government. From then onwards the Congress became more and more peasant oriented and in this process it became a real mass movement. The interests of peasants came to dominate its deliberations. Presiding over the golden jubilee session of the Congress at Faizpore, Jawaharlal Nehru called for a radical reform in agrarian relations without which neither industry could develop nor could the problems of unemployment and poverty be solved. The Congress declared, “The final solution of this problem involves the removal of British imperialistic exploitation and a radical change in the antiquated and repressive land tenure and revenue systems.” Both the Congress and Nehru were aware that land redistribution programme must be followed by a reorganization of agrarian relations on the basis of co-operation. While individual farming or peasant proprietorship was to continue, it was underlined that “progressive agriculture as well as the creation of new social values and incentives require some system of cooperative farming suited to Indian conditions.” Unlike the Soviet style collective farming, “Any such change can… be made with the goodwill and agreement of the peasantry concerned.” To impress upon the peasantry the benefits of cooperative farming, experimental cooperative farms were to be established.

Even though the Congress endorsed Nehru’s approach at its Nagpur session in 1959, there arose a stiff resistance from bureaucracy, landed interests and political circles including a section of the Congress. Gradually, Nehru’s approach was shelved and, from the 1980s onwards, Indian agriculture embarked on integration with the global market. Corporate agribusiness entered the scene in a big way, especially from the 1990s onwards, when India accepted the Washington consensus-based globalization. Disastrous consequences following it have manifested themselves in various forms ranging from increasing sufferings and suicides by farmers, large-scale exodus of labourers and marginal farmers after selling off or leasing out their tiny holdings, violent clashes and turbulence in rural areas and so on. Speaking at the Indian Science Congress in January this year, the Nobel laureate Prof. Amartya Sen expressed great disquiet at growing distress in the agricultural sector and increasing disparities with industrial and service sectors. Agriculture was stagnating causing asymmetries and inequalities within the country. In his own words, “Our vision of India cannot be one that is half California and half-sub Saharan Africa.”

While recognizing that all is not well with rural India, the strategy of contract farming has been advanced by global corporate firms and international bodies like FAO. Charles Eaton and Andrew W. Shepherd have provided the theoretical justification in an FAO publication “Contract Farming – Partnerships for Growth”. They define contract farming “as 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.” In other words, the three basic production decisions, namely, what, how and for whom to produce will be taken by corporate entities. Their main aim will certainly be the maximization of profits. Obviously, employment opportunities in agriculture will fall. In case, marginal and small farmers want to lease out their tiny holding, they may get some sort of rent. With far-reaching changes in the character of farming, there will be a large-scale exodus of farmers to urban areas in search of jobs. This will enlarge the informal sector and the population of slum dwellers. One may look up Mike Davis’s Planet of Slums (Verso, 2006) the frightening picture, sure to follow the corporate-induced agrarian reorganization. 

 Eaton and Shepherd state at the very outset: “In an age of market liberalization, globalization and expanding agribusiness, there is a danger that small-scale farmers will find difficulty in fully participating in the market economy. In many countries such farmers could become marginalized as larger farms become increasingly necessary for a profitable operation. A consequence of this will be a continuation of the drift of populations to urban areas.

“Attempts by governments and development agencies to arrest this drift have tended to emphasize the identification of “income generation” activities for rural people. Unfortunately there is relatively little evidence that such attempts have borne fruit. This is largely because the necessary backward and forward linkages are rarely in place, i.e. rural farmers and small-scale entrepreneurs lack both reliable and cost-efficient inputs such as extension advice, mechanization services, seeds, fertilizers and credit, and guaranteed and profitable markets for their output. Well-organized contract farming does, however, provide such linkages, and would appear to offer an important way in which smaller producers can farm in a commercial manner. Similarly, it also provides investors with the opportunity to guarantee a reliable source of supply, from the perspectives of both quality and quantity.”

The above two paragraphs try to make contract farming the panacea for all the troubles at present faced by Indian farmers. In fact, if one looks more carefully and analyze the implications they are sure to lead to disastrous consequences for India’s polity, society, economy and culture. The constraint of space, however, does not permit us to perform this task.

 The transition towards contract farming began surreptitiously when Pepsi Foods Ltd. entered contract farming business in India by installing a Rs 22 crore state of the art tomato processing plant in Punjab. To meet its demand of tomatoes, it entered contract farming. Soon PepsiCo entered the cultivation of Basmati rice, spices (chillies), oilseeds (groundnuts) and potato.

The BJP has been more enthusiastic about contract farming. The self-proclaimed votary of national pride Narendra Modi, the chief minister of Gujarat, is on record urging the corporates to enter contract farming his state (Business Standard, November 17, 2003). In BJP-ruled state of Madhya Pradesh, Hindustan Lever, a subsidiary of the Anglo-Dutch MNC Unilever, Tata group’s Rallis and ICICI have joined hands in carrying out contract farming for the production of wheat. Under the arrangement, Rallis supplies agricultural inputs and know-how and ICICI provides credit and Hindustan Lever buys up the produce for its food processing units. The National Agricultural Policy of the Government of India visualizes that “Private sector participation will be promoted through contract farming and land leasing arrangements to allow accelerated technology transfer, capital inflow and assured market for crop production, especially of oil seeds, cotton and horticultural crops.”

There are several serious objections to the entry of the corporate sector into agriculture. As has already been referred, the prime aim of the corporate sector will be the maximization of profits by minimizing the costs of production. In this process, employment generation will be the biggest casualty. The present exodus of the unemployed from the rural to urban areas will not only accelerate but also increase manifold and this will have serious repercussions. Second, the relationship between the corporates and the farmers will be on unequal footing. The former will most of the time have its way and dictate terms. In this context one may recollect what happened as a result of enclosure movement in England during the 18th century. Like enclosures contract farming will make farms larger and the farmers fewer. It will uproot small and marginal farmers and landless labourers from the villages. Of course, a number of them will be transformed into agricultural proletariat working for wages on the farms operated by the corporates. 

Before we end, let us quote a few lines from a report “The end of Gandhi’s dream: India’s economic boom and bust—Mahatma’s vision” (Independent, March 20): “India’s big companies talk of the country’s agriculture as a massive untapped resource, with exceptionally fertile land, and tropical fruits, rice and spices that are considered among the world’s best. Insiders say Reliance, one of the major players in India, is planning to move into the farming sector in a big way.” It is anybody’s guess why Anil Ambani of the Reliance has begun distancing himself from Amar Singh-Mulayam Singh outfit.

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