(Pooja Pal; Intern Journalist): New Delhi: Most of the agri-processing companies ITC Limited, Mahindra Agri Solution, DCM Shriram, and German wholesale retailer Metro Cash and relay expect considerable profits in supply-chain efficiency from the government’s decision to enable farmers to undertake contract farming.
It will aid in inflating income for farmers, especially the micro and marginal ones, as they will get better access to good quality inputs and better farm practices, executives said. Farmers owning below 2 hectares of land account for 86.2% of all farmers in India, but own just 47.3% of the crop area.
“An increased engagement between the farmers and food processors/retailers helps in guiding the farmers to align the crop varieties, quality, farm management practices, etc with what the market wants,” said S Sivakumar, head, Agri & Tech, ITC Limited.
He further stated that the latest legal plot will play as a support factor to transform Indian agriculture resulting in better incomes for the farmers and inflation in businesses’ supply chains.
It will cause a decline in the marketing risk for farmers due to pre-decided pricing and market guarantee, said Sukhpal Singh, Chairperson, Centre for Management in Agriculture, IIM-Ahmedabad. He further alleged, at that time, there was a tension that farmer’s interest may be compromised as they are micro-entities and can’t afford to tolerate buyer reneging from the contract.
On the other hand, long-term contracts with farmers will justify the higher investments made by companies on technology and farms, said Ashok Sharma, president – agriculture sector & MD and CEO –Mahindra Agri Solutions Ltd, (MASL), the agri-business initiative of the Mahindra Group.
The contracts will contain terms regarding traceability and that is probable to happen only with contract farming, which will boost exports too, said Ajay S Shriram, Chairman & sr MD, DCM Shriram Ltd. He further stated that this would provide a predictable income stream to the farmer.
MD of Metro Cash & Carry India-Arvind Mediratta alleged that establishing direct contact between wholesale retailers, companies & thousands of farmers would increase the probability of checking the end products’ quality.
He further stated that farmers would not be required to engage with middlemen. The companies will inculcate best practices on the usage of seeds and farming techniques keeping the technology in mind to bring inadequacies. The company currently procures 2000 tonnes of fruits and vegetables per month with approximately 60% of those being vegetables.
Singh alleged that contract farming is permitted in assorted states which includes Gujarat, Maharashtra, Karnataka, Tamil Nadu, Haryana, Uttarakhand, Madhya Pradesh, and West Bengal under the amended APMC Act wherein the companies & the agencies ought to ask for permit or license in each state accordingly.