1. cooperative versus contract farmingPresentation Transcript
1. 28/12/2013 Department of Agricultural Extension
2. COOPERATIVE VERSUS CONTRACT FARMING IN INDIA PRESENTATION BY GOPALA, 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 dow n to 0.20 hectare in 2035. • The per capita availability of w ater and the nutritional status of soil are also
experiencing declining trend over the years 28/12/2013 Department of Agricultural Extension 3
4. SOLUTION? • Judicious utilization of natural resources to ensure food and nutritional security of ever grow ing population
and improve living condition of the farmers. • This calls for organized arrangements for farming such as cooperative farming
and contract farming. 28/12/2013 Department of Agricultural Extension 4
5. OBJECTIVES OF THE SEMINAR 1 • To understand the concepts of cooperative and contract farming 2 • To know the
advantages and challenges of cooperative and contract farming 3 • To review the studies related to cooperative and
Contract farming 28/12/2013 Department of Agricultural Extension 5
6. Concept of cooperative farming Chandy (2001) “A voluntary form of organization in w hich farmers and landless cultivators
pool their uneconomic holdings and other resources w ith a view to facilitate the rational use of resources, economies of
scale, and adopt scientific methods of cultivation”. 28/12/2013 Department of Agricultural Extension 6
7. FEATURES OF COOPERATIVE FARMING 1. Members pool their land, man-pow er and other resources into a single unit.
2. Ow nership of land continues to be w ith the individual members. 3. The society is formed voluntarily and is run on
coprinciples. 4. Members receive remuneration according to the w orkdone and the land contributed for joint cultivation. 5.
Members w ill have the option to leave the organization. 28/12/2013 Department of Agricultural Extension 7
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. 28/12/2013 Department of Agricultural Extension 8
9. HISTORY OF COOPERATIVE FARMING IN INDIA 1944- Cooperative farming w as 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 28/12/2013
Department of Agricultural Extension 9
10. COOPERATIVE FARMING IN FIVE YEAR PLANS 1st FYP (1951-1957) -2000 cooperative farming societies w ere formed
2nd FYP(1956-1961)- Indian delegation sent to China to study their cooperative farming. Target to setup about 5000 for the
w hole country. 3rd FYP (1961-1966) -40% of the cooperative farms w ere not functioning properly. 300 pilot projects in
selected district w ere implemented. 4th FYP (1969-1974) - Cooperative farming programs have not made any substantial
progress. 5th FYP (1974-1979) - No mention of cooperative farming. 28/12/2013 Department of Agricultural Extension 10
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. 28/12/2013 Department of Agricultural Extension 11
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 w idely practiced in the Kolhapur region of Maharashtra.
28/12/2013 Department of Agricultural Extension 12
13. Why w e need cooperative farming India Average size of operational holdings Source: Agriculture Census, 2011,Ministry of
Agriculture, Government of India. 28/12/2013 Department of Agricultural Extension 13
14. Excluding the leave period, holidays, an extension w orker attends office for about 250 days in a year 28/12/2013
Department of Agricultural Extension 14 Source: Gautam et al, 2006. Agricultural Extension in India: A Journey since 1952
. At least 50 percent of the time goes for administrative w ork, official correspondence, reports and travel to reach villages 
At least, 25 percent of extension w orkers are administrators /supervisors DECLINE OF MANPOWER IN EXTENSION •
The extension w orker: farmer ratio is very w ide in India i.e. 1: 1000.

2. 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.
28/12/2013 Department of Agricultural Extension 15
16. COUNTRIES SUCCESSFUL IN COOPERATIVE FARMING • • • • • • The cooperative farming has been tried successfully in
various countries like United Kingdom Germany France Sw eden. Russia Israel 28/12/2013 Department of Agricultural
Extension 16
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 expenses 28/12/2013 Department of Agricultural
Extension 17
18. Suggestions for improvement of cooperative farming in India 1. Strong policy back up 2. Establishment of societies in the
areas w hich offer potential for grow th 3. Financial assistance for the cooperative farming societies 28/12/2013 Department of
Agricultural Extension 18
19. CONTRACT FARMING 28/12/2013 Department of Agricultural Extension 19
20. CONCEPT OF CONTRACT FARMING Singh (2006) Contract farming is an agreement betw een farmers and processing
and/or marketing firms for the production and supply of agricultural products under forw ard agreements, frequently at
predetermined prices 28/12/2013 Department of Agricultural Extension 20
21. 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 produce 16/1/2010
21  3.   2.  TYPES OF CONTRACTS 1.
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. 28/12/2013
Department of Agricultural Extension 22
23. History of contract farming in India • British colonel period- First introduced indigo and opium cultivation in the Bengal
Region. • 1920s -ITCs contracts w ith the farmers of Andhra Pradesh for grow ing Virginia tobacco. • 1990s-Pepsico started
contracts on tomato farming in Punjab. • 2003- Model APMC act w as enacted. 28/12/2013 Department of Agricultural
Extension 23
24. Models of contract farming in India Three models of contract farming 1. Bipartite Agreement model 2. Tri-partite Agreement
model 3. Quad-partite Agreement model 28/12/2013 Department of Agricultural Extension 24
25. Bipartite Agreement model 28/12/2013 Department of Agricultural Extension 25
26. Tri-Partite Agreement Model 28/12/2013 Department of Agricultural Extension 26
27. Quad-Partite Agreement Model 28/12/2013 Department of Agricultural Extension 27
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 Karnataka 28/12/2013 Department of Agricultural Extension 28
29. State-w ise Area under Contract Farming in India STATES/UTS Assam Bihar Goa Gujarat Haryana Karnataka Mizoram
Orissa Punjab Tamil Nadu India 16/1/2010 AREA 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 • • • • • • • • • 16/1/2010 HUL ITC
SUGUNA POULTRY VENKATESHWARA HATCHERIES PEPSICO RALLIS NESTLE NSC KSSC 30
31. Contract farming initiatives in Karnataka Sl.No. Crop Company 1 Ashw aganda Himalaya Healthcare Ltd 2 Dhavana Mysore
SNC Oil Company 3 Marigold and Caprica chilli AVT Natural Products Ltd 4 Coleus Natural Remedies PVT Ltd 5 Gherkin 20
Private Companies 6 Cotton Apacchi cotton 7 Potato PepsiCo 8 Fruits and Vegetables Rallis India 16/1/2010 31
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. 28/12/2013 Department of Agricultural Extension 32
33. COOPERATIVE VS CONTRACT FARMING 28/12/2013 Department of Agricultural Extension 33
34. SIMILARITIES BETWEEN COOPERATIVE AND CONTRACT FARMING SL. NO. CRITERIA COOPERATIVE FARMING
CONTRACT FARMING 1 Objective Production through consolidation of land holdings Production through contract 2 Credit

3. availability Available through banks Available through banks and companies 3 Inputs for production Available through
cooperative society Available through company 28/12/2013 Department of Agricultural Extension 34
35. Differences betw een cooperative and contract farming Sl. No. Criteria Cooperative farming Contract farming 1 Income
Membership fee and Percentage turnover Sales 2 Customers One or multiple One or limited 3 Required production skills
High Average 4 Price Mechanism Supply and demand Fixed prices 28/12/2013 Department of Agricultural Extension 35
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. Backw ard and forw ard
linkages to the farmers. 28/12/2013 Department of Agricultural Extension 37
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 w ith research and extension systems.
28/12/2013 Department of Agricultural Extension 38
39. Case studies On Cooperative farming 28/12/2013 Department of Agricultural Extension 39
40. CASE-1 Title -Cooperative Nature Farming by Unemployed youth • Adarsh Yuvak Sw ayamrojgar Sew a Sahakari Sanstha
based in the village of Tarodedi in Shegaon taluka of buldana • Started in 2001 w ith 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 w ith medium-sized farm holdings; 28/12/2013 Department of Agricultural Extension
40
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 • Returns Year First year 28/12/2013 Crop Cost /acre Sunflow er 2700 Returns
/acre 5000 Department of Agricultural Extension Total returns 35,000 41
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 w ithin a cooperative framew ork 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 w ages
daily. 28/12/2013 Department of Agricultural Extension 42
43. Contd……… • • • • The total cost of cultivation w as Rs 2.10 crore Gross returns w ere Rs 5.10 crore. Rs 3 crore w as
distributed among the farmers Based on proportionate to their landholdings and the labour contributed 28/12/2013
Department of Agricultural Extension 43
44. RESEARCH STUDIES ON CONTRACT FARMING 28/12/2013 Department of Agricultural Extension 44
45. RESEARCH STUDY-1 TITILE OF THE STUDY India’s Agrarian Crisis and Corporate-Led Contract Farming: Socio-
economic Implications for Smallholder Producers RESEARCHER SHARMA YEAR 2008 28/12/2013 Department of
Agricultural Extension 45
46. Methodology • The study w as conducted in three districts of Punjab viz., Amritsar, Jalandhar and Ludhiana • 87 contract
farmers and 40 non contract farmers w ere selected • Econometric model w as used to know the impact of contact farming on
productivity 28/12/2013 Department of Agricultural Extension 46
47. Fig 1. IMPACT CONTRACT FARMING PRODUCTIVITY OF RICE AND WHEAT 28/12/2013 Department of Agricultural
Extension 47
48. Table 1. Perceived Benefits of Contract Farming as Reported by Respondents (n=127) SL. No. 1 2 3 4 5 6 7 8 9 28/12/2013
REASONS Access to assured market Assured price Access to better seed Access to better extension services Less w ater
requirement Higher returns than competing crops Inspired by other contract farmers Less incidence of crop diseases
Personal relations Department of Agricultural Extension PERCENT 76 67 50 42 26 18 15 10 8 48
49. RESEARCH STUDY-2 TitleImpact of Contract Farming on Economic Status of Farmers in selected Districts of Karnataka.
Researcher Mallika Meti Year 2009 28/12/2013 Department of Agricultural Extension 49
50. Methodology • The study w as conducted in Hassan, Tumkur, Kolar and Koppal districts during 2009. • 30 farmers from each
district w ere selected as sample. • Total 120 farmers w ere the sample. • Compared economic status before and after
contract farming 28/12/2013 Department of Agricultural Extension 50
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 Total 28/12/2013 Before contract farming 262.66 252.79 232.19 253.65 250.25
After contract farming 294.52 290.32 299.85 300.16 296.25 Department of Agricultural Extension Per cent increase 12.12
14.85 29.13 18.34 18.38 51

4. 52. Table 2. Cost and Returns under contract farming in the selected district. (n=120) Gross returns Districts Total cost Net
returns B:C ratio Hassan (n=30) Before 80,733 6,139 73,133 13.15 Af ter 146,383 9,031 154,990 16.20 Tumkur (n=30)
Before 57,700 4,474 48,087 12.89 After 108,667 7,119 91,535 15.26 Kolar (n=30) Before 77800 8419.83 69380.17 9.24
After 112066.7 9,706 100444 12.00 Koppal (n=30) Before 110,733 15,340 103,770 7.00 After 266,000 20,180 245,783
13.18 Before 81,741.5 8593.20 73592.50 10.57 After 1,58,279.7 11509 1,48,188 Difference in B:C ratio 14.16 Pooled
28/12/2013 Department of Agricultural Extension 3.05 2.37 2.76 6.18 3.59 52
53. RESEARCH STUDY-3 TitleA Study on Contract Farming in Karnataka. Researcher Sahana Year 2013 28/12/2013
Department of Agricultural Extension 53
54. Methodology • The study w as 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, w atermelon and pearl millet. •
240 respondents w ere selected • Studied social impact and economical impact 28/12/2013 Department of Agricultural
Extension 54
55. RESULTS Table-1. Social impact of contract farming on farmers grow ing crops under contract (n=240) Sl. No Crops Mean
score Before After Paired t value 1 Tomato (Chickballapur) 161.19 902.38 5.16* 2 Gherkin (Haveri and Tumkur) 391.73
3295.27 4.48** 3 Marigold (Davanagere and Haveri) 187.33 717.21 6.38** 4 Cotton (Gadag and Tumkur) 956.45 2606.77
2.47* 5 Watermelon (Tumkur) 749.98 2122.46 3.45** 6 Pearl millet (Bellary) 332.11 1451.47 3.12** *=significant at 5 per
cent 28/12/2013 *=significant at 5 per cent Department of Agricultural Extension 55
56. Table-2. Economic impact of contract farming on farmers grow ing crops under contract. N=240 Sl. No Crops Mean Score
Before After Paired t value 1 Tomato (Chickballapur) 22146.79 92731.40 9.82** 2 Gherkin (Haveri and Tumkur) 23621.22
693421.80 12.75** 3 Marigold (Davanagere and Haveri) 9985.05 281992.90 12.13** 4 Cotton (Gadag and Tumkur)
65583.47 878983.00 7.91** 5 Watermelon (Tumkur) 161918.90 1203545.00 7.06** 6 Pearl millet (Bellary) 41732.89
561962.90 5.49** *=significant at 5 per cent 28/12/2013 *=significant at 5 per cent Department of Agricultural Extension 56
57. Implications of the study • The contract farming is beneficial to small and marginal farmers hence it can be popularized for
the other crops • There is a need of separate dispute handling mechanism for dispute settlement. 28/12/2013 Department of
Agricultural Extension 57
58. CONCLUSION • Natural resources are shrinking in terms of per capita availability year after year and the population grow th
is increasing. • Ratio of extension personnel w ith 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 w orkon this issue w ith major focus
on interdisciplinary approach. 28/12/2013 Department of Agricultural Extension 58
59. 17/11/2012 59
60. 28/12/2013 Department of Agricultural Extension 60
61. Impact of farm size on land productivity The results show w eakcorrelations betw een 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. • Keyw ords: LISA ANDERSSON,
2006, A study of the impacts of land fragmentation on agricultural productivity in Northern Vietnam. Bachelor thesis,
DEPARTMENT OF ECONOMICS , Uppsala University 28/12/2013 Department of Agricultural Extension 61