C M Sharma
In the ever increasing global competition for income and wealth, the small and marginal farmers of Jammu region too cannot afford to remain behind. Considering the lopsided economy of scale of small and marginal farmers due to scattered land holdings and limited water resources for irrigation, farming in isolation by the small, marginal and medium individual farmers has little sustainability and viability in the longer run.
So, the catch words for sustainable agriculture are, ‘organization of farmers’ and ‘cooperation among farmers’. In the race for economic sustenance, the most viable option, particularly for small and marginal farmers is to come together, get organized and join hands, either as Farmer Producer Organizations (FPOs) or actively participate in Contract Farming (CF). A cluster or group of about 200 farming families is considered ideal for FPO formation. The numbers involved in CF depends upon the contractor’s feasibility.
Both the FPO and CF systems enable the member farmers to responsibly pool, acquire and utilize their resources and work proficiently to attain a fair level of economy of scale. If managed well, these systems enable generation of a higher profitability, particularly from specialized farming systems like organic farming and from the agro-climatic zone/sub-zone adapted high value crops like basmati rice, exotic off-season and traditional vegetables, flowers, aromatic and medicinal plants, saffron, mushrooms, fruits etc and products of dairy, sericulture, apiculture, sheep, goat and poultry rearing etc. Given the availability of a number of facilitating schemes of the banks and the government and the availability of improved technology for cultivation of flowers, herbs, mushrooms, spices, saffron, vegetables etc. under protected conditions, the feasibility of developing round the year production clusters, even in the non-traditional areas, is also growing faster.
Farmer Producer Organizations (FPOs)
During the Krishak Mela 2025, held recently at R S Pura campus of SKUAST Jammu on March 24, Manoj Sinha, Lt Governor of the Jammu and Kashmir reiterated the steps taken under the guidance of Prime Minister Narendra Modi to bring in a revolutionary transformation in the agricultural landscape of J&K Union Territory. Sinha referred to the launching of Rs 5013 crore Holistic Agricultural Development Programme (HADP) in the year 2023-24 that envisages pulling out the UT from subsistence farming mode to the sustainable commercial mode. It may be mentioned that the HADP programme comprises of 29 comprehensive projects and about 75 schemes.
Farmers of J&K were aspiring for this kind of transformation for the past more than two decades when they would frequently demand from the government to ‘declare agriculture as an industry’. By demanding the status of industry, the farmers in essence wanted a reasonable support in ‘production to marketing chain’ besides a fair degree of control and decisive say in fixation of market price for their agricultural produce.
It is heartening that through the HADP Programme, the government appears to be heading in that direction. While focusing on agri-infrastructure and agri-enterprise development on a massive scale, there is every reason to hope that success of Project on Formulation of 300 FPOs by mobilizing 60000 farmers will ultimately transform the thinking and work culture in farming sector. The FPOs are based on the cooperative model, but adapted to suit rural and small-scale farmers while empowered to function and take decisions as a company.
By ultimately pushing with formation and promotion of FPOs, more farmers will get involved in production of higher quantity and better quality of agricultural products, prevention of post-harvest losses, establishment of processing units, and improved income from enhanced and efficient marketing. Through FPOs, which are a legally constituted body of small and marginal farmers coming together to form a collective group, there will be an improvement in farm income by better price realization, enhanced bargaining power, access to professional management, and reduction in transaction costs. This integrated model contributes to hedging peculiar risks in agriculture, thus offering a more sustainable livelihood opportunity. The FPOs must be duly registered under Companies Act or the State Cooperative Societies Act, as the case may be, and blend both the cooperative character and business enterprise principles to empower the member farmers.
To make them viable and sustainable on their own, the FPOs are enabled to pursue a ‘bottom-up’ approach for meticulous planning and execution of activities for harnessing of necessary resources (including finance) to produce, process and market specifically identified agricultural commodities. A wholehearted and conscious participation by member farmers in decision making for selection and application of technology, inputs, cultivation/ production processes and post harvest management, marketing and sharing of financial gains will empower them and make them operate as an industry.
Focus of the government, no doubt is on educating, training and incubating the farmers to realize the envisaged goals. However, the scheme being comparatively new to J&K, the field functionaries and experts of respective departments and agencies need to regularly and persistently guide and educate the FPO members and office bearers about their roles, rights and responsibilities, till they become capable of standing on their own feet.
CBBOs and FPOs
The government has empanelled and engaged different Cluster Based Business Organisations (CBBO) as resource institutions at ground level in different districts to provide professional hand holding support to the FPOs for a period of 5 years, but more than their physical presence, it is their commitment and active interest that will enable the FPOs to stand upon their own feet and ultimately determine the success of FPOs. Upon CBBOs lies the responsibility to sensitize FPOs in advance about the desired quality parameters of the produce in domestic and international market and also about rational targets of agricultural diversification, area coverage and production in accordance with the market demand. A mutually cooperative attitude of member farmers is also essential for the success of an FPO.
Ultimately, the FPOs must remain sincere, transparent, democratic and truthful to its members and specialize in production of specific and authentic products, establish their own infrastructure for storage and post harvest/processing, development of brands and establishment of wholesale and retail outlets besides e-marketing facility and so on.
Contract Farming (CF)
CF involves an understanding/formal agreement between producers (farmers) and firms (consumers/buyers who are generally major processing or exporting individuals and companies) that have a contract for the production and supply of agricultural inputs under pre-arranged arrangements, usually at a pre-set cost. The arrangements and agreements can vary with plants and contract firms. HADP has provisions for CF under Seed Production Projects etc. The Contract Farming is mainly driven by the resourceful individuals or companies and firms who pursue more or less a ‘top-down’ approach in planning and execution of their cropping/farming programmes, from arrangement of inputs and prescription of technology to marketing of produce and sharing of profits.
Advantages of Contract Farming to farmers
Generally, farmers have lesser knowledge of commercial crop production techniques, low income and lack of post-harvest management technology, inadequate infrastructure, and market data. Farmers can use the understanding of the agreement as a guarantee of creditworthiness in commercial banks and inputs to fund inputs. Contract farming helps smallholder farmers to participate in the growth of high-yielding crops such as vegetables, flowers, fruits, etc. Contract farming does not require much money for farmers and reduces costs incurred in obtaining donations as provided by contract firms.
Advantages of Contract Farming to Contract firms
Contract farming is usually followed by food management organizations. Contract farming provides a solution to the problem of supplying raw materials in the required quantity and to a reliable source close to processing facilities.
Advantages of Contract Farming to Banks
Banks and financial institutions support contract farming. Easy monitoring of manufacturing operations, extension activities, and credit delivery are easy on contract farming. Loans can easily be obtained at better prices by joining banks in contract farming.
Advantages of Contract Farming to Government
Many government offices and a few governments are directly or indirectly involved in contract farming. To combat poverty, the best programme to include private companies in contract farming is to accelerate technology transfer, revenue generation, and a guaranteed agricultural harvest market. The private agricultural business will provide new strategies with greater success than government management in agriculture, as it has a direct financial interest in improving the productivity of farmers. This will also create opportunities for working in a rustic environment, job creation, agribusiness, and financial creation.
Caution to be observed in Contract Farming
The risks associated with the development of a new product may not meet the expectations of farmers or the predictors’ predictions. Many organizations offer contract farming to large and medium farmers only. They ignore the small and medium farmers.
Contract Farming Organizations can regulate quality practices to reduce purchases or regulate non-productive policies with farmers. The formal implementation framework is extremely tedious for both producers and firms and the legal compliance of contract terms with farmers provides a negative message for a contracted company among the farming community.
(The author is Dy Director of Agriculture (Retd.), J&K Government)
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