New Initiatives in Indian Agriculture

Abstract

The Government of India new agricultural policy envisages that private sector participation will be promoted through contract farming and land leasing agreements to allow accelerated technology transfer, capital inflows and assured market for crop production, especially of oilseeds cotton and horticultural crop, following this announcements a number of innovative agribusiness models have come up. Indian corporate and rural India has entered into collaborative partnership through vertical co-ordination. The common thread among all these initiates have been integrating and tightening the supply chain. Mahindra's Shubhlabh services Tata Kisan Kendra, ITC e-Chaupal, Godrej Aadhar and DSCL Haryali have emerged as new agribusiness supply chain models.This vertically coordinated supply chains are supposed to eliminate the inefficiencies in agricultural marketing which arises due to multilayer intermediaries sucking away a large chunk of the margins and leaving nothing for the farmer on the one hand and lack of basic availability of infrastructure as well as technology on the other. These vertical coordination supply chain models are common in agriculture worldwide. In India, land ceiling laws limited such vertical coordination. Corporate farming, captive farming or contract farming were only allowed in plantations, degraded or waste lands and so on. With the government's change in heart regarding contract farming, a stage is set for such vertical coordination in Indian agriculture. This paper evaluates three such attempts by corporate India i.e. PepsiCo’s contract farming in Punjab, ITC's e-Chaupal and Mahindra Shubhlabh services.