Cooperative farming to boost economies of scale


Dr. L Jalapathi Rao says, small and marginal farmers can benefit immensely through cooperative farming, provided the government motivates them by offering tax breaks and concessions and the bureaucracy too provides support.

Agriculture in India has a long and sound traditional base. It is a major source of employment and food for millions and source of raw materials for several industries. It is the single largest private sector with nearly 60 percent of people depending on it for their source of livelihood.

India is endowed with rich natural resources, variety of soils, water, natural vegetation and climate suitable for growing large variety of food, fodder, horticultural crops and rearing variety of livestock. Self sufficiency in food grains production was achieved by synergy of technology, services, public policy and farmers’ entrepreneurship. However the growth shows a declining trend; production and productivity have remained almost stagnant.

Economic status of farmers still bad

The agriculture sector contributes only about 18 percent of the total GDP, with more than 60 percent population depending on it, resulting in low per capita income in the farm sector. Consequently, there is a large disparity between the per capita income in the farm sector and the non-farm sector. Farmers in general and small and marginal farmers in particular, are struggling to have a viable livelihood and dignified living through farming and to hold on to their resources.

The support services, policies and schemes of governments have not succeeded in improving the economic status of farmers. It is argued that the high-intensive and high-risk models of agriculture have pushed the majority of small farmers into crisis. There is greater need now than ever before to focus more on the economic wellbeing of farmers rather than just on production, by evolving a long term and sustainable solution to the problems that pervade small and marginal farmers.

Progress in agriculture needs to be measured not only on the total food production but also on the growth rate in net income of farm families. A vibrant and politically stable India rests on the financial conditions of rural communities and not on the profitability of a few large corporations.

Institutional reforms are required to channelise small farmers’ energies for greater productivity and higher income. A robust innovative system is essential with participation of producers, research institution, financiers, supporting policies and extension mechanisms. Two approaches that are to be taken up to seek solutions to these problems are: accelerating transfer of technology mechanism through use of Information and Communication Technology (ICT) and creation of farmers‘ enterprises–agricultural co-operatives commodity groups.

Cooperative farming can enhance incomes

Indian agriculture is characterised predominantly by small and marginal farmers. One of the reasons for yield plateau and low income to farm families is land fragmentation. About 80 percent of farmers are small and marginal. They are deprived of access to latest precision farming techniques, farm mechanisation, credit, technical advice, quality inputs, market intelligence and post harvesting facilities. They also lack the bargaining capacity. The gap between scientific know-how and field level do-how is widening. Fragmentation of land is inevitable due to ever increasing human population and decreasing cultivable land. But there is a need to address this issue comprehensively to increase production and farmer income in order to overcome knowledge deficit speedily.

This can be done by cooperative approach to farming. The economies of scale in procurement, technology adoption and marketing are better attained if small farmers join hands for collective farming. The farmer group operation would facilitate requirement for quality and traceability for exports. These farmers’ collectives would further facilitate crop specialisation in clusters and the limited and finite resources in the area could be channeled and processed, and industry can be established in the production zone itself. Farmers in a cooperative become an integral part of the supply chain. There is a need therefore, to encourage the formation of producer enterprises, agricultural cooperatives or commodity-based collectives, so that a section of the farmers can themselves reap the benefits. The need is to give the power of scale to the small farmers both in production and post harvest operation to enhance their incomes.

There are problems for processing and marketing enterprises for procuring higher quality products for specific markets from large number of small farmers. There is a need, therefore, for forming large groups of farmers engaged in production of higher quality products for specific markets within specific agro-climatic zones.

Agricultural cooperation in India

This is not an easy task considering the fact that the past efforts in cooperative farming have not succeeded. Agricultural cooperation in India so far suffered from various institutional drawbacks but it cannot be given up. An honest attempt has to be made to convince the farmers about the benefits of cooperative farming and the economies of scale. The motivation for the collectives need to come from the government offering tax breaks and concessions, a supporting bureaucracy and service support.

There are few successful cases of cooperatives in India that are unique models, but localised. They are known for acceptance of leadership and commitment. These societies are, however, confined mainly to marketing of inputs and outputs. Similarly the concept of cooperative marketing of inputs and seed production is spreading in different villages. But concerted efforts are to be made by one and all to demonstrate the benefits of cooperative farming and while extending other various forms of support.

Appropriate mechanism should be put in place so that farmers have greater control of the market channels and improve their profit opportunities.

The policy and legal frame work under which the cooperatives are functioning,need to be reviewed so as to create an enabling environment for them to attain autonomy and run their operations in a business-like manner and accounting made transparent.

Farmers’ cooperatives should be financially supported for creating initial infrastructure. The present free economic policies must also have a reserve place and sector for cooperatives.

Legislative and regulatory frame work should be amended and strengthened to achieve the objectives. A new bill, Cooperative Sector Reforms, formulated and introduced in Parliament in place of Multi State Co-operative Societies Act 1984, needs to get approval.

Transfer of technology

The diversified nature of India, with its wide variety of agro climatic regions and broad range of socio-economic conditions in the rural population, calls for agricultural extension approaches that are context and situation specific. With more than 80 percent of farmers cultivating an area of two hectares or less, there is an increasing need for stronger intermediaries that can facilitate information access for adverse small holder farmers. Progress in poverty and hunger reduction crucially depends on the increased productivity and profitability of these farmers, which in turn depends on the successful delivery of agricultural extension.

There is an increasing need to work in partnership and to share knowledge and skills in order to provide locally relevant services that meet the information needs of marginal and small holder farmers.

The extension system during 70s and 80s was effective and played its role in realising the benefits of Green Revolution. But in subsequent years, the system was not able to meet the requirements of changing agricultural situation. There has been, therefore, a demand for re-examining the architecture of Agricultural Extension Services to help farmers to bridge the gap between yields that are possible and those which are actually achieved.

Enhancing small farm productivity

Enhancing small farm productivity, and increasing small farm income through crop-livestock integrated and multiple livelihood opportunities through agro-processing and biomass utilisation, are essential, both to meet food production targets and for reducing hunger, poverty and rural employment.

Despite a wide range of reform initiatives in agricultural extension in India in the past decade, the coverage of, access to, and quality of information provided to marginalised and poor farmers is uneven. While the call for demand-driven agricultural extension has existed for several decades now, new modes of reaching out to farmers could have significant impact, as they better reflect the local information needs of farmers. In spite of the renewed interest and investments in agricultural extension, the coverage of such services is inadequate and limited. Survey showed that 60 percent of farmers had not accessed any source of information on modern technologies to assist in their farming practices.

To realise the benefits of latest technologies, farmers need to access a wide range of information related not only to production technologies but also to post harvest processes, accesses to remunerative markets, price information and business development.

The Extension Working Group, constituted by the Planning Commission, recommended for launching of National Mission on Agricultural Extension, during the 12th Plan to deepen, widen and carry forward the extension reforms. The mission is to focus on sustainable small farms agriculture, especially in rainfed areas. It is also expected to achieve inclusive growth through comprehensive framework of development of difficult areas and disadvantaged group of farmers on the highest priority by every sector. The government, under Bharat Nirman Programme, is committed to expand rural connectivity through different measures so that rural users can access information of value and transact business. This includes connecting block headquarters with fibre optic network, using wireless technology to achieve last mile connectivity and operating information kiosks through partnership with citizens.

Few farmers have access to technology

Traditional extension system is in a state of disarray, insufficient and in-accurate. Advances in technologies are not reaching to most farm families. Information is power and tool for progress. There is need to fully leverage power of ICT for linking every component, provide accountability and empower farmers to demand and access service. Continuous contact with farmers has to be established to provide knowledge, information, empower to facilitate them to demand and access services. Efforts are required to strengthen informatics in agriculture. Cyber space need to be explored and ICT should be used to reach the last person in a village.

Attempts are made to use first generation ICT 4D models, radio, TV, web, but links to end user are not established. Second generation ICT 4D approaches mobile services, handson- mobile net working and knowledge database are emerging. They are still not two-way interactive. There is now need to use next generation ICT 4D approaches like Voice-Over Internet Protocol and web with mobile (webinars).

Restructuring and strengthening of agriculture extension system has to be a mix of extending physical outreach, enhancement in quality through domain experts and regular capacity building, interactive methods of information dissemination and innovative use of ICT. In addition to harnessing ICT, the existing extension system need to be retained and rationed. There is need to expand Krishi Vigyan Kendra approach for demonstration of technologies and skill development of rural youth and women as para-technicians. For complete and effective transfer of technology there is need to develop Village Knowledge Centers for making extension farmer-responsible and farmer-accountable and to have last person connectivity.

There is also a need to rollout a national e-governance plan for continuous interaction with farmers. A national centre for e-governance in agriculture should be setup to leverage ICT for promoting improved delivery, transparency, accountability and good governance through digital system for performance monitoring at all levels. In an era of globalisation, connectivity by radio and separate TV channel for agriculture can act as important mediums in strengthening grassroots and mainstream linkages and contribute towards creating a vibrant, aware and informed connectivity, the hall mark of a true democracy.


Dr. L Jalapathi Rao

The writer is the former Registrar of Acharya N.G.Ranga Agricultural University, Hyderabad.