Need and approaches for bead threading of large number of small farmers in India

About 70 per cent of India’s population thrives in villages with about 52 per cent of the workforce engaged in agriculture, 82 per cent have small and marginal land holding and they share about 44 per cent of cultivable area of the country. Agricultural census data shows that there were about 121 million agricultural holdings in India in 2000-01, out of which around 99 million were small and marginal farmers. Average size has declined from 2.3 ha in 1970-71 to 1.37 ha in 2000-01. This indicates that numbers of small and marginal farmers are increasing day by day. Therefore, for sustainable agriculture growth and food security; for economic growth of the nation, development of this vast segment of the society is necessary.

Small and marginal farmers owing to their small landholding, have advantages as well as disadvantages. The advantages being, it suits the Indian diversity and helps in conservation of bio diversity by prevention of genetic erosion. Lipton (2006) recognised role of small farms in development and poverty reduction. Birthal (2011) observed that these small farmers though share 44 per cent of cultivable land area, they contribute around 70 per cent of vegetable production, 55 per cent of fruit production and 69 per cent of milk production in the country. Most of the study have found that their productivity is higher than large farmers. Multiple cropping index is higher for small and marginal farmers and they have 51 per cent access to irrigation compared to 31 per cent of large farmers.

However, there are large numbers of concerns associated with the small holdings. Though their productivity is higher, researchers questions the economic viability in long term. Most of the farmers fail to overcome the expenditure and cumulative borrowing resulting in indebtedness. Owing to small nature of holding, they lack the economy of scale; resulting in low bargaining power; limited income restricts the capital that can be invested again in the agriculture. As, this section of society is mostly unorganised they lack market access and linkages to sale their produce. Though this section is growing in terms numbers, on social and development indicators they are far behind the mainstream. Therefore there is need of innovative strategies that can help in uplifting them sustainably.

This necessitates development of approaches that are farmers led, decentralised, region and location specific, involvement of private players through PPP, NGOs through collaboration etc. There is need to mobilise and organise farmers so that resource constraints can be overcome and they can achieve economy of the scale and more bargaining power. Herlehy (2012) in his article “Linking Smallholder Farmers to Markets: The Power of Farmer-Based Organizations” emphasised that when farmers come together through cooperatives or member-owned businesses, they can pool their resources and maximise the value of whatever work they do. Some important strategies through which these small and marginal farmers can be mobilised and organised are below:

Farmers Producers Organisation (FPO)

By joining farmer-based organisations small-scale farmers can have easy access to market information, credit and input for their production, processing, and marketing activities. Farmers’ organizations to a larger extent focus on production or crops relevant for the market than for production for own consumption and are good tools to improve small-scale farmers’ welfare.

1) By pooling their agricultural output, farmers may strengthen their bargaining power

2) By pooling their output, farmers may reduce the risks that are associated with farming activities.

3) By pooling their agricultural output, farmers may gain market access to marketing channels

4) By pooling their agricultural output, farmers may be able to benefit from economies of scale.

5) By pooling their output they are able to reduce the average fixed cost associated with the investment and transaction costs are reduced.

A World Bank study shows that farmers’ participation through an association benefits them- increasing their economy of scale, productivity, input supply and assistance in quality control.

Contract Farming

It is the process of vertical integration of three important players in the market i.e. farmers, private firm or company and consumer. It combines small and marginal farmers labour and efficacy, management skill and capital of the private firms and choices and preferences of the consumers, creating win-win situation for the all three. It can play an instrumental role in the mobilising and organising small and marginal farmers in aggregates at grass root level by giving them access to inputs, technology, advisory and risk management through fixed market price to their produce. It improves the supply chain and value chain and thus helps in giving more income to the small and marginal farmers and reduces the post harvest losses. Experts see contract farming as an opportunity to increase private sector investment in agriculture.

Cooperatives societies

Co-operation plays a pivotal role in mobilising and organising vulnerable and unorganised people engaged in various economic and social activities at the grass root level. The co-operative movement has helped in preventing exploitation of people from money-lenders and in raising economic status especially of small farmers, village artisans, landless labourers, destitute women etc. Through cooperative farmers can pool their resources to bring economy of scale and more bargaining power. In Maharashtra state, Mahagrapes has harnessed this potential of the cooperatives and thread them together by becoming marketing partner to 15 grape growers cooperative society, enabling even small farmers to link to international market, which is not possible for small and marginal farmers as individual.

Self Help Group/ Farmers Interest Group

It has been observed that the strength of small farmers lies in group mobilisation and organisation through SHG/FIG for meeting diverse agricultural needs. It helps in mobilising their savings and providing avenues for credit for both consumption and investment. Many farm women lack or have limited access to extension, capital, information and market despite their major contribution to agricultural activities. Formation of SHG/FIG will help in financial inclusion of the women and youth, giving them more money to invest in micro enterprises, agriculture and improve their income and standard of living.

New Marketing systems

New marketing systems which aim at reducing number of middleman in the supply chain and facilitate direct one to one contact between farmers and consumers with use of modern information, communication technology can help in increasing the income of small and marginal farmers. Initiatives like E-chaupal have helped small and marginal resource poor farmers to market their produce at higher price by obtaining market intelligence about the price of the commodity. Rythu bazaar of Andhra Pradesh and Shetakari Bazar of Maharashtra are other examples of the new marketing initiatives.

Government of India has started new initiative called National Agriculture Market (NAM) is a pan-India electronic trading portal which networks the existing APMC mandis to create a unified national market for agricultural commodities. It will create a unified market through online trading platform, streamlining of procedures across the integrated markets, removes information asymmetry between buyers and sellers and promotes real time price discovery, based on actual demand and supply. This initiative likely to have positive impact on small and marginal farmers, however actual impact is yet to be evaluated. Considering their vast presence in Indian agriculture, the above mentioned measures are the initiatives in this direction.

Profile photo of Vinayak Nikam
Dr. Nikam is working as scientist at National Institute of Agricultural Economics and Policy Research. His research activity includes research on impact assessment of agricultural research and development.