Ground Report: Punjab’s failed attempt with contract farming reason behind reluctance to accept farm laws?

Two decades before Modi government passed the new farm law to open up the agriculture market for private players, Punjab experimented with contract farming. Farmers who bucked the trend are now reaping the benefits of contract farming but it failed to catch the imagination of the majority, a reason why farmer unions today are vehemently opposed to the idea.

India Today TV travelled to villages in Patiala and Nabha and spoke with farmers about their experience with contract farming.

A large poly house by the pond is a landmark for locals in Sahouli village near Nabha. It’s owner, Meharban Singh, took to contract farming two decades ago as he found the traditional MSP-driven wheat and paddy crop less lucrative. He grows cucumber, sweet corn, broccoli and green peas in his farm as per the contract.

From government-run Punjab Agro to now working with privately-owned PAGRO Foods, contract farming for Meharban has to be a choice and not something that is thrust upon. Meharban Singh told India Today TV, “Why would the farmer become a slave to companies by signing any such agreement, he would be independent to choose the contract which suits him, if some company offers us a better price for our produce only then will we do a contract. We want laws to help us choose the better deal.”

In Gajju Majra village, it’s a busy time for potato farmer Harpinder Singh as it’s the harvesting season. He grows potatoes exclusively for Pepsi Co., which runs a chips unit nearby in Channo village near Bhawanigarh. It’s been an 8-year-long association with the multinational giant. Since then, Harpinder hasn’t grown the household potato variety as this pink hybrid variety earns him more bucks. He rues the fact that there aren’t many companies around to give him a more competitive price for his hard labour.

Meharban Singh took to contract farming two decades ago.

Harpinder Singh said, “Profit of growing pink potato is under contract farming as it will give us a minimum assured price. We are forced to dump the household variety of potato if there is glut. Now it is only Pepsi but if there are more companies then there will be competition and we will get better price for our produce.”

Long queues of tractor trollies can be seen outside the International Fresh Farms Products Ltd processing unit which procures potatoes for Pepsi Co. Farmers from nearby villages don’t mind toiling in the cold for more than 24 hours outside the unit for a turn to sell their crop. For the simple reason that selling potatoes to traders in the nearby mandi won’t fetch them a better deal. Contract with Pepsi Co. earns them Rs 4-5 more than the mandi price.

But contract farming has a flip side. If the crop fails or gets damaged, it’s the farmer who loses and he has no guarantee on returns for poor quality produce. In Birarhwal village, Kamaljit Singh sold vegetables to food processing companies under contract for six years. But not any longer.

Speaking to India Today TV, he said, “I did contract farming for six years, I faced a lot of issues, from seed issue to poor keeping quality, there is no liability on part of the company, under the new law if wheat and paddy is brought under contract farming then small farmers will face more issues because they don’t have the resources to withstand pressure from corporates who would exploit them.”

Way back in 2002, Capt Amarinder Singh during his first term as the chief minister of Punjab introduced contract farming to wean away farmers from the wheat-paddy cycle. His government set up a contract farming commission which tasked Punjab Agro to procure the produce of farmers for markets nationally. All went well for five years but after Capt Amarinder was voted out, the new Akali-BJP regime paid little interest and with no help from Centre. Farmers gradually went back to MSP assured wheat and paddy as the scheme got scrapped in 2012.