By:

Weena Yancey M Momin

Roll No. – MBA 3210

Agri Business Management

Corporate farming

OVERVIEW INTRODUCTION FARMS +CORPORATE A NEW SUPPLY

CHAIN CORPORATE FARMING VS FAMILY

FARMING KAPPA PROJECT SCOPE OF CORPORATE FARMING IN INDIA COMPANIES INVOVLED IN CORPORATE

FARMING CONCLUSION

Corporate farming

Corporate farming is a term that describes the business of agriculture, specifically, what is seen by some as the practices of would-be mega corporations involved in food production on a very large scale

INITIATIVE OF CORPORATE FARMING

National Agricultural Policy (NAP) of Govt. of India announced in 2000 envisaged that “Private sector participation in Agriculture shall be promoted through Contract Farming and Land-leasing arrangements (Corporate Farming) to allow accelerated technology transfer, capital flow and assured markets for crop production.

Corporate Farming

This is a system for the production and supply of agricultural / horticultural produce under forward contracts between producer / supplier and buyers.

Essential to this is the commitment of the producer/seller to provide an agricultural/horticultural commodity of a certain type, at a specified time and a price and in the quantity and quality required by a known and committed buyer.

REASONS FOR CORPORATE FARMING Consolidation of small farm lands

into larger land holdings

Increase in agricultural productivity

Introduction of value added products

Cont…………

The farmer/producer will be required to plant contractor’s crop on his land, harvest and deliver a quantum of produce (based on anticipated yield) to the contractor.

He shall provide land and labor necessary for this. The contractor shall supply all required inputs for the production of the said crop

FARMS + CORPORATE A NEW SUPPLY CHAIN IN INDIA

Collaborative partner ship Oilseeds , cotton and horticulture new agri business Knowledge intensive farming Better solutions for farm related

problems More opportunities

CORPORATE FARMING

VS

FAMILY FARMING

WHAT IS FAMILY FARMING ?

A family farm is a farm owned and operated by a family, and passed down from generation to generation. It is the basic unit of the mostly agricultural economy of much of human history and continues to be so in developing nations.

Many remember the years when farming was a way of life.  When you grew all your own food...eggs, pork, beef, poultry, gardens full of bountiful vegetables.

You didn't have to plant thousands of acres to make a living.

Those days are gone.  Gone forever we're afraid.  Along with those days, the Family Farm is disappearing.

In developed countries the family farm is viewed sentimentally, as a lifestyle to be preserved for tradition's sake, or as a birthright.

What once was an occupation thought to be unskilled by many, (even though it wasn't), has become a very technical job.

WHY IS THE FAMILY FARM DISAPPEARING? Many farmers feel this is in the plans either by the government

or by big corporations.  If they run most of the farmers off of the farms, big corporations can take control of agriculture completely,  thereby eventually being able to set their own price for agriculture products.

Today's prices are driving farmers out of business.  What occupation do you know of that still receives the same wages received in 1972?

How many products sold in the world today has someone else setting the price the producer receives for it?  A farmer can not say I want $2.50 per bushel for corn, as that is what it cost me to raise it.  Someone else sets a price, and there's nothing a farmer can do about it.  Someone else controls their destiny.  No matter how hard they work, someone else controls the life of a farmer.

WHY ARE FAMILY FARMS IMPORTANT?In addition to producing fresh, nutritious, high-quality foods, small family farms provide a wealth of benefits for their local communities and regions.

Perhaps most importantly, family farmers serve as responsible stewards of the land. Unlike industrial agriculture operations, which pollute communities with chemical pesticides, noxious fumes and excess manure, small family farmers live on or near their farms and strive to preserve the surrounding environment for future generations. Since these farmers have a vested interest in their communities, they are more likely to use sustainable farming techniques to protect natural resources and human health.

The existence of family farms also guarantees the preservation of green space within the community. Unfortunately, once a family farm is forced out of business, the farmland is often sold for development, and the quality land and soil for farming are lost.

the current situation, for the "family farmer" to regain any sort of practical economic independence, it would seem necessary that the entire food industry be restructured. Furthermore, given the extreme number of defunct family farms, it is not so much a matter of saving or preserving the family farm (whatever it was, it is effectively already gone), but of using the remaining knowledge, expertise and farms as the framework for the "new family farm."

What is CORPORATE FARMING?

Corporate farming is a term that describes the business of agriculture, specifically, what is seen by some as the practices of would-be megacorporations involved in food production on a very large scale. It is a modern food industry issue, and encompasses not only the farm itself, but also the entire chain of agriculture-related business, including seed supply, agrichemicals, food processing, machinery, storage, transport, distribution, marketing, advertising, and retail sales.

Corporate farming is often used synonymously with agribusiness (although agribusiness quite often is not used in the corporate farming sense), and it is seen as the destroyer of the family farm.

CONTRACT FARMING:

"Contract farming" is a form of vertical integration where the farmer is contractually bound to supply a given quantity and quality of product to a processing or marketing enterprise.

(The buyer agrees in advance to pay a certain price to the farmer and often provides technical advice and inputs (the cost of the inputs being deducted from the farmer's revenue once the product has been sold to the buyer).

 

Benefits of Corporate FarmingThe core argument for the methods criticized as corporate farming is essentially: "This is the way to keep up with population growth, and to make inroads into feeding billions of people to developed nation standards—this is the only way to feed the world.“

Indeed, rapid technological development and large-scale global production management are responsible for an unprecedented abundance of inexpensive, widely available, attractive, "safe" food.

By lowering the cost of raw food inputs, creating sophisticated long-distance distribution networks, producing processed convenience foods, and making food available year-round in vastly stocked supermarkets, corporate farming has presented consumers in the wealthiest regions of the world with an immense variety of food, at relatively low cost. Today, in North America, only about 10% of average income is spent on food. By this measure, provided these methods are sustainable, corporate farming would appear to be a tremendous success.

Corporate farm vs family farm

One major difference between independent farming and corporate farming is that a corporate farmer is usually a contracted employee, rather than the owner of the farm.

However, ownership itself does not mean independence. An owner-operated farm today faces many constraints that are completely out of the owner's control.

Most of these can be seen in light of increasing concentration of ownership, not only of farms, but of the equipment and inputs necessary to farm, and the available sales channels.

KUPPAM PROJECT IN A.P

Location: Kuppam, Chittoor district, A.PProject start date: June,1997

Why Kuppam?

Kuppam area is part of Drought Prone Areas Program(DPAP) block and chronically drought affected

Eighty-five percent of the population in the area live below the poverty line

Only 10% of the gross cropped area is under assured source of irrigation

Saline lands Soil composed of gravel and stones of

varying sizes with low level of organic matter

A Pilot demonstration project The Kuppam Pilot Project was primarily

undertaken by the Government of Andhra Pradesh through its Rural Development Department to promote and demonstrate Corporate Agriculture

Demonstrate use of corporate farming Area coverage 170 acres of land Corporate: M/S. BHC Agro (India) Pvt.

Ltd

SCOPE OF CORPORATE FARMING

Current situation: Total cultivable area: 160 million hectare People involved: 60 crores Total output: 200 million tons

Future estimates: Total cultivable area: 100 million hectares People involved: less than 60 crores Required output: 400 million tons

Benefits

Increases out put

Reduces fragmentation

Increases export performance

Technology

Limitations

It makes farmers landless

Undermines local production

Failure of corporate farming in many countries

Few Cases Of Corpotate farming in India

Company Area/region andcrops

1, IEEFL, Pune(subsidiary of theIon ExchangeIndia set up in1995)

Maharashtra,Tamilnadu, andGoa; Plantationsmainly fruit trees

2. JamnagarFarms Pvt. Ltd.- asubsidiary ofRelianceIndustries(Mukesh Ambanigroup)

Gujarat, andPunjab; Agroforestry andhorticultural crops

3. Anil DhirubhaiAmbani Group(Reliance)

Punjab; Fruits andvegetables

4. Field Fresh anequal partnershipventure betweenBharti Enterprises(Airtel group) andRothschild

Punjab; freshfruits andvegetables

5. Vimal Dairywith a capacity toprocess 2.5 lakhlitres of milk ( apart of the Rs. 900crore VimalGroup),

Narmada canalarea in northGujarat; milk forcaptiveconsumption

PEPSICO

Pepsi's tomato farming project was primarily responsible for

increasing India's tomato production.

Production increased from 4.24 million tonnes in 1991-92 to

5.44 million tones in 1995-96 due to the use of high yield seeds.

Pepsi offered its contract farmers advanced equipment such as

transplanters and seeding machines to help them carry out

their task efficiently and speedily.

Contract farming has been encouraged by Pepsi.