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ISSUES R
RELATED TO LAND
REFORMS IN INDIA
TRENDS IN LAND HOLDING PATTERN IN INDIA

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Maximum number of operational land holdings in India is marginal holdings. According to

Census 2011:
 67 per cent of holdings were classified as marginal (less than one hectare)
 18 per cent were classified as small (one-two hectare)
 Large holdings were estimated to be only 0.7%

Number of Holdings & Average Size

 The average size of holdings has shown a steady declining trend over various
Agriculture Censuses since 1970
1970-71.

 The number of agricultural operational holdings has seen a steady increase over the
years.

 From 1995-96 to 2010-11,

11, an increase of 20% over 16 years was seen.

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Total Operated Area: The total operated area has seen mixed trend.

a. 1995 to 2005: It reduced from 163.35 million hectares to 158.32 million hectares.
b. 2005 to 2010: It increased to 159.59 million hectares.

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AGRCULTURAL LAND LEASING ACT 2016

Need for agricultural land leasing act 2016
1. Most state governments have either legally banned or imposed restrictions on
agricultural land leasing.
2. Restrictive land leasing laws have forced tenancy to be informal, insecure and
inefficient.
3. Informal tenants are most insecure and inefficient, as they do not have legal sanctity
and access to institutional credit, insurance and other support services.
4. Restrictions on land leasing have reduced the occupational mobility of many
landowners who have interest and ability to take up employment outside agriculture
and yet are forced to stay in agriculture due to the fear of losing land if they lease out
and migrate.

Key Features of the proposed Model Land Leasing Act,2016

The Expert Committee on Land Leasing, headed by Dr. T. Haque, constituted under the NITI
Aayog submitted the model Agricultural Land Leasing Act, 2016 on March 31, 2016. The key
features are:

1. Legalize land leasing to promote agricultural efficiency, equity and poverty reduction.

2. Legalize land leasing in all areas to ensure complete security of land ownership right for
land owners and security of tenure for tenants for the agreed lease period.

3. Remove the clause of adverse possession of land in the land laws of various states as it
interferes with free functioning of land lease market

4. Allow automatic resumption of land after the agreed lease period without requiring any
minimum area of land to be left with the tenant even after termination of tenancy, as
laws of some states require

5. Allow the terms and conditions of lease to be determined mutually by the land owner
and the tenant without any fear on the part of the landowner of losing land right or

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undue expectation on the part of the tenant of acquiring occupancy right for continuous
possession of leased land for any fixed period.

6. Facilitate all tenants including share croppers to access insurance bank credit and bank
credit against pledging of expected output.

7. Incentivize tenants to make investment in land improvement and also entitle them to
get back the unused value of investment at the time of termination of tenancy.

Dispute Resolution

1. The Lessee Cultivator and the Land owner - Lessor shall make all efforts to amicably
settle any dispute between them arising out of lease agreement under this Act, using
third party mediation or Gram Panchayat or Gram Sabha.

2. If the dispute is not settled through the mechanisms mentioned in clause (i) above,
either party may file a petition before the competent authority , i.e. Tahsildar or equal
rank revenue officer by any other name in a state which shall adjudicate the dispute
using summary procedure within a period of four weeks.

3. For every order other than interim order passed by the competent authority under this
Act an appeal shall lie to the Collector / District Magistrate / Divisional Commissioner
as may be specified by the state.

4. The state government shall constitute a special land tribunal, headed by a retired high
court or district court judge, which shall be the final authority to adjudicate disputes,
under this Act.

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e-NAM
Types of agricultural Market in India:
1. Unregulated Markets: Here business is conducted without any set of rules and
regulations. Traders frame rules and conduct business. These markets suffer from
various defects in functioning.

2. Regulated Markets: Here business is done as per the rules and regulated by statutory
market organization. Market charges are standardized and fixed and practices regulated
by Agri Produce Market committee. The management of such markets is done by
a market committee which has nominees of the State Government.

Marginal farmers & Issues of disorderly markets in India

 Small and marginal farmers constitute 80 per cent of total farm households, 50 per cent
of rural households and 36 per cent of total households in India.

 Regulated Markets (APMCs) in India is accessible throughout the year and has been
handling a range of commodities for decades. However, small and marginal farmers
have remained out of the ambit of these markets.

 They find it difficult to access regulated markets due to their being situated far away
from the market and the small produce for sale. Due to this, small and marginal farmer
prefer to access the nearest market, or a rural haat.

 These rural markets receive produce in disorderly manner, leading to high post-harvest
losses. The marketing experience of small and marginal farmers in such environment is
unremunerative and discouraging.

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 Integration of small farmers with the market is the only way of ensuring better returns
from produce.

Model APMC Act-2003

 The State Acts related to agricultural markets created fragment markets (2477) for
agricultural commodities and curtailed the freedom of farmers to sell their produce
other than through the commission agents and other functionaries licensed by the
APMCs.

 So, the Ministry of Agriculture developed a model APMC Act, 2003 and has been
pursuing the state governments for over a decade now to modify their respective Acts
along the lines of the Model APMC Act, 2003.

The Model APMC Act

1. provides for direct sale of farm produce to contract farming sponsors

2. provides for setting up “Special markets” for “specified agricultural commodities” –

mostly perishables

3. permits private persons, farmers and consumers to establish new markets for
agricultural produce in any area

4. requires a single levy of market fee on the sale of notified agricultural commodities in
any market area

5. replaces licensing with registrations of market functionaries which would allow them to
operate in one or more different market areas

6. provides to facilitate direct sale of agricultural produce to consumers

7. provides for the creation of marketing infrastructure from the revenue earned by the
APMC

8. The model APMC Act provides some freedom to the farmers to sell their produce
directly to the contract-sponsors or in the market set up by private individuals,
consumers or producers.

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9. The model APMC Act also increases the competitiveness of the market of agricultural
produce by allowing common registration of market intermediaries.

 Many of the States partially adopted the provisions of model APMC Acts and amended
their APMC Acts.

 Some of the states have not framed rules to implement the amended provisions, which
indicate hesitancy on the part of state governments to liberalize the statutory
compulsion on farmers to sell their produce through APMCs.

 Some states —— such as Karnataka —— have however adopted changes to create

greater competition within state.

Challenges posed by present agri-marketing system:

1. fragmentation of State into multiple market areas each administered by separate APMC

2. multiple levy of mandi fees, requirement for multiple license for trading in different
APMCs

3. licensing barriers leading to conditions of monopoly

4. poor quality of infrastructure and low use of technology

5. information asymmetry

6. opaque process for price discovery

7. high level of market charges

8. movement controls

Union Budget 2015-16 & NAM

 Integration of agri-markets across the country through the e-platform is seen as an

important measure for overcoming challenges posed by the present agri-marketing
system namely - fragmentation of State into multiple market areas each administered by
separate APMC, multiple levy of mandi fees, requirement for multiple license for trading
in different APMCs, licensing barriers leading to conditions of monopoly, poor quality of
infrastructure and low use of technology, information asymmetry, opaque process for
price discovery, high level of market charges, movement controls, etc.

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eNAM-National Agriculture Market
 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.

 The NAM Portal provides a single window service for information which includes among
others:
a. commodity arrivals & prices
b. buy & sell trade offers
c. provision to respond to trade offers

Necessity of NAM:
 Agriculture marketing is administered by the States as per their agri-marketing
regulations, under which, the State is divided into several market areas, each of which is
administered by a separate Agricultural Produce Marketing Committee (APMC) which
imposes its own marketing regulation (including fees).

 This fragmentation of markets, even within the State, hinders free flow of agri
commodities from one market area to another and multiple handling of agri-produce
and multiple levels of mandi charges ends up escalating the prices for the consumers
without commensurate benefit to the farmer.

 NAM addresses these challenges by:

a. creating a unified market through online trading platform, both, at State and
National level and promotes uniformity
b. streamlining of procedures across the integrated markets
c. removes information asymmetry between buyers and sellers and promotes real time
price discovery based on actual demand and supply
d. promotes transparency in auction process
e. access to a nationwide market for the farmer, with prices commensurate with
quality of his produce
f. online payment
g. availability of better quality produce and at more reasonable prices to the consumer

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Conditions to join NAM:

States interested to integrate their mandis with NAM are required to carry out following
reforms in their APMC Act.
a. Specific provision for electronic trading
b. Single trading licenses valid for trading in all mandis of the State
c. Single point levy of transaction fee

Current Status:
As on October 2017, 470 Mandis across 14 states have been intergrated with e-NAM.
 On launch day, eNAM lists 23 commodities and integrates 21 agricultural markets across
eight Indian states. It plans to include over 585 markets across India by March 2018.

CONTRACT FARMING
WHAT IS CONTRACT FARMING?
 Contract farming can be defined as agricultural production carried out according to an
agreement between a buyer and farmers, which establishes conditions for the
production and marketing of a farm product or products.
 Typically, the farmer agrees to provide agreed quantities of a specific agricultural
product. These should meet the quality standards of the purchaser and be supplied at
the time determined by the purchaser.
 In turn, the buyer commits to purchase the product and, in some cases, to support
production through, for example, the supply of farm inputs, land preparation and the
provision of technical advice.
 National Agricultural Policy of GoI has also recognised contract farming as an important
aspect of agri-business and its significance for small farmers. The Inter -Ministerial Task
Force on Agricultural Marketing reforms observed that contract farming was becoming
increasingly important.

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In Conract Farming :

 The farmer is contracted to plant the contractor’s crop on his Land

 Harvest and deliver to the contractor, a quantum of produce, based upon anticipated
yield and contracted acreage
 This Is at a pre agreed price
 Towards these ends, the contractor may or may not supply the farmer with selected
inputs

Need for Contract Farming in India

1. The farm-firm linkages of contract farming model integrates production and marketing
and are very critical for high value agricultural commodities.
2. It helps to overcome inadequate linkages with markets
3. Due to unfinsihed land reform agenda, we have presence of fragmented land holdings.
In production agriculture, the trend in India is towards fragmentation rather than
consolidation. The average size of landholdings declined from 2.2 hectares in 1970-71 to
1.06 hectares in 2003. Nearly 88 percent of the farmers have less than 2 hectares of
land, and account for about 44 percent of the operated area.
4. Lack of capital, poor infrastructure, inadequate information dissemination, etc
5. Loss/wastage of large quantities of fruits and vegetables due to transportation & storage
facilities.
6. Agri-based and food industry’s inability to acquire timely and adequate good quality
agricultural produce.
7. Coming up of unified national agricultural market platform called eNAM in India since
2016.
8. Changes in consumption habits
9. Continued expansion of world trade in fresh and processed products
10. Indian agriculture has begun to diversify and future sources of agricultural income are
likely to come increasingly from the high value segment, driven by rising demand for
high value horticultural, livestock, and fishery products. The challenge is to identify

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innovative solutions, possibly based on contract farming models, that are efficient and
competitive and also ‘inclusive’ in terms of working with small holders on sustainable
basis.

The Advantages of Contract Farming to the farmer

1. Exposure to World Class mechanised agro technology.
2. Obtains an assured up Front Price & market outlet for his produce.
3. No requirement to grade fruit, as mandatory for fresh market sale.
4. Bulk Supplies versus small lots as again required by the fresh market.
5. Crop Monitoring on a regular Basis.
6. Technical advice, free of cost at his doorstep.
7. Supply of:
a. Healthy Disease Free Nursery
b. Agricultural Implements
c. Technical Bulletins Etc
d. Remunerative Returns

The Advantages of Contract Farming To The Company

1. Uninterrupted & regular flow of raw material.
2. Protection from fluctuation in market pricing.
3. Long Term planning made possible.
4. Concept can be extended to other crops.
5. Builds long term commitment
6. Dedicated supplier base
7. Generates goodwill for the organisation.

Contract Farming - Industry Related Issues

1. Honouring Contracts - there is no credible enforcement mechanism in place.
2. Small size of land holdings.
3. Need to contract with a larger number of farmers, thereby increasing risk.
4. Lack of a comprehensive crop insurance scheme

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Who benefits from contract farming?
 Both partners engaged in contract farming can benefit. Farmers have a guaranteed
market outlet, reduce their uncertainty regarding prices and often are supplied with
loans in kind, through the provision of farming inputs such as seeds and fertilizers.

 Purchasing firms benefit from having a guaranteed supply of agricultural products that
meet their specifications regarding quality, quantity and timing of delivery.

GS-III (Economics/Agriculture) by Jayant Parikshit