Corporate farming

By:
Weena Yancey M Momin
Roll No. – MBA 3210
Agri Business Management
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.
 W H Y I S T H E FA M I LY FA R M D I S A P P E A R I N G ?

 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 Farming
The 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.P
Project 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 and
crops

1, IEEFL, Pune Maharashtra,

(subsidiary of the Tamilnadu, and
Ion Exchange Goa; Plantations
India set up in mainly fruit trees
1995)

2. Jamnagar Gujarat, and

Farms Pvt. Ltd.- a Punjab;
subsidiary of Agroforestry and
Reliance horticultural crops
Industries
(Mukesh Ambani
group)

3. Anil Dhirubhai Punjab; Fruits and

Ambani Group vegetables
(Reliance)

4. Field Fresh an Punjab; fresh

equal partnership fruits and
venture between vegetables
Bharti Enterprises
(Airtel group) and
Rothschild

5. Vimal Dairy Narmada canal

with a capacity to area in north
process 2.5 lakh Gujarat; milk for
litres of milk ( a captive
part of the Rs. 900 consumption
crore Vimal
Group),
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.