Cooperative Farming

Importance of Agricultural sector:
  • With a large population to feed, imports will not solve our problem if there is a severe drought and food shortage
  • Though agriculture now accounts for less than 15% of gross domestic product (GDP), it is still the main source of livelihood for nearly half our population


Reason behind the current Agrarian crisis
(1). Landless Farmers
  • Around 83% of rural households are either entirely landless or own less than 1 hectare of land
  • Farmers’ tiny plots of land can no longer sustain whole families, especially in rain-fed agriculture, which accounts for two-thirds of India’s total cultivable area
(2). Shortage of money
  • Landless or marginal farmers lack the resources to either buy or lease more land or invest in farm infrastructure like irrigation, power, farm machinery, etc.
  • About 52% of agricultural households are estimated to be in debt, and the average size of household debt is Rs 47,000
(3). Different kind of Risks
  • Weather: The large majority of small farmers are dependent on the rains. A weak monsoon or even a delayed monsoon means a significant loss of output
  • Soil: The next risk is weak soil fertility, pests and plant diseases
  • Price: The better the crop the lower would be the price
  • Net income sometimes collapses if there is a very good crop of perishables 
MSP benefits large traders instead of farmers:
  • For foodgrains like rice and wheat, government procurement at the minimum support price is supposed to protect the farmer
  • But MSP benefits the large traders who sell grain to the government
  • Small farmers typically do not have enough marketable surplus to justify the cost of transporting the crop to government corporations in the towns
  • In the case of other crops, Agricultural Produce Market Committees (APMCs) have the opposite effect
  • Farmers have to sell their produce through auctions in regulated markets controlled by cartels of licensed traders
  • These licences give traders oligopolistic market power


Solution to farmer problems: Cooperative farming systems
  • There are several variants of cooperation ranging from collective action in accessing credit, acquiring inputs and marketing to production cooperatives.
  • This also includes land pooling; labour pooling; joint investment, joint water management and joint production.
Advantage of Cooperative farming systems
The advantages of aggregating small farms into larger, voluntary, cooperatives include:
  1. Greater capacity to undertake lumpy investment in irrigation and farm machinery,
  2. More efficient farming practices,
  3. Greater bargaining power and better terms in the purchase or leasing of land,
  4. Access to credit,
  5. Purchase of inputs and the sale of produce



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