Abstract
Indian agriculture has been under huge and persistent distress, in what, in fact, many researchers have described as a “crisis” for close to three decades now—a period that has been co-terminus with the so-called economic reforms. Not surprisingly, there is substantial literature on the subject and major scholarly debates on what type of policy alternatives are needed to revive the agricultural sector. One of the dominant perspectives has been that the problems in the agricultural sector can only be solved through reforms that further open up agricultural markets, although within a regime of regulating agri-businesses in ways that also benefit smallholder farmers. It is worth noting here that more than four-fifths of the farmers in India constitute marginal and small landholders (with holdings up to 2.5 and 5 acres, respectively), with extremely limited capacity to compete in the open market. In order to strengthen this capacity, there has been a tendency by policymakers to advocate technological and institutional innovations that provide appropriate support to farmers in order to reduce their costs of production, improve their backward and forward linkages, and, in general, make them more competitive.
The book being reviewed is embedded in such a broad perspective and is focused on drawing lessons from three state field surveys to assess the impact of business models in the provisioning of farm services and inputs. From the author’s perspective, agri-businesses and service providers can play important roles in cutting costs of production, improving access to markets, and increasing yields. One of the ways of doing this is to introduce institutional innovations, many of which are taking place through private initiatives. The book recognizes these innovations, particularly the growth of agri-business in the input and farm services sector, as important steps in resolving the distress of the small farmers. It uses field studies from three states to assess the changing landscape of agri-input marketing and selling through a variety of distribution channels and business models. Furthermore, the book assesses the inclusiveness of these channels and finally explores the way forward for policymakers by drawing lessons from these examples.
The book is divided into six chapters, of which three are empirically very rich and detailed case studies of different business models of agro-services and input provisioning. The first chapter sets out the overall context and the methodology of the study, whereas the second provides an overview of the purchase and use of agricultural services in India. The chapter shows that the system of purchase of agricultural inputs and services from cooperatives is declining, and multiple other channels of access are available to farmers in the contemporary agrarian economy. It contends that although company-owned and company-operated business models are making a big entry, they still remain small players due to issues of access. However, given that the focus of the study is on the perspectives of smallholders, it would have been better if a deeper theoretical/conceptual connection had been made by the author with a range of critical issues confronting smallholder agriculturalists. The conclusion of the chapter suggests that the main issue faced by the smallholders is the problem of “access” to newly developed channels. One wonders whether this statement is an oversimplification of the complex reality created by increasing penetration of agri-businesses in India’s agriculture.
The next three chapters (3 to 5) provide rich details and important insights pertaining to the different models of agri-inputs and services that have been adopted by agribusinesses and other private players in three separate regional contexts. Chapter 3 focuses on farm machinery and rental services in Punjab, through a case study of the Zamindara Farm Solutions (ZFS). The data show that the company’s custom rental service for farm machinery largely catered to medium and large farmers. The primary agricultural cooperative societies (PACS) were largely serving small farmers from whom they often faced delayed payments. However, the PACS showed a limited portfolio of services and the problem of long-term viability of this business model, even though the farmers were satisfied by their services. The chapter essentially points towards the need for diversification and improvement of access.
The second model explored by the author in Chapter 4 is supermarket retailing of agri-inputs in Uttar Pradesh. Here. the author makes a specific case study of Khushali Krishi Kendras (K3), which are owned by a real estate company, Rohtas Enterprises. The data show that K3 outlets catered to small and medium farmers, for whom 50% of the total crop area was under sugarcane. The penetration of the company had thus increased the area under commercial farming. However, a shortage of inputs was reported by K3-dependent small and marginal farmers as they could not get inputs on credit and their costs of production also did not reduce substantially. But the author notes that the K3 retailing system has been more inclusive than traditional channels and needs to diversify its portfolio to increase its market penetration amongst small farmers.
Chapter 5 deals with the third model of agribusiness franchising in Bihar through a case study of Green Agrorevolution Private Limited (GAPL). It is noted that the franchisee model reduces risk and is very suitable for adoption in agri-inputs. The GAPL opened 11 outlets, called Dehat, which catered to multiple villages. These outlets were linked to Farms and Farmers (F&F), an NGO started by the company. The initial assessment of the farmers was made by F&F who were guided on improving their agricultural practices. This in turn linked them to Dehat outlets, many of which were franchisees. The author notes that the franchising model is quite suitable because it improves the penetration of the companies amongst small farmers and provides them a market linkage. However, almost none of the farmers reported any decrease in their costs of production, thus raising questions about whether such a model can in fact address the distress that small farmers are facing today.
The concluding chapter of the book attempts a comparison of these three models and argues that even though agri-business models largely cater to medium and large farmers, they do have a potential to cater to the needs of smallholders. The author argues that market penetration would increase if input subsidy was delinked from inputs and instead given as an incentive to leverage market penetration. A further recommendation includes the introduction of a licensing system for farm input distribution and improved access to institutional finance. The author concludes that agribusinesses can partner with the government in order to bolster schemes such as producer collectivization and handholding for building local platforms. On the whole, the study is grounded in an understanding that small farmers can benefit from agribusiness penetration if their scale and scope is improved.
It is important to consider the conclusions of this book in the context of a much larger, and quite complex, canvas of India’s agrarian political economy, integrating the national and international correlates that shape, frame, and constrain the prospects of the marginal and small farmers. To illustrate a sense of these concerns, the author discusses a couple of issues which have been much discussed in the recent literature: the huge inability of the current agricultural economy to provide adequate work and livelihood options for agricultural labor and marginal/small holders, resulting in increasing exodus of workers from this sector; the increased openness of agriculture to the world economy that has contributed to a crisis of livelihoods for substantial segments of marginal and small farmers; extreme power imbalances across economic actors, in particular between agri-business corporations and those at the bottom of the ladder; and so on. In short, there is huge evidence to suggest that the current national/global macroeconomic policy regimes are deeply flawed, contributing to almost any and every significant outcomes and challenges associated with the sector. However, policymakers contend that the provisioning and diversification of farm services through agribusinesses and similar routes will make these farmers more “competitive and efficient,” and will help alleviate their difficulties. Hence, it is claimed that more rather than less “market reforms” are necessary in the agrarian sector. This book appears sympathetic to such a perspective, echoing the view that India’s agrarian challenges have a lot to do with the non-competitiveness and inefficiency of its farmers. Although the book provides a wealth of empirical material in this growing, and very important, area of research, backed by careful and meticulous scholarship, it does not explore in any substantive manner a host of fundamental questions confronting small and marginal farmers under the current phase of capitalism. For sure, it hints at many of the important issues and challenges, which themselves are good beginnings for meaningful conversations. The volume is a very important contribution to engage with the emerging scenario and policy discourses with respect to Indian agriculture, in particular, and I would certainly recommend it to anyone interested in the subject.