In India, farmers and the interests of the state are in a continuous state of conflict right now. The farmer is usually the poor sod, standing in a corner in tatters with no savings and no idea on how he will source the money for next year’s seeds and fertilizer.
The state is the usurper and the arbitrator driven by the personal greed of a few caucuses.
During the last 10 to 15 years owing to rapid urbanization, farmer’s land is being acquired through statutory mandate. However, neither the urban real estate owner nor the rural farmer has gained from this arrangement.
The people who really have gained are the politicians and the real estate barons. Land is a resource, which has always been glorified and abused but never optimized in India.
Cut to the middle class guy’s workstation at home.
Mr X has invested Rs 25,000 in shares of YNaught Limited. He is watching the value of his shares drastically go up as the government has leased out land that belonged to the company for a large infrastructure project.
Mr X’s other investment is losing value on the stock exchanges from the Rs 50,000 he invested in as the state government has forcibly acquired the land owned by company OfCourseNot Limited for a public interest project. He suspects it is a school for kids begat and borne by civil servants.
Now, the latter company may go out of business and may be wiped off the map owing to this development. However, other than those Rs 50,000.00, Mr X is not worried that his livelihood being threatened —– just as a farmer always is when his land is taken away.
Well, the world invented the corporate veil a long time ago and is sticking to it with the corporate sector. It may be a good time for the government to take over ownership of agricultural land under a state owned Section 25 company and issue equity to farmers who may continue with the same activity but be paid with dividend and not the proceeds of the crop.
The government may own 51 per cent and anywhere between 20 to 26 per cent may be floated to the public to be traded on bourses.
Where would that leave the farmer and his family? Clearly, he would be in a position far better than he is suffering now or has been suffering for the last 10 years.
A Section 25 corporate entity would offer the farmer crop, health and life insurance and also a safety buffer in case of acquisition of any part of the land which the corporation would own.
I know, you are going to mention cooperatives now and point out that they have been active for quite a few decades. Hey, cooperatives induce elections and they attract politics and politicians. It would be better for the farmer to avoid both.
Today, the farmer owns land and little else. He does not own health insurance, life insurance, crop insurance or even a nest egg to tide him over successive years of bad crop. This could radically change if he embraces the model of corporate farming with equity with either the help of the government or a section 25 company such as Urban Thirst.
Another development that is slowly creeping up is that of e-commerce in perishable food.
Models such as www.localbanya.com and www.meragrocer.com are the first signs of an organized cold chain that India desperately needs right now.
Organized cold chain never materialized owing to government regulations or incentives in India. Today, there is a good chance that they will happen top down with pressure from the consumer side of the supply chain through hundreds of e-commerce companies across India.
Instead of Greenfield ventures investing in refrigerated warehouses, investment may pour into e-commerce companies, which in turn would float wholly owned subsidiaries owning refrigerated trucks and warehouses.
It may finally happen.
Our totally disorganized Soviet style food supply chain across the nation where half of the fresh food produce gets wasted may just get transformed into a new landscape where one encounters a refrigerated warehouse in every village. Instead of dry and bone shaking tractors with trailers, one may find local entrepreneurs investing in reefers.
This is going to have a chain reaction. The sugarcane farmer who is totally at the mercy of the sugar mill owner may exercise the option of transporting the sugarcane to other mills across the state border.
That is when luxury restaurants in this country may offer fresh sugarcane juice on the menu.
Change the functional model and you will have derived a happy farmer.
Also read: http://blogs.economictimes.indiatimes.com/managementmusings/infrastructure-farming-can-be-sexy-too/
DISCLAIMER : Views expressed above are the author’s own.