The Left-ruled states of Kerala, West Bengal and Tripura are opposed to the idea of contract farming even as the practice is catching on in many other Indian states.
According to Kerala Agriculture Minister Mullakara Ratnakaran, the idea of contract farming is not acceptable because the state has only small farmers with small holdings who would not be able to hold their own in the face of a private company.
"Agriculture is a state subject and at no cost can any system be imposed. So far the state government has not been informed about contract farming. Just four or five states have agreed to this proposal," said Ratnakaran.
The first sign of dissent by the Left Democratic Front (LDF)-ruled Kerala and the other two states were seen at a meeting convened by Agriculture Minister Sharad Pawar in New Delhi last month to discuss the national farm policy.
Contract farming is taking place in Punjab, Orissa and Andhra Pradesh and is catching on in several other states too.
It basically means a private party can enter into a contractual agreement with individual farmers or a group of farmers. The farmers will carry out cultivation in the manner stipulated under the contract.
The private party will contribute by way of initial investment, providing inputs like seeds and fertiliser and also the necessary extension services. The final product will be purchased by the private party at a pre-determined price.
While Kerala's ruling Left seems to be opposed to the idea, KJ Joseph, a senior academic at the Centre for Development Studies in Thiruvananthapuram, said it would be welcome in the state where agriculture is fast losing its lure.
"In the context of globalisation, if our products have to be acceptable, a change has to take place and in the present scenario contract farming is one area that will soon become a necessity," Joseph said.
The contribution of agriculture to the state income has been on the decline, falling from 17.3 per cent in 2000-01 to 12.66 per cent in 2005-06.
"One of the main reasons why the agriculture sector in the state continues to struggle is poor agricultural extension services. The strengthening of small farmers has to take place and till such a thing happens, blindly opposing contract farming is not a good idea," said Joseph.
Contract farming, according to those in favour of it, is to help reduce post harvest losses, build supply chains and develop linkages with the food processing industry.
"The need of the hour is private capital with appropriate state intervention. If other states go ahead with this new concept and we don't, then again the loss will be for the farmers," warned Joseph.
With the exception of rubber almost all crops have seen the area under cultivation dwindle over the years in Kerala.
The area under rice cultivation dropped from 347,000 hectares in 2000-01 to 247,000 hectares in 2005-06. Similarly, for coconut in the same period the area dropped from 926,000 hectares to 900,000 hectares, and for cashew from 92,100 hectares to 80,700 hectares.