Government seeks India Inc help to push agriculture schemes

The government proposes to rope in the industrial sector in a big way to promote agri schemes through a coordinated farmer-industry-centric policy.

The proposed model envisages formation of a producer company with the direct involvement of a company consisting of farmers or farmer bodies that could look into the implementation, monitoring and growth of government schemes, especially in rain-fed areas. Rain-fed agriculture is used to describe farming practices that rely mostly on rainfall for water.

To push forward this plan, the President of India has constituted a working group of different state governors to chalk out strategies to enhance productivity, profitability, sustainability and competitiveness of agriculture in rain-fed zones. Based on these recommendations, the government will formulate the policy.

Terming it a farmer-industry partnership across the agri value chain, official sources said these companies will be designed with direct involvement of the industrial sector and the government taking on the role of a policy formulator besides being an overall authority for the implementation of various government policies.

These companies will be profit-oriented so that there is a greater incentive, both for the farmers as walk as the industrial sector for fruitful involvement. This could also help address the infrastructure bottlenecks in the farming sector to a larger extent. Currently, companies are only involved in a very limited manner in the value chain of agriculture, such as for extension activities and seed development. Even if these companies are involved in areas like drip irrigation, it is only on a standalone basis.

Officials said that a producer company would be registered under Part XI of the Companies Act and would cover the entire agri value chain. This legislation provides for the same legal and regulatory framework enjoyed by companies but protects the basic principles of co-operatives, such as, voluntary and open membership, democratic member control, members’ economic participation, autonomy and independence. These companies will be registered with the ministry of company affairs (MCA) and would not function like co-operatives, which have a mix of state and central government control. This is to ensure direct control of the government over its own schemes.

Some of the areas where these companies see a bigger role are technology, agri-mechanisation marketing, distribution, research and development, procurement, building awareness of farmers and development of agri- infrastructure, sources said. Under the proposed model, a farmers’ body, whether co-operative or any other type of entity, would be part of the company as an active shareholder. The model could follow joint financing pattern with funds pooled in from the company/co-operative, members of the oraganisation and seed money from the government.

Currently, producer companies have been formed in India in various sectors, including agriculture. Madhya Pradesh alone has 17 producer companies, of which 15 are crop-based while one is engaged in milk production. In most producer-owned companies, 10 farmers, usually active members of the community, are appointed as chief promoters. The company floats shares that are picked up by other farmers. These shares can be transferred but not listed on the stock exchanges.