Its farm reforms on anvil, Centre tells states to hammer

On the agenda: changes in the Agriculture Produce Marketing Committee (APMC) Act and the land-leasing system. These reforms, if implemented, would drastically change the way in which agricultural products are bought and sold and the system under which farmers own and cultivate their land.

One suggestion in the land reforms is the formation of a ‘‘land share company’’, a completely novel way of owning land that has been successfully implemented in China. In this, the land use rights would be taken from individual farmers to form joint stock companies. Their individual shares and profits would be in proportion to the size of the land contributed. The land held in equity would be leased by the company for both agriculture and commercial purposes.

Another proposal is for farmers to lease their land to an individual who would finance their cultivation process, ensuring better quality seeds, fertilisers etc. The leaseholder would pay a lease based on the ongoing market rates. He would then sub-let the land to the same farmer for cultivation, for a time period which would be mutually agreed upon. The farmer will not forgo ownership of the land. This way, the farmer suffers minimum risk, getting money for his land as well as sharing the profits.

On the other hand, the revised APMC Act will help farmers take advantage of a free market and gain access to global markets as well. The Centre has already prepared a Model Act that calls for promotion of competitive agricultural markets in private and cooperative sectors and establishment of direct purchase centres and farmers’ markets.

The Model Act provides an institutional framework to support contract farming, an arrangement under which companies enter into contracts for marketing of agricultural produce and provide technologies and capital support to farmers.

Assuring that nothing would be finalised without discussions with farmers’ groups, Singh asked all the states to review, simplify and liberalise land in order to promote both agricultural efficiency and equity. Some states expressed two main fears regarding land leasing. First, legalisation of land leasing in areas with poor infrastructure may alienate marginal farmers. Second, it might lead to concentration of holdings in a few hands. The Centre suggested a law to keep this under the ceiling limit.

Some states like Punjab, Haryana, Gujarat, Maharashtra and Assam already have an informal system of land-leasing. But in a state like Gujarat, the tenant acquires a right to purchase the leased land from the owner within a specified period of tenancy. Most states have completely banned this.