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Journalism of Courage
After the marginal success with contract farming, the government now plans to promote land-share companies. According to this concept, farmers can lease their land to a company, say an agro-processing unit, and become shareholders in proportion to the size of their holdings. The land will be considered the farmer8217;s equity in the company and he will receive a share of the company8217;s profit. The farmer can also take land on lease, including his own land, from the company and cultivate for a fixed rent. The farmer thus stands to gain from both farming and as well as his share in the agro-processing unit.
The idea of land-share companies is part of a new policy note prepared by the Ministry of Agriculture to be circulated to all states. At present, some land-share companies exist, though there is no legal framework. The ITC group grows tobacco in Andhra Pradesh and Pepsico recently started growing potatoes, tomatoes, chillies and rice in Punjab, Maharashtra, Karnataka and West Bengal. The Mittals, in collaboration with UK bank, Rothschild, have started cultivating several crops in a big way.
In 2002, the Tamil Nadu government leased out wasteland to corporates for 30 years to grow crops like cotton, flowers, fruits, vegetables and spices. The Gujarat government has also leased out over 2,000 acres of wasteland.
The government hopes that the concept of land-share companies8212;midway between contract farming and direct corporate forming8212;can ensure faster growth in the farm sector and increase farmers8217; income. But the fear is that the farmer could be alienated from his land if the firm heads for liquidation. To ensure it doesn8217;t happen, the government plans to put in some safeguards.
One of the several proposals is that access to shares in the land-share company should be restricted to farmers and up to 25 per cent of the company8217;s paid up capital can be subscribed to in cash by others, including an agro-processing unit or a trading company.
Another proposal is that the land-share company can operate on a commercial basis and the management should be vested in an elected board of directors. Voting rights could be on the basis of cooperative principles8212;one member, one vote8212;irrespective of the value of share of each member.
Descendants of farmers can inherit shares in the company. A farmer can sell his share to other farmers, but the shares cannot be traded through public issue as there may be a risk of takeover by corporate houses or other entities. In case of liquidation, the shareholders would get back their land rights.
