- Introduction stating land fragmentation.
- Briefly mention effects of fragmentation.
- Point out the major hindrances of land legislation.
- Describe the role of FPOs and agri-tech startups.
India is an agrarian economy with agriculture contributing to over 58% of employment. Since India gained independence, land fragmentation has been a persistent issue with the size of land decreasing in each successive generation, majorly due to the inheritance laws. Hence, land fragmentation poses a serious challenge to agriculture productivity & income with approx. 0.2 Ha per person in rural household.
The menace: Over generations, such fragmented lands become unviable for agriculture as the yield significantly reduces compared to the resources & investment put in. Particularly in densely populated areas the issue of small landholdings is rampant with average size becoming alarmingly low. Such smaller landholdings make scaling nearly impossible.
Understanding the legal snag: after India’s independence, to remove the challenges posed by the Zamindari system, India came up with land reforms legislation. Broadly, it posed three bottlenecks :
- State governments prohibited non-farmers to buy farm land to protect farmers from losing their land. However, this drastically reduced the number of potential buyers, thereby decreasing land prices, furthering land fragmentation in due course. Gradually such lands lost their high asset value.
- There was income restriction imposed on non-agricultural income to prevent the rich zamindari families from acquiring more lands. But this actually pushed richer agricultural families from agricultural land market to other areas of investment, thereby financially starving this sector in the longer-run.
- Nearly all state regulated the maximum landholding to eradicate intermediaries as was prevalent in zamindari system. Due to such ceilings, division of existent lands became inevitable for property inheritance.
Role of FPOs and agri-tech startups as a solution: Many farmers have started becoming members of Farmer Producer Organizations (FPOs). FPOs are effective mechanisms where farmers can ‘crowd in’ and act as an aggregator to produce and then sale through e-trading as one or multiple lot depending on requirement. Due to the aggregator principle from input to output, it can potentially enhance the economy of scale and bargaining power of the member farmers. To facilitate this process, the Small Farmers’ Agribusiness Consortium was mandated by Agriculture Ministry to support the state governments in forming FPOs.
Agri-tech has began to gain rapid traction only over the past few years. Committed to addressing the various problems like farm-to-fork issues, unproductive to productive landholdings, increasing farmers’ average income, help them procure farm inputs, and even availing credit, agri-tech startups have been a game changer for agri-problems. Acc. to NASSCOM, as of 2019, India has more than 450 agri-tech startups. With a data-driven approach powered by cutting-edge technologies, agri-tech startups are empowering farmers to scale their yield within limited land and offering them guidance on various issues. Agri-tech startups help in aggregating the demand which helps in providing better value to smallholding farmers. Startups have also been working on aggregating the output from smaller farmers by selling directly to mandis and food processors.
Resolving the problems arising out of land fragmentation is very critical to create a thriving agriculture sector. In this direction, the governments have taken continued efforts through reformed regulations and by partnering with private agri-tech farms & other stakeholders.