Answer:

Owing to the small land holding size of farmers in India, with more than 85% of farmers having land holdings size less than 2 acres, it becomes increasingly difficult to make agriculture as an economic activity viable for their sustenance, lest only to provide food for the sustenance of the farmer.

Co-operative farming in broad terms refers to pooling of land and practising joint agriculture. Its goal is to bring together all of the land resources of farmers in such an organised and united way so that they will be collectively in a position to grow crops on every bit of land to the best of the fertility of the land.

Cooperative farming helps in achieving Economies of Scale for the small farmer. As the size of farm increases, the cost of using machinery (tube wells, tractors etc.) decreases. It further helps in solving the problem of subdivision and fragmentation of holdings. Resources can be pooled by the farmers, which can help in increasing the productivity of land and labour. Case Studies generally point out that with cooperative farming, per acre production increases.

The weakness of the above farming lies in the fact that post-independence it was mainly government driven rather than being initiated by the people themselves. Further, fear of unemployment, attachment to land, lack of proper propaganda renunciation of membership by farmers and existence of fake societies inhabited its growth in India. While there were many loopholes in the government policy, benefiting large farm owners, leading to creation of ‘bogus farms’, subsidy provided was also not well targeted which further lead to proliferation.

Contract Farming can be described broadly as an institutional arrangement between farm and firm to produce and transact agricultural commodities on predetermined terms. The core of contract farming arrangements is some form of commitment, oral or written, on the part of the farmer to provide a commodity of a particular quality and quantity, grown according to specified methods agreed upon before sowing, with a corresponding commitment on the part of the firm to buy that produce at a pre-fixed price.

The practice, in principle is regarded as a win-win situation for both the farmer and the buyer. The farmer gets an opportunity to link up with a buyer and fix a price even before sowing, thus offering a kind of insurance and for firms, the attractiveness of timely procurement of supplies of quality produce without having to take on the responsibility of managing cultivation on factory owned farms. Further, the direct link between firm and farm implies disintermediation or the elimination of trade- middleman, saving on transaction cost.

The chief problem stems from enforcement issue. Duping farmers of lands, non- transparent quality standards, rejecting produce arbitrarily, altering price when product is delivered, weak law enforcement and legal redressal mechanism are some of the weaknesses of the current system.