I am advocating an “Indian” Kibbutz model which already exists and has been proven to be successful in some ways.
Like Dairy farming for example. The cooperative sector has been a huge success in the milk industry and the model has been widely adopted for other purposes. For example the sugar industry, or banking where we have a large number of cooperative banks. In housing too, where most housing “colonies” or apartment complexes in cities like Mumbai are organised as “cooperative housing societies“ .
We have a large number and many types of agricultural cooperative societies. In the milk industry, producers form cooperatives which buy, process and market the milk. In sugarcane similarly, the cooperative sugar factory buys, processes and sells sugar, alcohol, energy etc.
I wonder why the system has failed in the “production” side of agriculture, where it’s an obvious solution to the “small land holdings” problem.
Larger land holdings enable economies of scale for mechanisation, investments in irrigation, water storage, rational water use, insured futures deals for sale of produce in the markets, and so much more. Larger land holdings hold the key to mechanisms that will increase productivity.
Then why don’t farmers pool land? Why has this not happened on a large scale across India? Why has this not succeeded like the milk cooperatives?
I refuse to believe that it is because of a lack of initiatives to pool land. There is enough entrepreneurial energy and talent in this country to make these structures happen and to experiment with various types of business models and produce.
I suspect it’s the law that is hindering this. The legal framework is possibly not securing the rights of small landholders who become a part of these cooperatives. Maybe it makes it difficult for them to exit? Maybe it places restrictions on the formation of such cooperatives, fearing industrial or creditors takeovers of land from small farmers? Maybe the land ceiling act or the restrictions on change of ownership of agricultural land reduce securitisation opportunities for lenders to such cooperatives so that they can invest to develop the land.
In our desire to protect the small land owner and the agriculturist from corporate or urban “sharks”, have we managed to also restrict the ability to create structures that enable productivity and prosperity for him?
I will investigate these legal aspects and report on this on another blog post. Maybe suggest some solutions as well!