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 farmer’s equity in the company and he will receive a share of the company’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 companies—midway between contract farming and direct corporate forming—can ensure faster growth in the farm sector and increase farmers’ income. But the fear is that the farmer could be alienated from his land if the firm heads for liquidation. To ensure it doesn’t happen, the government plans to put in some safeguards.

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