In view of the declining average size of land holdings in India which has made agriculture non-viable for a majority of farmers, should contract farming and land leasing be promoted in agriculture? Critically evaluate the pros and cons.

Shrinking holdings and the reform question

India's average operational holding has fallen below 1.1 hectares, with a large majority of farmers being small and marginal. Fragmentation raises per-unit costs and depresses viability. Contract farming and legalised land leasing are proposed to raise scale, investment and returns.

Pros

• Contract farming: assured market and price, access to inputs, credit, technology and quality standards, reducing price risk and linking farmers to agri-business and exports.
• Land leasing: legal recognition lets owners lease out without fear of losing title, gives tenants secure access to credit, insurance and investment incentives, and allows consolidation for efficiency.

Cons and risks

• Small farmers may be excluded in favour of larger, bankable growers.
• Asymmetric bargaining power, contract breach, delayed payments and quality-rejection disputes.
• Risk of corporate dominance, monocropping and diversion from food security.
• Insecure or informal tenancy can lead to eviction and exploitation of tenants.

Safeguards

A model contract-farming law with registration, dispute resolution and price protection, and a model land-leasing law that secures the owner's title while extending institutional benefits to tenants, can capture the gains while protecting the weak. Farmer producer organisations can strengthen bargaining power. Reform should therefore be enabled, but with strong regulatory protection.