Agri firms to get land on lease for value addition

Agri firms to get land on lease for value addition

The State government has decided to amend the Karnataka Land Reforms Act, 1974, to allow farmers to lease out their agricultural land to private agro companies, who in turn will have to use technology to increase yield on the leased land.

The proposal was recently cleared by the State Cabinet and an amendment bill will be tabled in the next legislature session. The new business model, termed ‘management contract’, was first mooted at Global Agribusiness and Food Processing Summit last year.

At present, the Karnataka Land Reforms Act - 1974 bars leasing out agricultural land.

Once the amendments are in place, farmers can lease out their land to agro companies for a specified period. Cultivation and harvest of the farm produce will have to be taken up by the private players. At the same time, agro companies entering into the lease will have to utilise value added services in agriculture such as hi-tech cultivation and precision farming to increase the yield on the leased land. On their part, farmers will retain the ownership of land through the agreement period and can also seek fixed rent for the land holding.

“The State Cabinet has given its nod to amend Sections 2 and 107 of the Karnataka Land Reforms Act which includes the definition of agriculture and the provision for leasing out agricultural land for management contract,” Dr G K Vasanth Kumar, Additional Secretary to the Agriculture Department told Deccan Herald.

Agro-based industries, agro-processing industries and post-harvest operation will be brought under the definition of agriculture after the amendment. At present, the definition  includes raising of crops, grass or garden produce, dairy farming, poultry farming, breeding of livestock and grazing.

The rules to be framed under management contract will also have a provision to consider the land owned by farmers to be used as equity in farming collaborations with private companies, Vasanth Kumar said. Management contract is different from contract farming – in the contract farming, the farmer will have to cultivate the land to provide established quantities of a specific agricultural product while meeting the quality standards and delivery schedule set by the purchaser, usually an agro company.

In case of management contract, the onus of cultivation and harvest rests with the private player, who will have to use technology to increase yield. Companies can also go for multiple contracts with farmers owning land on adjacent plots to extend their cultivation area.

The move comes at a time when there is growing apprehension among the farming community that the State government’s policies were aimed at snatching away their land in the name of modernising agriculture.

However, Agriculture Department officials said management contract will be advantageous for farmers.