An Analysis and Policy Implication of Contractual Agricultural land Agreements

Agriculture is the one of the major occupations of the people of India. In the early twentieth century, the soil supported 227 out of 319 million, and 209 million of them got their living directly or indirectly upon the cultivation of their own or others‘ fields. This proportion was 68 per cent in 1872, 61 per cent in 1891, and rose to 76.5 per cent in 1901, to 82 per cent in 1911 and in 1921; it was about 73 per cent. In 1931, 75 per cent of the peoples derived their livelihood by cultivation. In 1951, more than 70 per cent of the people were agriculturists. The fact that agriculture has a crucial role to play in general economic development needs no great elaboration. Haryana emerged as a separate state in the federal galaxy of Indian Republic on November 1, 1966. With just 1.38 per cent (44213 square kilometers) of the total geographic area and 3.05 per cent 310.82 lakhs as on March 2011 of India‘s population, Haryana has carved a place of distinction for itself during the past three decades. Whether it is agriculture or industry, canal irrigation or rural electrification, Haryana has marched towards modernity with leaps and bounds. Today, it enjoys the unique distinction in India of having provided electricity, metalled roads and potable drinking water to all its villages within record time. Haryana is among the most prosperous states in India about 75 per cent population of the state is engaged in agriculture, directly or indirectly. Apart from meeting its own requirement for food grains, Haryana also contributes about 45 lakh tons of food grains to the central pool annually. The Basmati rice produced in Haryana finds an easy market abroad. 82.2 per cent 36, 15,000 hectares of the total area 43, 97,810 hectares is sown in Haryana. Wheat is the most important crop of Haryana, grown on 55.8 per cent 20, 17,000 hectares of the total area sown. Rice, Cotton and Bajra are other important crops grown on 22.99 per cent 8, 31,000 hectares, 18.06 per cent 6, 53,000 hectares and 15.8 per cent 5, 71,000 of the total area sown respectively. The main issues in the continuing debate on share tenancy are (i) efficiency of share tenancy in terms of resource use allocation and productivity - Is this arrangement less or equally efficient as owner operated farming?; (ii) Is share tenancy responsible for technological backwardness of agriculture i.e. it hinders the introduction of new technology in agriculture? and (iii) the rationale for the existence and persistence of share tenancy as an institution. In the next few pages we give a brief overview of the existing state of knowledge on these three issues, to provide the necessary starting point for our empirical investigation into some of these issues in the specific context of the post-Green Revolution Haryana agriculture. Archaeological discoveries at Sugh show that the south-east Haryana was a part of the Mauryan Empire. Ashokan pillars at Topra (Ambala) and Hisar, his stupas at chaneti and Thanesar confirm this.11 The Allahabad pillar inscription states that the Yaudheyas submitted to Samundra Gupta and eventually their kingdom formed part of the Gupta

per cent of the land sown is irrigated in Haryana as against 37.2 percent at all India level. Kurukshetra, Karnal, Panipat, Kaithal, Sonepat and Jind enjoy the irrigation levels of 99, 98.2, 98.2, 97.1, 93.4 and 89.2 percent respectively. Even the least irrigated districts such as Yamuna Nagar, Gurugram, and Bhiwani have the irrigation levels above the national average. 49.66 percent of the irrigation is through the government canals, 49.92 per cent by wells and tube wells and 2.42 per cent by other sources. The total number of tube wells and pumping sets in Haryana was 6, 66,493 in 2015-16 which amounted to one set per 8.39 hectares of land.

Jodha (1981) in his study of two villages, each, in the district of Akola (Haryana), Sholapur (Haryana) and Mahbubnagar (Andhra Pradesh), over a period of four representing year (1970-1979) three agro-climatic zones in peninsular semi-arid tropical India revealed that 79 to 98 per cent of new land transfers were due to tenancy transactions only confirming the fact that land market in India operates largely through tenancy rather than through outright sale/purchase. Since ownership of land is considered to be one of the most important sources of security and social status by the cultivators. Bardhan (1984) described that even with full property rights in land, the market for buying and selling cultivable land is often rather inactive. Unless forced by extremely difficult circumstances, a resident villager does not usually sell his land. One possible reason is that land prices do not fully compensate for the very high risks in parting with this secure asset as evaluated by the farmer. In the absence of integrated financial markets, the transaction cost of investing the sale proceeds in alternative ventures is very high. Besides the externalities of land ownership in terms of social status and credit collateral for the owner may not be fully reflected in the land prices in the market. Land lease markets on the other hand, are quite active, at least until recently, before land reform legislation abolished tenancy in some areas or drove it underground. Dutt (1947) explained the over pressure on agriculture, stagnation and deterioration of agricultural activities, the British capitalist policy, neglect of development, low level of production but again it is a picture of India as a whole and does not provide detail for an overall study. Sarap (1996) in his study of functioning of land markets based on primary data of selected villages of three districts in Haryana, concluded that even in a dynamic rural area like the study area, with diversified occupation and modem technology, the turnover of land sale and purchase is low. permanent transaction market is an inactive market while the temporary transaction market (lease) is an active market. There is no sustained turnover in the land market and the sale of land is in response to transient cash needs of the household or the sales are interim with the seller wanting to buy back the land at a later period. The analysis of land transactions in the study area confirms that the turnover of land sale is low as argued by a number of other authors including Basu (1986), Plateau (1990), Raj (1990) and Binswanger & Rosenzsweing (1986) to mention a few. Talbot (1984) referred to the Haryana and its people, the Unionist Party and Haryana politics, the British desertion of their allies, but Author focuses on the political relations and there are only some minor references to agriculture in the region. Richard G. Fox in his book namely Lions of the Haryana: Culture in the Making, primarily a social anthropologist, shows how the capitalist world system penetrated the economy of the Haryana and how it led to the emergence of a class of petty commodity producers. Author discusses colonization and its socio-economic results namely migration and the emergence of wage labour but does not take up a study of agriculture as such. Sarkar (2001) focused on political developments from 1880-1947 and refers to commercialization of agriculture, production and some legislation, but on India as a whole and rather briefly, since it is not the main theme. D.R. Gadgil, Industrial Evolution of India, 1870-1949, in which few chapters on ‗agriculturists‘ in four phases are taken up, 1865-69, 1885-95, 1895-1914, 1915-39. Author is taking up some aspects of agriculture like, growth of cotton cultivation, agrarian standard of living, agricultural produce, prices of crops, poverty and debt, land tenures, effect of famines, agricultural improvements, communication, limited government action and legislation, agricultural statistics and brief reference to Haryana, United Provinces, Central Provinces and Bombay. Kaul et al. (2000) on the basis of secondary data concluded that Indian agriculture is dominated by small and marginal farmers and the agricultural scenario is characterized by the incidence of tenancy, landlessness, high degree of fragmentation and skewed distribution of holdings. The knowledge of the trend and intensity of tenancy, terms of payment for leased-in land and factors influencing area under tenancy are of utmost importance to policy makers, administrators and economists.

Objectives of the present study are as follows:

■ Intensity of leasing in ■ Mode of contractual agricultural land agreements ■ Tenure of contractual land agreements 2. To study the factors affecting contractual Agricultural land agreements.

The study pertains to whole of Haryana state. The state has been divided in three zones on the basis of cropping pattern, namely rice zone, cotton zone and bajra zone. It has been done so because the cropping pattern of any area evolves under the effect of many factors such as nature of soil, irrigation facilities, climatic conditions and demand and supply conditions of that particular crop in the national and international market hence can be treated as a more reliable and broad based criterion for division of the state in three parts. More over the cropping pattern decides the economic conditions, economic decisions and relations in that particular area. Cereal crops are the major crops grown in Haryana. The agro-climatic conditions of Haryana suit wheat, the most. It is grown throughout Haryana except parts of desert strip in south-west Haryana and parts of shivaliks in north Haryana. This accounts for 55.8 per cent of the total arable land. Haryana produces 12 per cent of the total wheat grown in India. Other major crops are rice, bajra, cotton and sugarcane. Of the major crops in Haryana wheat is a Rabi crop while rice, bajra and cotton are Kharif crops. They need different soil and irrigation conditions hence are grown in different areas of Haryana (Sugarcane is grown in the same area where rice is grown). As a result the present study on Haryana has been divided in three zones namely rice, cotton and bajra zone.

The study is primarily based on primary data. Primary data has been collected from the respondents i.e. lessee‘s and lessors for the agricultural year 2001-2002. To reach some conclusions regarding the objectives of the study, relevant information pertaining to different aspects of the study has been noted down from each respondent on a pre-structured schedule (questionnaire) through personal interview method.

Techniques such as regression analysis, simple tabular analysis, bar diagrams; pie charts etc. have been used for the analysis.

The intensity of leasing-in is measured by the following formula: (Leased-in land / Total operated land) x100 It reflects the level of depth of the phenomenon of need of contractual land on the part of lessee. It is also an indicator of starvation for additional agricultural land in the concerned farmer. A farmer leases-in land in order to utilize the unused human and physical resources with him. The findings of the present study have been shown in Table 4.1 and Figure 4.1. They are as follows: Rice Zone: In the rice zone, the intensity of leasing-in is 100 per cent in the landless followed by the marginal farmers (82.23 percent), the small farmers (79.24 percent), the medium farmers (59.21 percent) and the large farmers (34.31percent). Cotton zone: In the cotton zone, the intensity of leasing-in is 100 percent in the landless followed by the marginal farmers (55.99 percent), the small farmers (50.55 percent), the large farmers (57.41 percent) and the medium farmers (51.54 percent). Bajra zone: In the bajra zone, the intensity of leasing-in is 100 percent in the landless followed by the marginal farmers (94.32 percent), the small farmers (69.37 percent), the medium farmers (56.75 percent) and the large farmers (58.73 percent).

Overall: The intensity of leasing-in in Haryana is 100 per cent in the landless followed by the marginal farmers (66.48 percent), small farmers (58.54 percent), medium farmers (45.37 percent) and the large farmers (48.75 percent). Such high figures of intensity of leasing-in is an indication of the fact that the farmers leasing-in are highly land starved so as to utilize the excess labour and capital with them. In other words the problem of contractual land agreements has much depth in it as far as the state of Haryana is concerned. This study is in confirmation with the earlier studies. Sharma (1995)

The mode of contractual agricultural land agreement is a reflection of the level of development of agriculture of any area. There are three prominent modes of contractual land agreements prevailing in India. They are as follows: i) Fixed cash rent, ii) Fixed kind rent, iii) Sharing of crop produce. Of these three, the fixed cash rent reflects the growth of capitalistic relations in agriculture. It is supported on the following grounds: a) Whole of the surplus created by the tenant by his own labor, remains with him. b) The tenant gets full freedom in decision making; as a result the tenant gets full opportunity to use better production practices in order to get higher income. c) No tenant is liable to provide unpaid labor services or any obligatory service to the landlord. This saves the tenant from unwanted exploitation. d) The lessor also prefers this mode of leasing as he gets insurance against any crop failure. e) More over the rent can be collected even before the farming operation starts. f) It avoids disputes due to mistrust on both the sides as is prevalent in crop sharing. The sharing of crop produce mode lacks all the above quoted benefits. It is argued that this mode is an outcome of the compulsion of poverty and underdeveloped agriculture. Due to poverty the tenant contributes labor to the production process while the capital inputs are contributed by the lessor. The areas which do not have assured irrigation facilities (and they depend on the uncertain monsoons), there the tenant favors this mode as it involves risk sharing. The problem with this mode is that it is an outcome of poverty and uncertainty and it in turn leads to poverty and uncertainty. The agriculture remains a subsistence sector and it becomes a hurdle in the development of the economy as a whole. The findings of the present study are as follows: Rice zone: The data of rice zone of present study shows that 97 per cent of the leasing is on fixed cash basis as is shown in Table 4.2 and Figure 4.5. Though land is available in this mode, only 57 percent of the lessees prefer this mode, the rest 43

Category wise distribution of the farmers, who prefer crop sharing in cotton zone, is as follows: 52 per cent of the landless, 28 percent marginal farmers, 34 percent small farmers, 42 percent medium farmers and 29 percent large farmers prefer crop sharing mode of leasing. Reasons for this phenomenon are as follows: a) Less cash is needed (More than 90 per cent of farmers are debt ridden in rice zone.). b) Interest is saved which eats up all the savings in rice zone. c) Risk sharing (Comparatively less important than other zones because of more tube wells, which are more perennial source of water as compared to monsoons.). d) Tube wells are looked after well. Cotton zone: The data of cotton zone of present study shows that 80 per cent of the leasing is on fixed cash basis as is shown in Table 4.2 and Figure 4.5. Though it is the

Compulsion of the lessees to lease-in on the fixed cash basis, only 68 percent of the farmers prefer this mode on the leasing in side, the rest 32 percent prefer the mode of crop sharing as is shown in Table 4.3 and Figure 4.6. Category wise distribution of the farmers, who prefer crop sharing in cotton zone, is as follows: 70 per cent of the landless, 32 percent marginal farmers, 32 percent small farmers, 34 percent medium farmers and 42 percent large farmers prefer crop sharing mode of leasing. Reasons for this phenomenon are as follows: a) Risk sharing as there are uncertainties of Monsoons (Tube wells are not feasible in this area due to saline nature of the sub-soil water and water from canals is available after certain intervals only). Occurrence of disease in cotton (cotton is frequently attacked by a worm which damages the entire crop). b) Lack of capital for fixed cash mode of leasing. Bajra zone: The data of bajra zone of present study shows that 30 per cent of the leasing is on fixed cash basis as is shown in Table 4.2 and Figure 4.5. Though land is available in this mode, only 32 percent of the farmers prefer this mode on the leasing in side, the rest 68 percent prefer the mode of crop sharing as is shown in Table 4.3 and Figure 4.6. Category wise distribution of the farmers, who prefer crop sharing in bajra zone, is as follows: 98

sharing mode of leasing. Reasons for this phenomenon are as follows: a) Risk sharing as there are uncertainties of monsoons (though canal and tube well water is available in some parts of this zone, most of the area depends on the uncertain monsoons). b) Lack of capital for fixed cash mode of leasing. Overall: 73 percent of the leasing is in Haryana is on fixed cash basis as is shown in Table 4.2 and Figure 4.5. This is the reflection of the lessors will, as he dominates the decision regarding the mode of leasing. As far as the preference of the lessee is concerned, the fixed cash mode of contractual land agreement is preferred by only 61 percent of them farmers, the rest 39 percent preferring the mode of crop sharing as is shown in Table 4.3 and Figure 4.6. Category wise distribution of the farmers, who prefer crop sharing in Haryana, is as follows: 73 percent of the landless, 51 percent marginal farmers, 42 percent small farmers, 39 percent medium farmers and 42 percent large farmers prefer crop sharing mode of leasing. The findings of the present study are in resonance with the studies of Rai et al (1981) Kumar (1998) and Pandey et al (2000) to the extent that the fixed cash renting was the dominant form of leasing in the tube well irrigated areas i.e. the rice zone of Haryana. The study is in disagreement with the study of Kumar (1998) fixed cash rent was prominent in the least irrigated zone except the 73 marginal farmers and sharecropping was the prominent mode in canal irrigated zone. According to the present study 67 percent of the lease agreements in the canal irrigated i.e. the cotton zone were under fixed cash rent mode of leasing while only 42 percent of the lease agreements in the least irrigated zone i.e. the bajra zone were under the fixed cash mode of leasing. The present study is only in partial agreement with the study of Singh (1995) which revealed that the large medium farmers (the better off) opted cash renting while many marginal and small farmers went for crop sharing mode of leasing. The present study reveals that 77 percent of the landless, 33 percent marginal farmers, 43 percent small farmers, 34 percent medium farmers and 54 percent large farmers prefer crop sharing mode of leasing.

The tenancy laws in Haryana are only on the papers. Neither anybody neither has knowledge nor is the need for having some knowledge is felt by the farmers, entering in contractual land agreements. The present system has no safeguard mechanism against such violations as the agreements are verbal Whatever the figures may be the dividing line between them was very bleak. As the farmers opposing the entry did so due to lack of confidence while the farmers supporting the entry of private companies in the land lease market did so on the condition of ensuring safety regulations. This highlights the need of developing a fully-fledged law of contract in agriculture. Thus to ensure the large scale entry of the private capital in the land lease market and to make it a sustainable phenomenon, a congenial atmosphere is to be created. Such an atmosphere can be created by bringing suitable changes in the present tenancy laws which could generate confidence in the farmers leasing out on one hand and the private capital on the other hand. Such changes include clearly mentioned terms and conditions for lire parties involved in the land lease market. The present study reveals that 99 per cent of the farmers lease out land on annual basis in rice zone while only 1 per cent leases out on seasonal basis. Annual term of lease is being forced on the tenants as 53 per cent of them preferred to lease in land for more than one year. This shows that majority of the farmers leasing-in, feel that they can be better off if they lease in for more than one year. But they cannot do so because they are on the receiving end, demand for leasable land being much greater than the supply of leasable land. On the basis of the above discussion it should be recommended strongly that all the provisions which scare the fanners leasing out land for more than one year should be quashed from the existing tenancy laws. The farmers entering in to contractual land agreements had to pay rupees higher rent than what they are entitled to pay as per the legal provisions of the tenancy act. This is a serious issue as it eats up a major portion of the surplus of the farmer who is actually tilling the land. This may ultimately lead to marginalization of the marginal and small farmers. The situation would aggravate in the coming times. The cost of inputs would increase sharply in the days to come due to removal of subsidies. On the other hand the price of the crops would not observe a corresponding increase. As a result the farmers would find it more and more difficult to pay the ever increasing cost of rent. The farmers would have to face a much organized sector, the corporate sector, who would take up the task of agro- processing and marketing (both at national and international level) in the coming times resulting in further decreasing their bargaining power and making their situation worse.

The study suffers from following weaknesses:

and resource constraint on him to gather large data set for obtaining a robust result. 2. The farmers are not in a habit of book-keeping for the cost of inputs incurred in terms of money, quantity of production and labour hours invested in the agriculture. As a result much information has been gathered on the basis of memory and as such does not reflect the exact data. Besides, certain information cannot be checked from other related parties because of migration of a party to a distant place for the purpose of business, service or any other reason. 3. As would be discussed in the last chapter, Indian agriculture would witness tremendous changes under the effect of sweeping economic changes both at national and international level in the coming days. As a result the Indian farmer would have to produce as per the demands and standards of the international market Export in agriculture. Export in agriculture would be of value added products. The companies producing these agro-products would do so by maintaining direct links with the farmers.

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Research Scholar, Department of History, OPJS University, Rajasthan, India