August 07, 2016
Array

Agrarian Capitalism and the Control of Land in a Neo-liberal World

Archana Prasad

THE transformation of the agrarian landscape under contemporary capitalism has yielded new ways in which big companies use their financial power to control the production processes in agriculture. This use of financial and political clout can take many forms. The first is of course outright land deals where companies directly control both land and production. This is especially true of the African countries where agricultural supply chains have spread considerably. Here the control of land by the companies is direct either in terms of transfer of ownership, or through long term leases. The second emerging form is the contract farming, and out-grower model which is characterised not by the direct control of land, but the control of decision making in terms what is to be done with the land. The corporations control the lines of credit, supply of inputs, production process, pricing and marketing. So even if the peasant is the ‘legal’ owner of the land, the corporations are the ones who decide what to do with that land in practice. In both these forms the entity controlling the use of the land is the company, which in many cases acquires the control of land without actually purchasing it (in the case of the out-growers and contract farming model). In this sense the corporates are emerging as new landlords which impose an agricultural regime through their control of technology, markets and finance, thus showing of financial capital is one of the most crucial factors in restructuring the relations of production in the rural economy.

CORPORATE LAND

DEALS IN AGRICULTURE 

The lack of systematic and reliable data is one of the main problems of concrete analysis of agrarian relations at the current conjecture. However on the basis of limited data from international databases it is possible to say that agricultural investment by transnational corporations has increased within the global south. As the land matrix data shows, the area under transnational deals has only been increasing in the past one decade. 

Regionwise Investments in Land Deals for Agriculture

Region

Area under All Deals (ha)

Percentage of Total Deals

Percentage of Concluded Deals

Percentage of Intended Deals with In Principal Agreement

 

Total

Transnational

Domestic

Transnational

Domestic

Transnational

Domestic

Africa

32681344

87.43

12.57

83.98

16.02

93.28

6.72

America

7873645

70.38

29.62

69.56

30.45

100.00

0.00

Asia

13786451

70.99

29.01

60.24

39.76

92.10

7.90

Europe

10406704

58.58

41.42

58.34

41.66

100.00

0.00

Oceania

2518516

93.04

6.96

93.04

6.96

0.00

0.00

Total

67266660

77.81

22.19

72.63

27.37

93.07

6.93

Source: Calculated from Land Matrix downloaded from www.landmatrix.org on 31 July 2016.

The table below shows that there is a clear trend towards the transnational investment in land for agriculture. Of all the concluded deals with oral and written contracts, more than two-thirds were with transnational companies. This figure is the highest for Oceania, Latin America and all of Africa. In Asia it is more than 50 percent, indicating the trends of investments in these countries. In this context it is interesting to note most of the 77 domestic and transnational deals reported for India are for the purposes of mining. Only 7 deals are reported for agriculture and out of these 5 are for transnational companies. But even in cases of domestic deals the secondary investors are transnationals one of the main players being Nandan Biotech from the United Kingdom. In a majority of the cases though, diversion of agricultural land in India is largely for the purposes of mining and the primary investors are domestic with secondary investors being transnational companies. However it is important to note that India is one of the top 5 countries investing in land for agricultural purposes in Africa.

Another important feature to be noted about these deals is the nature of investments that the companies are making. Again, the only database which provides some partial information is land matrix from whose data the nature of investment can be gauged by the fact that in Africa and Asia non-food crops (export oriented agriculture), flexible crops (especially bio fuels) and multiple use crops (such as maize, sugarcane and others) dominate. The  implications of this type of investment and cropping patterns are enormous for the farmers. As recent studies show, flexible and multiple use crops are important to promote and sustain the financialisation of agriculture and the growing indebtness of farmers that has become common in African agriculture. Further farmers are unable to shift from these crops to cultivation of other crops because of the agricultural regime necessary for such cultivation. Studies from Africa provide more than sufficient evidence for this and also show the debt trap associated with such agriculture. Hence it is essential that the democratic movement questions this agricultural regime  since it has devastating implications for farmers.

THE OUT-GROWER

MODEL

As mentioned earlier, the second strategy followed by corporate houses is contract farming and the out-grower model. Here no direct control of land is necessary but the entire chain of inputs and marketing is controlled by the corporate houses. Though there is not much systematic data analysis of this model, there are abundant case studies. Perhaps the earliest venture in this regard has been ITC Company’s e-choupal project which stared from Madhya Pradesh. Here the collaborators of the company were rich large farmers who helped to organise and mobilise small farmers for soya bean cultivation. ITC enrolls lead farmers in all its clusters. These progressive farmers are early adopters of new technologies and production techniques who significantly influence other farmers. Lead farmers reduce transaction costs for ITC while allowing it to control production and improve product quality and supply chain efficiency. Each lead farmer supervises the production of 15-20 farmers and provides them with technical and other information and knowledge. Hence rich farmers who can afford to experiment and take risks become the collaborators of corporate capital and the link between this capital and the small farmer.

Another prominent example of this is the promotion of Bt Cotton and DEKALP Maize by Monsanto in India. As recent statistics show, Monsanto controls about 90 percent of cotton production with 60 million farmers using its inputs. It has also now started promoting maize, and one of the posters for its success is considered to be Project Sunshine in Gujarat whose limited impact and failure to increase the income of the farmers was documented by the Gujarat government itself in 2011. The risks of the out-grower model has been sufficiently pointed out in the African context where it has been in operation for a long time. An Oakland Institute study (2015) shows that farmers become dependent on large buyers and corporate credit for their operations, thus furthering the control of finance capital over agriculture. However the implications of this need to be studied further in the Indian context.

The preceeding discussion shows that experiences around the world show that a shift towards export oriented agriculture and the transnationalisation of agriculture results in the effective loss of control over land, and also makes farmers dependent on big capital for their survival. Scholars and activists need to understand all the dimensions of this phenomena in the Indian context so that the fast changing nature of agrarian relations can be captured concretely. As is well known, proper understanding of the phenomena is the first step towards formulating a credible strategy of resistance. Hence there is an urgent need to understand the fast changing character of rural India which is increasingly characterised by the semi-proletarianisation of a mass of the peasantry.