In a country of subsistence farming, where 80 per cent of the landholdings are less than two hectares in size, the next big step in boosting agricultural productivity and ensuring food security cannot be taken without centre-staging the small farmer. After years of continuing expansion of farming areas, and maximising yield through double cropping and improved seed quality, India is now experiencing stagnation in foodgrain production. The share of agriculture in the country's economy has been on the decline: in 2005-06, agriculture contributed merely 19.9 per cent of the Gross Domestic Product. The untapped potential is in the small landholdings, where technology adoption and marketing have been difficult because of limitations imposed by both the farm-size and resource constraints. The National Commission on Farmers headed by M.S. Swaminathan has proposed that small farmers should be given the power of scale in production as well as post-harvest operations to help them enhance their incomes. It has also highlighted the need to form larger groups of farmers engaged in the production of higher quality products for specific markets within specific agro-climatic zones. Farmers' collectives will be able to realise economies of scale, bringing down the costs of production and marketing.
Agricultural cooperatives have not been success stories in India. One reason is politicisation of enrolment and management. Another is excessive government control without commensurate government support and arbitrary waiver of loans. Commodity-specific collectives are an alternative, but politicisation can just as easily ruin them. Whatever be the form of the farmers' collective, there is no substitute for policy-based financial and institutional support from the government. The development of common property resources for small farmers and the consolidation of farms can also help reduce costs and raise profit margins. Small farmers can then be partners, not competitors, all of whom are vulnerable to exploitation by traders and middlemen. Another area of concern is the failure of land reform. In many States, land reforms have not been carried through because the political will is absent. The distribution of ceiling surplus land is essential for empowering small farmers. While free power and fertilizer subsidy might have benefitted small farmers to an extent, the real beneficiaries are the big players. Indiscriminate subsidies, which lead to opposition to subsidies as a whole, should end. Finally, small farmers have not been able to access credit at reasonable rates. A well-thought-out credit framework should be an important component of the new national policy for farmers.