This paper reviews the nature, profile and functioning of South Asia’s agribusiness sector which has been undergoing rapid changes in the wake of globalisation. Its principal focus is the impact of agribusiness corporations, supermarket chains and such agencies on primary producers and rural poverty reduction.
Supermarkets presently accounts for a very small share of the fresh produce retail sales in the region but sales are increasing rapidly. Contract farming has been spreading fast as a mode of coordination and of procurement activity. Some sectors like perishable produce including vegetables, fisheries and milk are already witnessing new systems of coordination of production and processing activity. New players including MNCs are working with producers directly in India, and indirectly in Sri Lanka. However, a major shortcoming of this growth has been the exclusion of small farmers from various commodity chains which operate with contract farming at the producers’ level.
In Bangladesh, NGOs are taking an active role in facilitating small producers’ involvement contract farming. This development is missing in India and Sri Lanka. India, however, has taken up major legal reforms which aim, among other things, to regulate contract farming and to promote better linkages between firms and farmers.
Although, contract farming has led to higher incomes and employment for rural poor, it has created several problem such as:
- depletion of natural resources like water
- lack of proper working conditions
- gender-discrimination in wages and employment of young girls
- biased contracts
- lack of effective delivery of various services including procurement
The paper concludes that there is a need:
- to understand various commodity and product areas in agribusiness sector from the small producers’ perspective to design relevant policies and interventions
- to look at the institutional and organisational dimensions of the sector for better understanding for policy design and action.
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