CSR in Agriculture

Why in News?

A decade ago, India became the first country to legally mandate Corporate Social Responsibility (CSR).

Corporate Social Responsibility (CSR) – It is a means of corporates contributing directly for the welfare of the society through socio, economic, environmental contributions.

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It involves taking responsibility for the company's impact on society and the environment, going beyond profit-making to contribute positively to the broader community.
Legal mandate- Section 135 of Companies Act 2013, mandates the eligible companies to spend 2% of the average net profits of the immediately preceding 3 years on CSR activities.
Applicability- The provisions of CSR applies to every company, its holding company, its subsidiary company and foreign company having in the preceding financial year
- Net worth > 500 crore
- Turnover > 1000 crore
- Net profit > 5 crore

India was the first country to have statutorily mandated CSR for specified companies.

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List of proposed CSR activities

Schedule VII (Sections 13) mentions activities that can be taken by companies in their Corporate Social Responsibility Policies.
Eradicating extreme hunger and poverty.
Promotion of education.
Promoting gender equality and empowering women.
Reducing child mortality and improving maternal health.
Combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases.
Ensuring environmental sustainability.
Employment enhancing vocational skills.
Social business projects.
Slum area development.
Contribution to the Swachh Bharat Kosh set up by the Central Government for the promotion of sanitation.
Contribution to the Clean Ganga Fund set up by the Central Government for rejuvenation of river Ganga.
Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development.

Activities Not Falling in the Ambit of CSR

The CSR projects that benefit only the employees of the company and their families.
One-off events such as marathons / awards / charitable contribution /advertisement / sponsorships of TV programs etc.
Activities which are not taken up in project mode.
Expenses incurred by companies for the fulfillment of any Act / Statute of regulations (such as Labour Laws, Land Acquisition Act etc.)
Contribution of any amount directly or indirectly to any political party.
Activities undertaken by the company in pursuance of its normal course of business.

What are the needs for CSR in Agriculture?

Role of Agriculture - Agriculture as a sector has a pivotal role in shaping the country’s socio-economic landscape.
High Human Resource in Agriculture - 47% of the India’s population depends on agriculture for employment and is significantly higher than the global average of 25%.
Low Economic Contribution - Agriculture accounts for 16.73% of India’s GDP.
New Concerns - Degradation of the natural resource base, stagnant farmer incomes, and threats caused by climate change are current focus of Indian Agriculture system.
Shift in Agri Focus - Shift in agriculture towards sustainability and modern agriculture makes a good case for CSR funds from the private sector.
Inadequate Public Funding - Indian agriculture needs more support as government funds often fall short.

Climate Action and Sustainability - Contribution to climate action and sustainability in the agricultural sector.

23% of companies had “environment and sustainability” as their CSR priority area.

Infrastructural Development – Development of grain banks, farmer schools, water conservation projects, and energy-efficient irrigation.
Promoting Organic Farming - Corporations can support organic farming practices by providing resources, training, and certification assistance to farmers.
Farmer Livelihoods - CSR programs can directly improve farmer livelihoods by providing training, resources, and access to markets.
Energy-Efficient Irrigation – CSR funds are supporting the development of energy-efficient irrigation systems, which reduce both water and energy consumption.
Precision Farming - Providing farmers with access to advanced technology and tools like GPS, drones, and IoT devices to enhance productivity and efficiency.
Supply Chain Sustainability - CSR can enhance sustainability throughout the agricultural supply chain by promoting ethical sourcing practices.

Common Areas of CSR and Agriculture

Inadequate Monitoring – Lack of method to determine the extent of funding going into agri projects and to categorise them based on targeted sectors of CSR activities.
Insufficient Reporting - Current reporting mechanisms have little to no emphasis on agriculture-related CSR initiatives.
Tracking Funds - Little chance of tracking the funds spent for agriculture-related initiatives alone.
Limiting Sectoral Impact Assessments – Most of the listed activities contribute to other sectors and non agri activities.
Lack of Clear Regulation of Fund Allocation - The listed activities currently emphasise companies understanding if they are eligible rather than explicitly delineating the sector to which their CSR funds can be flowed.

Specify agriculture as a distinct sector in CSR activities is crucial to engender more sustainable growth and effect a just transition.
Transition the reporting framework based on sectors receiving funds to help streamline and better target the available funds.
Identify the prevailing sustainability issues vis-à-vis agroecosystems and direct funds according to requirements to help drive tractable changes.