WHY SHOULD INDIAN AGRICULTURE BE LIBERALISED WHEN IN MOST COUNTRIES GOVERNMENTS SUBSIDISE IT?
Without some support from the state, the smallest of Indian peasants would be even more vulnerable
Written by Christophe Jaffrelot , Hemal Thakker |December 3, 2020
Indian farmers, in particular, worry that the farm bills may clear the way for giant Indian companies.
On September 27, President Ram Nath Kovind gave his assent to three contentious farm bills passed by Parliament — The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 (FAPAFS), the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (FPTC) and the Essential Commodities (Amendment) Act, 2020 (EC). These bills were passed by the Rajya Sabha with a voice vote in spite of the Opposition asking for a recorded division of the votes.
Essentially changing the rules around sale, storage and pricing of farm produce, the bills will permit private buyers to hoard essential commodities for future sales, which only government-authorised agents could do earlier, along with changing the rules for contract farming. The bills have been touted as a watershed moment for Indian agriculture by the Prime Minister, as the government claims that the reforms would remove the shackles from the agriculture sector and free farmers from the stranglehold of middlemen by creating one market. However, farmers’ unions and groups have concerns about two major issues: First, since the Minimum Support Price (MSP) is not mentioned in the bills, they fear that they will lose the assured option of selling to the APMC mandis and that this will lead to corporate exploitation. Second, they apprehend a process of corporatisation of agriculture in the absence of regulation, as agribusiness firms might well be able to dictate both the market conditions (including prices) and the terms of contract farming as small farmers do not have the same bargaining power.
Indian farmers, in particular, worry that the farm bills may clear the way for giant Indian companies. When Akali Dal leader Harsimrat Kaur Badal resigned from the Narendra Modi government, she said, citing a farmer from Punjab, “Jio came in, they gave free phones. When everyone bought those phones and got dependent on these phones, the competition was wiped out and Jio jacked up their rates. This is exactly what the corporates are going to do [with agriculture]”. Some farmers’ groups in Punjab forced the closure of Reliance stores in protest as Mukesh Ambani expressed his interest in agriculture. In 2017, he had declared “Agriculture, education and healthcare — all three are on our roadmap…”
The Adani group has also made some investments in the agri-business infrastructure space. “At Adani, we want to be known as the big agri-infrastructure player and Adani Wilmar to be a big food company in the country,” said Atul Chaturvedi, CEO, agri-business at the Adani Group, in an interview. Adani Agri Logistics has invested in the grain storage-handling-transportation network, while the Adani Wilmar joint venture is also looking to expand in food commodities.
The farmers’ suspicion is understandable. Not only because big players have a lot of clout, but also because past experiences have not been rewarding. For instance, the management of the crop insurance scheme against natural disasters, introduced in 2017, was handed over to one of Anil Ambani’s companies, among others. As P Sainath has reported, the farmers did not profit from it.
Why should agriculture be liberalised in the first place when in most countries governments subsidise this sector? In the US, the agriculture sector is expected to receive $46 billion in federal subsidies this year. This accounts for about 40 per cent of the total farm income and, if not for those subsidies, the US farm income was poised to decline in 2020, according to a report by The New York Times. Similarly, the European Union’s Common Agricultural Policy spending has averaged €54 billion annually since 2006.
Without some support from the state, the smallest of Indian peasants would be even more vulnerable. According to provisional numbers from the 10th Agriculture Census 2015–2016, in India, “smallholder and marginal farmers” (those with less than two hectares of land) account for 86.2 per cent of all cultivators — that is, almost 126 million people. For them, it is inconceivable to carry their produce to other states or far-off places to sell. They will not easily resist the deals “proposed” by agribusiness firms. Should they disappear in the name of the modernisation of agriculture, which means concentration of land and mechanisation?
That could be a good idea if the industrial sector could offer them jobs. But the share of the secondary sector in total employment has been stagnant at around 26 per cent (as against 41 per cent for agriculture) and its share in the GDP is declining. The tertiary sector has not been able to create enough jobs either and most migrant labourers in cities live in precarious circumstances, as the reverse migration due to the COVID-19 lockdown clearly demonstrated. Should more peasants leave their land to end up in cities without proper jobs? Already, the gap between urban and rural India in terms of per capita resources is widening.
It would be far more prudent to increase public investment in agriculture in terms of infrastructure and in the form of income support schemes like the Rythu Bandhu in Telangana or the Krushak Assistance for Livelihood and Income Augmentation in Odisha. This, coupled with ensuring that no transaction can be done below the MSP, would help alleviate some rural distress.
The law promises people with disabilities equality of opportunity & accessibility, but our practices deny them that
Why should Indian agriculture be liberalised when in most countries governments subsidise it?
But money is not the only problem (or solution). For making farming sustainable, the government should draw inspiration from Andhra Pradesh’s community managed farming model which promotes agro-ecological principles with the use of locally produced, ecologically sustainable inputs, focusing on soil health, instead of depending on chemical fertilisers. This model is more resilient as well as more biodiverse in nature and provides a safety net to farmers.