Thousands of farmers from Punjab and Haryana are protesting at Delhi borders against the recently enacted farm laws
It is no small paradox that the farmers’ agitation has made headlines in a year when government agencies have procured a record 202.77 lakh tonnes (lt) of paddy from Punjab this time, as against 162.33 lt in 2019-20 and the previous all-time-high of 176.61 lt in 2017-18.
The problem may well lie in communication – or shall we say the lack of adequate consultation, which has been the hall mark of the Indian political system, despite its flaws. In the absence of such parleys, many who have never seen a mandi in their lives and don’t plan to visit one soon, hold a definitive view on what is best suited for Indian agriculture!
Little wonder then that after a multi-pronged agitation launched in the national capital for close to two weeks, the government on December 9 proposed to give a 'written assurance' that the existing minimum support price (MSP) regime for procurement will continue.
It also offered to make necessary amendments on at least seven issues, including one to allay fears about the weakening of the mandi system. It has certainly ceded round-one to the protestors, revealing that farmers, unlike most other lobby groups in India, remain a formidable political entity.
MSP, as Union Agriculture Minister Narendra Singh Tomar has correctly argued, never had statutory backing. While MSP is declared for 23 crops, there are limits to its enforcement whether through government procurement or forcing private traders, organised retailers, and exporters to cough up the money.
From the benefit of hindsight, many of those protesting in Delhi, have long been votaries of reforms in the agriculture sector, specially of Agriculture Produce Market Committees (APMCs). There is no good reason for them to take a drastic U-turn now, unless the motivation is purely political.
Nonetheless, the haste in which the laws were pushed through gave government detractors the chance they needed to create a logjam in the national capital, aware that an agitation can only be successful if launched in New Delhi, where the national and international media is concentrated and where the political furore would be the loudest.
There can be nothing concretely held against contract farming, a subject that has been supported by previous Congress governments, in letter and in spirit. So, the obvious question to ask is why is there such a noise about corporatisation of agriculture?
Afterall, in some domains like poultry, fruits and vegetables, private players have done a commendable job. It is also not as if big companies are going to gobble up farmers’ lands – they are only interested in the produce. The answer, perhaps, lies in democratic politics: there is invariably a forked tongue, one that adopts a line in the government and the other, taking a strident line that comes naturally when in the opposition. We spoke to five leading agriculture economists and experts on how they saw the current impasse.
Siraj Hussain, Visiting Senior fellow, ICRIER and former Union Agriculture Secretary
The Union government’s offer to the farmers on December 9 is going back to the pre-legislation laws outside of APMCs. In a sense, it is an acknowledgement that agriculture continues to be a state subject, a prerogative of the state government.
The MSP issue is no doubt important, but the reality is that Indian agriculture is too diverse. Farmers of Punjab and Haryana are protesting because wheat and rice are purported to be taken out of the ambit of MSP. If the government had also included sugarcane in this list, farmers would have risen in protest in Maharashtra and Uttar Pradesh as well.
While it is a fact that reforms in the APMCs have been debated and sought for long, the way in which this government has rushed through the farm bills in Parliament, displays lack of adequate consultation. Even the labour laws, which were passed around the same time as the farm bills, were sent to the Select Committee of Parliament, as was GST, displaying the consensual approach towards policymaking. Finally, I would say that even if the government’s offer to farmers is a comedown, it is a healthy development.
Shashanka Bhide, Agriculture Economist, Senior Advisor at the National Council for Applied Economic Research (NCAER)
MSP is at the core of confrontation between the government and the farmers. The present framework of MSP is sustainable, even though there is perennial conflict between MSP and market price. However, there are no easy solutions. What do we replace the MSP system with?
Contract farming is a mixed bag. There are examples where it has done well, like in the instance of fruits and vegetables – the National Dairy Development Board (NDDB) and Safal are good examples. However, there are also instances where contract farming has not done well. Clearly, managing transition from MSP to more market-oriented systems is a huge challenge. Likewise, technology is important, but the point is who can invest? The fact is that there aren’t enough good counterfactuals.
PK Joshi, Former Director, South Asia, International Food Policy Research Institute
I for one have failed to figure out why the farmers are agitating! All the three bills are very sound, very good bills. Farmers and agriculture are getting just what they have been demanding for years. I can believe that traders are unhappy, but why farmers? It is amusing to see those who have been calling for reforms in the APMC Act for years, now doing a U-turn, demanding impossibly, that MSP be made legal.
MSP is a process where rice and wheat is procured by the government for a month during the season. There are dedicated mandis who do the selling and purchasing. It is not the government’s job to sell and buy. That used to happen in Socialist countries decades ago where the government fixed prices of food grain. It is the market that determines prices.
As for contract farming, what is the harm? About 80 percent of the poultry sector, fisheries, fruits etc are all contract farming, where big companies dominate. It is a win-win situation for all. Only crops have so far been kept outside the purview of the market, which also explains why Indian agriculture is facing hurdles.
YK Alagh, Economist and Former Union Minister
This is the worst time to implement agricultural trade policy, given that COVID-19 and lockdowns have placed restrictions on movement of goods and services. It should have been executed after the COVID-19 like situation were over.
I had suggested that about six-seven weeks ago, and I believe that Ramesh Chand of NITI Aayog had presented a similar paper, but obviously the bureaucrats are the ones who decide!
Punjab, Haryana and Western Uttar Pradesh are India’s grain bowl and would continue to be so. Therefore, not to have procurement in Punjab and Haryana does not make sense. You cannot change agro-climate conditions. For instance, Gujarat is a major producer of cotton and groundnut. So, these are state-specific and crop-specific conditions. Agriculture is the one good performing sector this year. We need to strengthen it, not feed off its glory.
India has the largest spread of agricultural markets in the world, but these markets are not APMCs. Without first-stage processing, in the absence of other infrastructure and with thin markets in commodities other than grains, the farmer knows he is at the mercy of the trader — he takes to the streets when his predicament is not recognised. The state cannot back out of its procurement responsibilities.Devinder Sharma, Food and Trade Policy expert
The main issue, which is not being discussed in the public domain, is that the farmers are protesting for an assured price. MSP is one mechanism that is in use. We need more. The other problem is that nowhere have market reforms helped agriculture. We would do well not to copy the failed agricultural reforms from the US and European Union. Indian economists are building up pressure to open agriculture to foreign direct investment (FDI) in multi-brand retail trade as well as in preparing the farm markets for commodity trading. If this had worked, I see no reason why the average farm income in the US should have nosedived in 2018.
The US Department of Agriculture (USDA) had estimated the ‘median’ farm income to be in the negative at minus $1,553 (or minus Rs 107,739). In other words, the average farm household in the US is living in debt, with the debt margin increasing substantially for half the households existing below the ‘median’.
I would say three things are significant here. One, APMC reforms are a must; we need to have 42,000 mandis instead of the 7,000 mandis, which we currently have in India. Two, make MSP legal and three, why not follow the Amul cooperative model for all crops? That is a big success story, and there is no reason why it cannot be replicated all over the country, instead of offering benefits to corporates and companies?