Reforming Indian agriculture in a way that would match the country’s food needs with ensuring farmers’ security has been debated for decades now. But a reform package, that would be welcomed by farmers and consumers from Punjab to Kanyakumari was never going to be easy or simple.
This Central government’s version of bringing about much-needed agriculture reform were three new farm laws that overrode all the other laws that came before it. Unfortunately, the new laws addressed the various issues that farmers faced in much the same way that the blind men of the fable saw the elephant.
No wonder then while some farmers, especially in the south and west, were largely indifferent to the new laws, those from Punjab, Haryana and Uttar Pradesh in particular felt the laws would massively hurt their interests. Especially their assured income from government procurement at minimum support price of their three main products: wheat, paddy and sugarcane.
Not surprisingly, it was with exasperation that the Prime Minister announced on November 19th, that the farm laws will be repealed. He rued that despite all efforts, he was not able to convince some farmers that the laws would benefit them.
In a note circulated to MPs on the Repeal Bill, passed in Parliament without discussion on November 29th, the government said: “These enactments were made for the overall socio-economic development of the farmers and the rural sector, after extensive consultation with various stakeholders and suggestions and recommendations of experts, professionals, agricultural economists and expert committees over the years”.
But farmers refuse to go home
It is at once ironical and sad that despite the Prime Minister climbing down from his high horse, his government has not been able to get farmers to call off their year-long protest at Delhi’s borders. The protesting farmers refused to go back home till the actual repeal process was executed. And also till their other demands, which they have listed in a letter to the Prime Minister, are addressed.
The only sop they got was Union Agriculture Minister Narendra Singh Tomar announcing the formation of a committee — which would include farmers — to look into their demand for legal guarantee of a Minimum Support Price (MSP) for agricultural produce.
This is the most important and difficult decision the government faces now. The fact is the farmers’ opposition to the farm laws stemmed from their fear — justified — that these laws would, sooner than later, dismantle the mandis under the Agricultural Produce Market Committee Act in the states, particularly Punjab, Haryana and Western Uttar Pradesh.
The mandi syndrome
These mandis were where the farmers took their produce and government agencies bought all the wheat, paddy and sugarcane primarily, at the MSP which has been revised upward almost every year. In these states, the mandi system is well entrenched, and the market committees are packed with representatives of local politicians, who operate through the commission agents who facilitate the transactions. The commission agents provide the farmers some facilities that the government does not, like cash advances to buy seeds and fertilisers, loans to get a new tractor or marriage or illness-related expenses.
Not surprisingly, the commission agents backed the farmers’ protest. For if the mandi system is ever replaced by free trade, these commissioned agents will become redundant and corporate buyers can then deal directly with the farmers.
It is not that the farmers did not understand that the new farm laws would have been beneficial for them. But they realised that all farmers across the board would not benefit in a free trade of agricultural produce, and that corporates and big private traders would pick and choose farmers and farm produce and not buy at a government determined rate.
The gap between an educated, progressive farmer with the required knowledge and access to the latest technology to take advantage of a free market system and the small marginal farmer, comprising a majority of Indian farmers who will be left out, is huge.
Modern agricultural practices requiring costly machinery which are made available on loan or lease are nowhere as ubiquitous as an Ola or Uber. So there is every chance that the mandis will swiftly deteriorate without addressing the issues, mainly affordable access to capital and technology, that small farmers faced. Though the government repeatedly said they will not dismantle the mandi system, farmers know it would have happened anyway.
The MSP-based procurement may be seen as a welfare measure, but historically it was meant to address the country’s food security issues. The states of Punjab, Haryana and Western UP reaped the maximum benefits of the green revolution and grew plentiful wheat and paddy to feed the population, with enough available to build buffer stocks.
Farmers in these states benefitted hugely in monetary terms from this system. They did not have to hunt for a buyer and prices of produce that came under MSP category did not fall when there was a glut in the market. That system continues even though the buffer stocks are bulging and rotting in government godowns. Except in 2020 when the government dipped into it to distribute free rations on account of COVID-19.
The MSP-based procurement has also resulted in farmers of this region preferring wheat and paddy cultivation despite these leading to a tremendous fall in the water table, over dependence on chemical fertilisers to increase yield , and stubborn resistance to diversification of what the nation now badly needs — oilseeds and pulses, to name just two crops.
The demand for legally guaranteed MSP would have been echoed by non-BJP parties in Parliament where no debate or discussion was allowed on the repeal bills. Interestingly, the Prime Minister as chief minister of Gujarat had recommended such a legislation in a 2011 report of the Working Group on Consumer Affairs under his chairmanship.
An MSP law not feasible
But enacting such a law will not be as easy as bringing the farm laws of 2020 was, or repealing them has been.
Even as a committee looks into the issue of legally guaranteeing MSP—meaning procuring all agri produce grown across the country—common sense says that it will not be economically viable or logistically feasible. The government can certainly not be in the business of buying and selling agricultural produce when we want the government to govern, and keep off other activities which are best left to private players.
And what kind of deterrent will a law have for not buying at the MSP? If this is made a criminal offence, the country’s jails will soon be packed with private traders who pay below the MSP for purchases from a needy farmer.
The protesting farmers know all this all too well. There are two reports of the mid 1980s called the “Johal Committee reports”. They strongly recommend crop diversification, and mention the possibility of desertification of this fertile land if wheat and paddy continued to be grown on this scale. Recently, the vice-chancellor of Punjab Agricultural University guestimated it could even happen within the next ten years.
While the Prime Minister has clearly buckled under electoral pressure, the fact is his government did not talk enough to the farmers and assuage their fears and ego sufficiently before bringing in Ordinances first, and then shocked even their till-then most steadfast allies by hurriedly passing the bills in both houses in the midst of the pandemic.
It is not enough to distribute largesse like PM Kisan , short for Prime Minister’s Kisan Samman Nidhi, a fully Central government funded scheme, that gives every farmer an income support of Rs 6000 a year–which is not even a band aid really. Instead, the centre must urgently facilitate alternate opportunities for the millions of farmers, who will keep moving away from tilling their meagure land holdings, or stay exposed to the vagaries of the weather and pray that there is a buyer for his produce.
A way forward
There is one other important thing the government has to do before trying to reform the distressed agricultural sector. Amartya Lahiri, Royal Bank Research Professor of Economics at the University of British Columbia suggests that the key is to move labour from the relatively low income agricultural sector to non-agricultural occupations.
According to Lahiri, agriculture today employs 45 % of India’s workers. But the productive contribution of this huge labour force is only 10% of the productivity of the country’s entire labour force. And the way forward is to move this labour to other occupations by “expansion of large scale, low-tech industrial employment, which could absorb the surplus agriculture labour”.
“The need of the hour is for the non-agricultural sectors to step up and provide a viable alternative to low productivity in agriculture. In India, the majority of the non-agricultural employment growth has happened in the service sector”.
As one generation melts into another, leading to further fragmentation of farms, it makes sense that farmers’ welfare possibly lies in large scale development of low tech manufacturing sector, and not in laws that guarantee mandis and MSP. For agricultural productivity will not increase enough to sustain 45% of the country’s labour force.