An opportunity for real reforms
A series of events in the past few months – promulgation of three ordinances for reforming agriculture markets in the country in June and passing of bills in the two houses of Parliament recently – have triggered widespread protests by farmers.
The major arguments against the bills are that they will pave way for ‘corporatisation’ of agriculture and result in withering away of MSP regime implemented through Agriculture Produce Market Committees.
Both APMC system and MSP regime are beneficial only to a minor section of farmers. A large majority of smallholding farmers sell their produce to local traders, at terms favouring the latter, outside APMCs.
According to the Shanta Kumar Committee, set up to make recommendations on restructuring of Food Corporation of India, less than 6 per cent of farmers have gained from public procurement of wheat and paddy.
Agriculture market needs reforms and it is long overdue. Giving MSP is not a sustainable strategy in the long run, particularly for non-food grains.
The bills have come with several positive features, including removal of licence requirements for buyers, changes in market fees and levies for farmers, more flexibility to establish trade areas, facilities for inter-state trade and provisions for dispute settlement.
Unfortunately, the bills are gravely inadequate to bring about any radical changes in the lives of majority of farmers. They have missed the ground realities of poor enabling conditions which are prerequisites for making markets efficient. At best, the bills are likely to formalise already existing practises.
Both the government and protesters have unfortunately missed addressing the real issues faced by majority of farmers. Every crisis is an opportunity in disguise. Notwithstanding the deficiencies, the new bills offer a rare opportunity for the mandis to transform themselves into farmer-oriented institutions and stay relevant. Modernisation of mandis will create a win-win situation. Policies must be put in place to build local capabilities of farmers to actively participate in the market, improve governance system and step up delivery of public goods. The present crisis offers an excellent opportunity for initiating some real reforms.
With Farm Bills, farmers at risk
The three Farm Bills that the Modi government rammed through Parliament do not strengthen farmers’ capabilities or bargaining power. Instead, they increase their vulnerability to exploitation by stronger, corporate interests. There are three ways to raise farmer incomes: 1. Provide direct governmental support ; 2. Protect Minimum Support Prices, while providing the freedom to sell anywhere; 3. Invest in infrastructure for storage, value addition and marketing.
Rural India is in deep distress. Last year, NSS report revealed that people had cut down on food consumption, signalling rising poverty and worsening malnutrition. In 2018-19, agricultural growth fell to a 14-year low and farm-gate prices crashed to an 18-year low. This was before the pandemic! Post the unplanned lockdowns, things have worsened.
The Farm Bills are a precursor to dismantling the MSP regime. The government claims that MSPs will be protected, but it could have legislated that all purchases will have to be at MSP or above. The Modi Government hurriedly announced the MSP for the next rabi season much in advance, and as usual, termed it an historic increase. It is indeed historic because it is the lowest increase in wheat MSP in 10 years.The Farm Bills practically resurrect the exploitative zamindari system. A “farming agreement” without adequate safeguards provides big private players an opportunity to exploit small and marginal farmers. The government has essentially left farmers alone without institutional support mechanisms, when they needed to be strengthened.
Creation of multiple markets close to farmers must precede opening up the market. Without such a competitive landscape, incentivising private players to procure outside APMCs reduces farmers’ bargaining power. India, in recent years, has seen different industries/sectors becoming oligopolistic. It will be devastating if this were to happen to agriculture, which supports 62 crore Indians. Agriculture needs a reform, but Farm Bills are a deform. Without securing the rights of vulnerable farmers, the government is pushing them into an abyss. Disruption for its own sake brings misery, as evidenced by demonetisation and GST. Empowering farmers through a range of interventions must precede throwing open agriculture to competition. Because these Farm Bills fail to do so, they must be rejected.