My take on Farm Acts and current farmers’ agitation (Without jargons of technical terms and quantitative estimates)

 

Of late, I have been watching the news of farmers’ agitation and also debates related. A large number of farmers are blocking traffic entering into Delhi from different routes like from Uttar Pradesh, Haryana and Rajasthan. Some are displaying their farm equipment, machinery, others swords too. Placards are in plenty, some even not related to farmers’ demands. With stock of food in store, a bit of entertainment and time in plenty, these so-called-farmers have made roads their home for months until their demands are met. Earlier, they have resorted to rail blockade too. And this agitation has been going on for more than a month, largely in the state of Punjab, and to some extent in Haryana and Rajasthan. Fortunately, later, the rail blockade was removed. Probably it still persists to the varying level in some places. The farmers’ aim is to choke trade and services in Delhi so as it forces the Central Government to accept the demand of farmers to repeal the farm Acts that the Government recently enacted after ordinance and then through the parliament.

The farmers allege that these Acts on being operational will affect their livelihood as their land will be seized by the other party for minor defaults if they enter into contractual agreement. Many farmers do enter into agreement with others, especially within the villages or towns and give the land for farming for a definite period on rental basis or to the cultivator on the mutually agreed terms. Most often, these terms are oral and contract is renewed on the yearly basis. However, farmers feel that with the Act in operation, not the big rich farmers in their neighbourhood, but corporates will come in to replace the traditional land lords and these corporates will then acquire their land. Punjab has an experience of working with these corporates. As far as I remember, many years ago, Pepsi had entered into agreement with Punjab farmers to grow tomato. I have not heard that Pepsi Co has acquired their land forcefully. Recently, a particular variety of potato is being contracted for growing as it is most suitable for chip making. Yet, there is no news of farmers’ being forced to renew contract or being forced to handover their land to the company. What farmers are fearing is that oral contracts that they have been entering into may be replaced by more formal legal contracts enforceable in the courts to which they are unaccustomed to? But if they do not want to enter into contract, they are free to do so. What kind of contract they want is their choice? It is hard to believe that they will be forced to hand over their land to the corporates. Unfortunately, the allegation extends to naming the corporates too, which is mudslinging and defamation, as none of these corporates have either entered into contract with the farmers and eventually acquired the land forcefully.

Farmers often complain that they do not get a fair price for their produce. And the mechanism available for this malady is the fixation of Minimum Support Price (MSP) for some of food grains that the Government of India has. The infrastructure for MSP based food grain purchase is well established in the states of Punjab and Haryana and may be in Rajasthan too for paddy and wheat. And farmers in these states take full advantage of this infrastructure by growing these crops on the large scale. The other states are also following this trend. Recently, Madhya Pradesh has emerged as the largest supplier of wheat to the Government. The Government of India procures food grains through the Food Corporation of India (FCI) which stores, distribute and sell it as per price mechanism through the public distribution system (PDS) available in various states. On an average, FCI maintains the stock of 60-80 million tons annually to ensure food security, although initial purchase may exceed this limit too. As farmers are paid higher price for purchase of food grains, the cost that FCI bears is higher over the time. However, it sells the same food grains through PDS at the lower price as those buying it are poor people. Thus, the difference between buying and selling price is borne by the Government and this difference is a subsidy that runs into millions of rupees that the Government bears every year in the name of food security.

Farmers fear that in the event of these new Acts, MSP will be withdrawn by the Government allowing prices to float as per the market forces of demand and supply. This will be taken advantage of by the traders and corporates as they will hoard food grains at cheaper rates to sell later with profit. The Government has time and again given an assurance to the farmers that MSP will not be withdrawn and will be available to the farmers in future too. Here is impasse. The farmers want this assurance to be enacted through the parliament, the Government does not want to do it as it says that this has been the case for years in the past. Once MSP is enacted, it may either conflict with international obligations (World Trade Organization treaty) or will be a great burden to the economy forever that its tweaking will be frightful for every party in governance, giving little leeway for correction.

The farmers see it as obstinate behaviour of the Government, calls it as dictatorial. Fortunately, the Government that we have is elected with party in power in majority. The Government does not think it so. And the farmers’ demands spin illogically as they want all three Acts scrapped without specific mention of those clauses affecting them. The Government on its part want to amend only those clauses that farmers feel unjustified.

Most of the debate hovers around the ill-intent of the Government that the farmers perceive as they feel that the Government need not have rushed these Acts. They talk about Swaminathan Committee’s recommendations and how they are not given their dues. Most of time, the debate relates the past behaviour of the parties in the corridor of power and out of power. Both parties in ruling and out of it, have reversed their positions in respect of trade in farm goods. So, it is a blame game between parties, as they are directly involved in the farmers’ agitation. It is not restricted to verbose, but actively encouraged by some as some states like Punjab have the opposition party in governance vis-à-vis party in governance at the Centre. This has spilled over internationally, with our patriotic Indian Americans, Indian Canadians, etc. living in comfort and marching in streets with demand of separate nation/khalsa. One nations’ Prime Minister interfered too by commenting upon the farmers’ agitation. The current system of marketing food grain through Agricultural Produce Marketing Committee Act involves commission agents (Adtya, dalal) who procure and sell the farm produce. These commission agents often influence the price to get bigger commission on buying and selling. Over the years, often role of these commission agents, often called as middlemen (bichole) is criticised as the price that consumer pays is far more than the price at which farmer sells. And hence, the direct marketing between producer and purchaser is encouraged so that both gains with fair deal. And the Government is moving in this direction by encouraging Farmers’ Producer Organizations. Further, the Government has allowed farmers to sell anywhere, thus unshackling restriction of trading farm produce within the state or towns, by using electronic National Agricultural Marketing (eNAM).

Time and again, it is clear that farmers are not increasing their income despite increase in farm production. And the past is witness to their agitations that vent their anger on the Government as well as those in between. Every agitation wants higher prices of farm produce, lower costs of inputs, better facilities of marketing, and subsidies-direct in the form of direct benefit transfer (DBT, cash transfer on per acre basis) or indirect in the form of waivers of charges on electricity, water, etc…The subsidies distort the economics of farming, but every Government in India and anywhere in the world including the developed countries resorts to it in one form or other in the name of ensuring food security and biodiversity of their own country. Ideally, as economists will say-market forces should rule the business of growing crops. However, as social scientists point out, there is no free trade, as each component is intertwined with complexity of infrastructure and financial needs and their societal value to reach the different strata of society.

Thus, if the past presents a gloomy picture, and feeding the people is the moral social responsibility, the Governments will continue to intervene and intervene, even if it is to the detriment of one section or other, in the best overall interests. But at the same time, every Government has to bear the burden of running the economy lessening dependence of loans and grants. And in the process, it will have to think out-of-box to take a long term reform shot at the economy. And as the developing countries depend mostly on their natural resources, farm being a major source of livelihood for majority, the Governments cannot ignore reforms in the farm sector. This agitation is alleged to represent vested interests (commission agents pocketing Rs 700 Crore annually on purchase of foodgrain for Food Corporation of India, the Govt subsidiary), as it is limited to the North India. While state Governments have supported these Acts on their party line, some like Tamil Nadu Government has recently expressed its support for these reforms, and others like Odisha are positively inclined. It is pointer that these Acts are in that direction. It may be a bitter pill now but could be a cure for persistent malady.