Agricultural reform bills ignore lessons from other countries

Small & marginal farmers left at mercy of corporate behemoths


September 24, 2020

/ By / New Delhi

Agricultural reform bills ignore lessons from other countries

For the 145 million Indian farming families, the government has done little, save give them INR 2,000 per family under the PM-Kisan scheme and some food rations (MIG Photos/Varsha Singh)

The much touted agricultural reform bills passed by Parliament in a controversial manner come as a boon to global and Indian food behemoths eyeing the lucrative market, while putting the small and marginal farmers, about 86 pc of all Indian farmers at the mercy of these giants.

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Farmers’ rights activists say the agriculture reform bills passed by the Parliament in a chaotic manner open the floodgates for large corporate players to take a dominant position in the purchase and storage of food products and hence severely hurting the farmers of the country. ‘‘These are hasty moves in terms of what is actually contained inside the bills and the overall intent of the government where it is saying that, look we give up on investing for farmers, we cannot do this post-harvest infrastructure ourselves and we are not too worried about having to protect farmer’s interests and we believe that markets will take care of it. And that is where the government is going wrong. There is no free market out there and it doesn’t exist in the developed world either from where the government is importing its models and where the advisors think the country should head towards,’’ says Kavita Kuruganti, convenor of Alliance for Sustainable and Holistic Agriculture (ASHA), a network of farmers’ organisations, consumer groups, women’s organisations, environmental organisations, individual citizens and experts, with a presence in 23 states of the country.

‘‘We do know what has happened in the developed world since the liberalisation of the agricultural market. We do know that farmers suicide continues to happen even within the small percentage of population that remains in farming whether it is in France or the US. We do know that corporate monopoly has taken over there and the concentration of corporate power is only intensifying and not reduced. We know that farming there is to be cropped up by camouflaged huge subsidy which has increased nearby. So to think that the solution lies in this kind of liberalisation and to think that the 1991 moment is actually a positive moment to write home about, especially in the context of farmers, I think that the government is wrong in that. What we do need is a solution which keeps the Indian farmers in mind and their conditions in mind,’’ adds Kuruganti.

Indeed, the difference between an average Indian farmer with that of her counterparts from the US or EU is stark, if not nightmarish. First take the number of people dependent upon agriculture as their primary source of livelihood. In Europe, it is estimated that there are 10.5 million farms and about 12 million depend on it, while in US 2.05 million farms employ 2.6 million people, but in India over 70 pc of the population or about 800 million people depend solely on agriculture for their livelihood. The average farm size in India is a measly 1.15 hectares, while in the EU, it is about 50 hectares for a family-owned farm and the US is 180 for a family owned farm.

The average income of a US farming household was USD 72,481, higher than the national average of USD 63,179, as per government records. In the EU, it was about EUR 36,000, but in India, the average farm household earned only INR 77,112 per year. These are but some of the figures that indicate exactly where the Indian farmers find themselves faced with their brethren across the world, notably the developed nations whose examples have been cited by the government as case studies. The common refrain in the weeks leading up to the introduction of the bills in the Parliament was that the developed countries have fully functional markets and that have helped the farmers prosper, while the government has stayed out of the process entirely.

However, critics say that the government ought to have looked at these very countries and understood the real situation there as farmers continue to go on strikes frequently, dump their produce on roads as a sign of protest against low prices and the biggest refrain of course is the complete dominance by large companies of the marketplace as well as the entire process of farming. Indeed, it is the powerful farm lobby that the US President Donald Trump is hoping to curry favours with, as he goes into a rather tight race with his rival for the presidential election to be held on November 3. According to the US Department of Agriculture, since the onset of Covid-19, the United States government has dished out USD 28,000 in additional support to each of its farmers, on top of the annual subsidy of USD 11,000 a year that the government pays to the farmers. Both the subsidies are in addition to the money that the farmers make in selling their crop. For its 10.5 million farms, the EU has already agreed to hand out EUR 7,000 each. This has been topped by individual member states as per their needs and available budgets.

For the 145 million Indian farming families, the government has done little, save give them and other poor families about 5 kg food rations per month, in addition to INR 2,000 per family under the PM-Kisan scheme.

Despite the very small percentage of their population being dependent upon farming as a livelihood, governments in all developed nations have been extremely protective of their farmers and farm markets. The EU, for instance, has frequently been accused by India and other developing countries of closing its own food markets to imports while gaining greater market access to its food exports. Also, over two decades ago, the rich nations had promised to provide near open access to their farm markets to exports from developing nations. However, even today, the two economic behemoths – the EU and US continue to have much higher farm exports than imports. The EU exported EUR 138 billion of farm products in 2018 as against EUR 116 billion imports, while for the US the respective figures were USD 135 billion and 130.9 billion. Indian farm exports – its largest export commodity – stood at USD 39.4 billion and imports were USD 24.6 billion.

Justifying the Essential Commodities Act (Amendment) Bill, the government says that its objectives are enhancing farmers’ incomes and attracting private investment in post-harvest agricultural infrastructure in a predictable setting that were being jeopardised by the frequent ad-hoc orders being issued under the ECA.

A large majority of Indian farmers remain entirely dependent on rain and are highly vulnerable to climate change

However, the critics respond that the bill removes supply and storage of all food items from regulation except under some ill-defined ‘extraordinary circumstances’. Earlier, the law barred any other organisation except farmers or Farmer Producer Organisations from stocking beyond a limit. Farm activists say that once these restrictions are removed, it would open up the path for large multinational or domestic firms to outbid the entire market marginally, mop up the entire produce and then store it till the retail price rises enough for them to make a neat profit on the transaction.

The critics add that several state governments have already experimented with various aspects that the central government’s farm bills aim to do. ‘‘A majority of states have brought in those reforms already, be it direct marketing, private market yards, single licence across the entire state or contract farming and we have also states that have tried complete deregulation. But the sad reality is that none of these have solved the farmers’ problems,’’ says Kuruganti.

She goes on to say that the government must keep three things in the mind regarding agri-reforms.

‘‘There have to be three principles that the government must keep in mind. One is fair and remunerative pricing and leaving it to the markets does not help. It has not helped within the regulated market yards and it is very unlikely it will happen in unregulated market. Second is oversight. The government needs to know who the players are, what are the transactions and what are the prices that the farmers are getting. The government says it will do an occasional survey on retail prices, but that is entirely different. We are talking of what prices are the farmers getting. The third principle is to give authority to state governments as farmers cannot access the central government from all over India. The regulatory authority has to be closer to the area of operation and it should be easier for farmers to get there – panchayat, district and state level for that matter. It is a complete collapse of citizen entitlement if accountable government structures are not accessible to citizens,’’ she adds.

The combination of ECA and APMC bypass bills will give monopoly to any deep player with deep pockets, the critics say, adding that a company like the Adani Group is well placed to reap extremely high benefits from this with the kind of infrastructure, land leasing in several countries across the world and of course they also have ports. Earlier, the government had several regulatory tools like licensing, price control, compulsory licensing, stocking, information collection and produce for inspection records, entry/search/examination of premises and seizure.

‘‘All of this is being thrown away now and there is nothing to prevent Adani from buying large quantities of produce and stock it in their warehouse for selling overseas or here in India when the prices rise to a suitable level. Thus, the benefit of higher prices will not go to the farmers, but the big buying houses. Also, the bigger players are very likely to force the smaller traders and merchants out of the market, leaving the small farmers at the mercy of these handful of players, creating oligopolies that can be disastrous for the farmers,’’ says Karuganti.

She adds that in the developed nations a farmer is already bound to a company like Cargill from the time she sows the seeds to the time of selling the harvest. That is the kind of concentration of the supply chain in the developed nations.

‘‘Fools have to learn from their own mistakes where the wise learn from the fools’ mistakes and it looks like we don’t want to learn from what has happened in other countries,’’ concludes Kuruganti.



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