Why Farmers Fear Efforts at Liberalization?

Farmers at Protest (Image Source: NBC News)

Efforts of liberalisation reforms being brought about in India since 1991, had initially spared the sector of agriculture from the advent of private-sector participation. The initial framework had involved a system of providing credit to farmers to invest in new technologies. The output was meant to be sold through the Public Distribution System (PDS), and procured by the Food Corporation of India (FCI). The purpose was to tap the increased output from the Green Revolution areas such as Punjab, Haryana and Western Uttar Pradesh and to distribute the surplus output to food deficit regions elsewhere in the country.

However, this system worked only till the time when there was deficit in certain regions. Once an agricultural surplus emerged, the FCI began to face the burden of unsold stocks. An article from The Wire states that the share of agriculture in GDP had reduced from 33% in 1990-91 to 13% in 2017-18, however the share of rural population to total population had fallen much more slowly, from 74% in the 1991 census to 69% in the 2011 census. Limited opportunities for workers to move out of the agricultural sector, and a reduction in land size due to inheritance across successive generations for farmers, reducing the weaker among them to labourers, could be the responsible factors for such constraints on the farming sector.

The proponents of liberalization have seen this growing crisis as an obstacle that the markets could easily resolve. The three farm-laws passed by the government that the farmers are protesting against, have been presented as instruments to open up agriculture to the market. The amendment to the Essential Commodities Act limits the scope of the government to intervene by reducing stocks when the prices increase, and allows those who package a food product to stock virtually as much as they like. A second legislative step has scrapped the existing support system for the Agricultural Produce Market Committees in the state, and the third act establishes the nature of agreement between the farmer and the trader. The proposed intention behind these free-market reforms has apparently been to provide the farmers with access to higher prices, by tapping national and international markets.

However, despite the attempts of economists to sell the dream of higher prices, it is the risk of an eventual crash in prices that been of more concern, and worry, to the farmers. The farmers are apprehensive of the imminent possibility that the large players with deep pockets would first starve the APMC trading yards of stocks, and once the APMCs cease to survive, the farmers would have no alternative left but to sell to the large private traders. Without APMCs to buy their produce during years of surplus, farmers would be left with large unsold stocks that could bankrupt them.

Moreover, the government has not provided any regulatory mechanisms or bodies within the reforms to prevent traders from indulging in malpractices, which has only strengthened the farmers’ distrust against the laws. In case of any arising dispute under the new reform-laws, the farmers can only approach the local Sub-Divisional Magistrate (SDM), and are barred from registering such grievances in the civil court. It does not seem like an extreme speculation to fear that the SDM as an institution could be heavily influenced by the political and economic clout of the large corporate houses, rendering farmers vulnerable, as in the absence of APMCs, they would have nowhere to go, in case they are unwilling to enter into agreement with the private traders.

The government claims to have based these reform-laws upon the recommendations of the MS Swaminathan Commission report.

To alleviate concerns of underemployment in the agricultural sector and generate more income through farming, the National Farmers’ Commission had been formed on November 18, 2004 under the leadership of the eminent agricultural scientist MS Swaminathan. With the aim of achieving a comprehensive and sustainable shift in agricultural practices back then, the Commission had submitted its final report to the then government on October 4, 2006.

The NDA government claims to have implemented the recommendations of the National Farmers’ Commission, known as the MS Swaminathan Commission report, of giving MSP of one and a half times the cost to the farmers. The facts recorded by The Ministry of Agriculture and Farmers’ Welfare however (published on an article in The Wire), tell a different story. Only 25 out of the 200 recommendations that the government claims to have implemented, were actually implemented under the NDA regime. The remaining 175 had been carried out during the preceding UPA rule.

The Swaminathan Commission report had also formulated the National Farmers’ Policy, which had incorporated key recommendations of the Commission. 201 action points were suggested in the policy, and although the Union Agriculture Minister Narendra Singh Tomar claimed during an interview to Dainik Bhaskar that 200 action-points within the policy have been implemented under the leadership of Modi government, as per the data obtained from the Ministry of Agriculture by The Wire, only 25 of the 201 action points listed in the policy were implemented during Modi’s tenure.

Tomar also claims that the current farm-laws are based on the recommendations of the Swaminathan Commission. But the intricacies of the legislation do not support his claim.

Within the context of the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act which allows the sale and purchase of agricultural produce outside the APMC, even though the Swaminathan Commission report had indicated that there is an urgent need to bring about changes in the APMC system, nowhere did the report state that the Central government can formulate a law regarding it. The Commission had rather recommended states to make changes in their respective APMC Acts.

The Swaminathan Commission had asked for the tax imposed on mandis to be applied as ‘service charge’ instead of ‘compulsory tax’, so that the same tax or levy is paid, for whichever facility used. The BJP leaders, including the prime minister and union agriculture minister, have termed it as a wrongful tax in an apparent bid to gather public support, and have been insisting that no tax is being imposed under the new system proposed by the farm-laws.

According to documents obtained by The Wire, the union finance ministry has justified that the amount collected by the mandis is not tax as the concerned APMCs, provide services to the people in exchange of them.

As per an article on Scroll, the farmers and their leaders are “smelling the political intent behind these laws”, which the experts in support of the legislations are reading “somewhat innocently”. Those who share the view of these experts perceive capital-investment, private-sector participation, scientific expertise, and technological futurism as a formulaic package, that is being deemed essential to catalyse rural and agrarian development.

These experts have broadly dismissed the significance of values related to democracy, ecology and equity in decision-making as inferior to the role of “facts”. Politics is suspected by them to be a messy affair that hinders the sincere work that they do to bring about growth, progress and prosperity to the people. This view was most aptly reflected when NITI Aayog CEO Amitabh Kant had declared during an online discussion that India is “too much of a democracy”, that purportedly acts as a roadblock to the path of “tough reforms”.

A depoliticized and narrow technical perspective of the problems at hand has led to experts providing technical fixes rather than comprehensive solutions that would resolve structural iniquities within the socio-economic and political realm of the country.

The new farm-laws reveal that the central government has simplistically concluded that bypassing the APMCs alone would offer the best solution to raise the efficiency of the agricultural markets in India. The experts with their reductionist approach, considered bypassing the mandis to be an easier and faster solution than, working with multiple state governments and incentivizing more players to enter to participate in the auctions, which could have made the mandis more competitive.

The lofty promise of technological and private sector-driven futurism that the dominant media discourse has hurled at the farmers remains unfulfilled, though. Several socio-economic shocks that were induced by centralized decision-making that the farmers have had to suffer since demonetisation, only add to their apprehensions about the privatization reforms being brought about by the new farm-laws.