Agriculture now requires a 'Credibility Revolution'

Nobel Prize winners for Economics 2021. 

Pic courtesy: cbsnews.com

The Nobel Prize for Economics this year reflects a shift in global economic thinking towards a more pragmatic and realistic approach to achieve growth. Knowing the obscene wealth equality the world is witnessing, where free markets have helped accumulate wealth in the hands of a few, the award this year will hopefully encourage economists to be more pragmatic and not to be swayed blindly by neo-classic theories.

What makes the award this year stand out is evident from the citation, which says: “This year’s Laureates have provided us with new insights about the labour market and shown what conclusions about cause and effect can be drawn from natural experiments. Their approach has spread to other fields and revolutionised empirical research.” Not only for the labour markets, the approach is also vital for the future of global agriculture and the transformation in food systems the world is expecting in the years ahead keeping the SDGs in focus.

We will try to understand how the “credibility revolution” in empirical economics, based on “natural experiments” can play a significant role in undoing the great harm supply demand principles have done to farm livelihoods everywhere in the world. After all, if markets were so good, and as we are repeatedly told that supply demand will lead to price discovery, why is that farmers across the globe are often not even able to recover the money they spend on producing a crop? Why is that farmers are faced with a terrible agrarian distress, and are sometimes left with no other option but to take the fatal route? Perhaps the Royal Swedish Academy of Sciences, which awards the Nobel for economics, should now focus on the evidences available in farming to analyse the causal relationships, not forgetting that nearly half the world’s population is directly and indirectly involved with agriculture.

This year’s Nobel Prize for Economics, which has gone to three US-based economists – Prof David Card of the University of California, Joshua D Angrist of MIT and Guido W Imbens of Stanford University – explain the importance of “natural experiments” over mathematical experiments, which can be easily manipulated. While Card, along with Kruegar, established that higher labour wages leads to higher employment, countering the market economy argument which emphasises on keeping wages low for increasing employment; whereas Angrist and Imbens demonstrated how investment in school education can help in higher incomes for students.

Knowing the pitfalls of applying randomised trials and mathematical experiments based on various models and formulae, which can be easily manoeuvred to match the end result the researcher wants, there is a growing realisation for the need to move instead towards evidence-based research. This can help in reformulating and redesigning the economic welfare policies in a manner that it is not only effective but also leads to an all-encompassing economic growth. For instance, the Nobel this year challenges the labour reforms that India is aggressively pushing for, which relies more on deregulating minimum wages for labour. If workers get higher wages, let’s not forget we also have the possibility of pulling more people out of extreme poverty.

In America, if the minimum wage by 2024 is raised to $ 15 per hour (from the existing $7.25 unchanged since 2009), studies show it will benefit 40 million workers.

Now let’s try to see how realistic projections based on clearly available evidence can help transform global agriculture. There is no need for any randomised trials, and nor is there any need for applying any mathematical models to know how farmers have been at the receiving end all these decades. Based on ideological perceptions as well as on some outdated economic principles, policy makers have left prices to be determined by market forces. The assumption that less the number of people in agriculture means higher farm income, and the bigger the size of farm means a higher bargaining power to achieve a higher price has fallen flat. In America, ever since Richard Nixon’s agricultural secretary Earl Butz had made that infamous statement asking farmer to ‘get big or get out’ it hasn’t helped farmers get a higher income. Nor has the large farm size led to a higher price discovery for farmers.

Despite less than 2 per cent of the American population remaining in agriculture, the median farm income has been in the negative for over a decade. In 2020, American farmers were saddled with a bankruptcy of $ 425 billion. The rate of suicide in rural areas is higher by 45 per cent compared to the urban centres. The average farm size has risen to 444 acres and still the farm incomes are very low. In Europe, the situation is no better. With hardly 1 or 2 or 3 per cent of population left in farming in European nations, farm incomes have dwindled over the decades. In early March, French farmers had hung suicide dolls on trees outside Parliament to show the devastation and distress farmers were faced with. Like in US, massive agricultural subsidy support is required year after year to sustain the farming population. Prices have either remained static or have declined over the years thereby acerbating agrarian distress. Farmers have increasingly abandoned agriculture and migrated to the cities looking for other jobs.

Even in far away Australia, where the average farm size is 4,331 hectares, nearly 25 per cent of the farms have closed down in 30 years. The rate of suicide among males in agriculture is twice the other sections of the society. So is the case with farm workers.

For past several years, I have consistently talked of the severe farm distress that prevails in the rich and developed countries. The evidence is all there. Despite free markets to be the dominant economic mantra, farmers everywhere in the world have been deprived of a living income. With the economic design aimed at sacrificing agriculture for the sake of economic growth, farming is in the hands of Big Business. The international trade policies too are designed to help the big multinational companies. Whether it is the World Bank/IMF or the World Economic Forum the same agribusiness design is now being pushed onto the developing countries, with the same flawed promise of increasing profitability for farmers. It didn’t happen in the developed world, and it is not going to happen either in the developing countries. A London School of Economics study shows that the same market reforms in agriculture failed to help farm incomes prop up for small producers in Kenya.

But with policy planning, academia and media in the clutches of Big Business, agriculture so far has remained untouched by the “credibility revolution”. #

Source: Credibility revolution can better farmers lot. The Hans India. Nov 14, 2021. https://www.thehansindia.com/business/credibility-revolution-can-better-farmers-lot-715198?fbclid=IwAR2xxyqA7K26e7_KCV6j8E9yFwljy2UpeV42EcA36abKO2DkFOldKch5ft4

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How twisted TV debates are vilifying farmers

Pic courtesy: agronicfood.com

As the Supreme Court takes suo moto notice, a comparatively longer horrific video clip that has surfaced clearly shows a Union Minister’s convoy mowing down peaceful protesters at Lakhimpur Kheri in Uttar Pradesh. While protesting farmers were hit from behind, killing four and leaving several injured, another four died in the violence that followed. 

While this ghastly incident has caused outrage across the country, it has also exposed the diabolic face of the society wherein all efforts are being made by a dominant section of the educated (and the media) to shift the blame on the farmers for stone pelting leading the drivers of the cars to lose balance and hit them. If the videos had not appeared, this biased thinking would have certainly gained acceptance or at least created confusion among a large section of the general public. In fact, the ease at which such kinds of insinuation are being casually thrown at farmers brings out the discrimination, contempt and bitterness that prevail against the farming community. 

Call it rural urban divide or a digital divide or reflections of the growing disconnect with the farming population at large, but an underlying feeling of bitterness and indignation is quite visible. In any conversation, you just have to scratch a bit and the bitterness they harbour spills out. Farmers are considered to be a burden on the society, living on freebies and subsidies. “Why are farmers allowed to protest in cities, obstructing traffic and causing inconvenience to people,” I am often asked, with some going to the extent of even saying that farmers live on the taxes the middle-class pays.   

Often in response to my tweets wherein I share reports of farmers committing suicide, a few trolls go to the extent of retorting: “These people in any case should have died. They are a scum of the society.” While it renders me speechless, at the same time it shows the hard feelings and enmity that prevails. Take the case of protesting farmers at the borders of New Delhi, besides being hurled with choices abuses, an effort has also been made to brand the farmers movement as a handiwork of khalistanis, 'terrorists' and ‘anti-national’ forces. As if this is not enough, the more you watch TV debates, the more you get dismayed. Most anchors and panelists, who probably cannot distinguish between wheat and barley plant, are the ones who will tell you about the virtues of the three central laws that the farmers oppose. 

The hostility that prevails is the outcome of a hugely discriminatory narrative that has been created. It actually stems from an economic design that relies on sacrificing agriculture for the sake of the industry. It relies on keeping food prices low so as to keep economic reforms viable, to force people from the rural areas to increasingly migrate to cities which are in need of cheap labour. For at least four decades, farm incomes have either remained static or declined. This has kept food prices low for the urban population, and has also kept inflation under control. 

The latest Situational Assessment Survey 2019 has clearly shown that farm income from crop cultivation alone has come down since the time the last survey was held in 2013. The average income of a farmer has been computed at Rs 27 per day, which I find is less than what a lactating cow can provide. This is primarily because farm gate prices have been deliberately kept low. I have often explained how the wheat price has increased by 19 times in 45 years period, between 1970 and 2015, while the basic pay and DA of government employees had gone up by 120 to 150 times, and that of college and university lecturers/professors by 150 to 170 times in the same period. 

For the same reasons, Economic Survey 2016 told us that the average income of farmers in 17 states of India, which means roughly half the country, stood at a paltry Rs 20,000 a year. In other words, farming families were living on less than Rs 1,700 a month in half the country. As expected, there was no outrage when I talked of the miserable conditions farmers were living under. Interestingly, government officers get almost Rs 20,000 a year simply as washing allowance. Each of the 11-lakh non-gazetted Railway employees will get a bonus of Rs 17, 171 this year, which is almost equivalent to what farmers earn annually in half the country. 

Yet, an impression is created that farmers lead a comfortable life. They don’t pay taxes. In reality, despite their meager incomes, farmers pay indirect taxes on everything they buy. Even when a farm labour buys chappals for Rs 30 a pair, they have to pay a GST. And let’s not forget, farmers don’t get an inflation-linked DA. Even the MSP that the government announces is often less than the prevailing rate of inflation which means even the cost of production is not covered. More so, a Producer Subsidy Equivalent index that the Organisation for Economic Cooperation and Development (OECD) prepared for the past two decades, Indian farmers have been negatively taxed all these years.  

But when some State governments waive farm loans, hell breaks loose on the media. A number of TV shows called for waiving the waiver. But when did you watch a TV show on corporate bad loans, which are several times more? While roughly Rs 2-lakh crore of outstanding farm loans have been waived in past five years, more than Rs 10-lakh crore of corporate bad loans have been written-off in the past eight years. So much so that a former CEA had gone to the extent of saying that writing-off corporate bad loans leads to economic growth.  

This is how seeds of discrimination are deliberately sown against farmers. The contempt and resentment that a large section of the middle-class carries against farmers is borne out of misinformation and twisted facts that are routinely thrown at them. This flawed impression needs to be corrected, a role that the government, the academia, the civil society and the media must undertake. Farmers are not a burden, but in reality are the ones who continue to carry alone the burden of subsidizing the nation. #

Source: How twisted TV debates are vilifying farmers. Bizz Buzz. Oct 8, 2021. 

https://www.bizzbuzz.news/economy/how-twisted-tv-debates-are-vilifying-farmers-1040214?fbclid=IwAR0RBuVpmCCzlCxTgxvFFiXqi1Z8yFsfcAtI3AaGcx-O4ksFwcpM3CRIJXk

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The reforms Indian agriculture needs

Pic courtesy: rediff.com 

Farmer protests show no signs of ending. For almost ten months now farmers have been protesting at the New Delhi borders. While the protesting farmers are not giving up on their basic demand calling for the repeal of the three central laws, the Centre remains adamant saying that it is willing to accept amendments to the three laws but complete withdrawal is out of question. 

As the stalemate continues, a question that is being repeatedly asked is if the three laws are not acceptable for farmers, then what kind of agricultural reforms would be required. After all, even before these laws were introduced Indian agriculture was (and is still) passing through a terrible crisis. Just withdrawing the laws would mean returning to a status quo which in any case is not going to help the farming community struggling to somehow survive.   

That Indian agriculture is passing through an appalling crisis was never in doubt. But the latest report of the Situational Assessment Survey 2018-19 which looked into agricultural households and incomes in rural India only comes as an acknowledgement of the worst fears. This comprehensive study, based on an extensive survey, clearly shows that the income of an agricultural household from crop cultivation alone has been on a steady decline. In fact, an average farm household in 2018-19 earned more from wages than from crop cultivation.  

This survey report should in fact tell us why farmers are braving weather extremes to stay put at New Delhi borders. After all, as I have always maintained, the compound anger the protesting farmers carry is the result of continuous neglect and apathy they have lived with. Agriculture has been deliberately kept impoverished to keep economic reforms viable. That’s how the economic design was cast. In other words, the entire burden of keeping food prices low has been borne by farmers, which means in real terms, farmers alone have been subsidising the country. 

These are the same farmers’ whose hard work and labour results in a record harvest year after year, allowing the government to pat itself on the back, taking credit for a record production. In 2018-19, farmers produced 187.75 million tonnes of milk, 174.63 million tonnes of paddy and 102.19 million tonnes of wheat. In addition, farmers produced 320.47 million tonnes of horticultural crops, including fruits, vegetables, spices and plantation crops. But despite the bountiful harvests, farmers have remained at the bottom of the economic ladder. To keep food inflation low, and to hasten migration to the cities which are need of cheap labour, agriculture has been very conveniently sacrificed. 

For macro-economists, agricultural growth helps raise the quarterly as well as the annual GDP figures. So much so that even during the lockdown, when economy contracted, agriculture remained the only saviour registering a positive growth throughout. Agriculture, in other words, had lived up to its reputation of being the mainstay of the economy. But that is where the appreciation and acknowledgement ends. Mainline economists and policy makers have remained not even remotely concerned of the continuing plight of the farming community.   

Despite all the subsidies and programmes that are announced from time to time, which gives a false impression of agriculture being hugely supported, the latest Producer Subsidy Equivalent estimates prepared by the Organisation for Economic Cooperation and Development (OECD) shows that in reality India had negatively taxed its farmers in the past two decades. 

This brings me back to the question as to what kind of reforms does agriculture need. After all, agriculture continues to be in the throes of a serious crisis and has been crying for attention. The immediate need is to pull farmers out of the poverty trap by making farming a viable proposition. This is possible only if policy makers are willing to take some bold steps to realise the Prime Minister’s vision of Sabka Saath Sabka Vikas.

Since this question is asked again and again, and even at the cost of sounding repetitive let me reiterate that the three pillars of reforms that Indian agriculture desperately need are:  

1) Make Minimum Support Price (MSP) a legal right for farmers. Just like Spain brought in a law in Feb 2020 to make trading below the cost of production illegal for agricultural, horticultural, livestock and animal husbandry, it is high time India too brings in a legal provision making trading below the MSP to be illegal, and prescribe suitable penalties for defaulters. At present, while MSP is announced for 23 crops every year, effectively it is implemented for only two crops – wheat and paddy. This provision has to be extended for all the crops for which prices are announced. It does not however mean that the entire farm produce has to be procured. It only means setting a benchmark price below which farm gate prices for farmers are not allowed to fall. This has to be accompanied by a direct income support programme for marginal farmers with less than 1 hectare landholding. 

2) Expand the network of APMC regulated mandis. At present, we have approximately 7,000 APMC mandis. Although a lot of discrepancies have emerged in the way APMCs are managed, the need is to make corrections and not to throw away the baby with the bathwater. In fact, to minimise distress sale and ruthless exploitation by trade, markets need to come closer to the farm. India therefore needs 42,000 mandis if a market has to be provided within 5 km radius. Private sector should be invited to set up mandis to operate under the same APMC marketing norms. This will inculcate healthy competition. 

3) Replicate the Amul dairy cooperative model for fruits, vegetables, pulses and oilseeds to begin with. Instead of inviting corporate into agriculture, strengthen the cooperatives. This will need appropriate public sector investments, and structural changes in agricultural marketing set up. And let’s not forget. When consumers buy milk from dairy cooperatives, nearly 70 to 80 per cent is the share of farmer in the end consumer price. In America, where free markets operate in agriculture, only 8 per cent is farmers share in the end consumer price. What we need is perfecting a system that provides 70-80 per cent of the end consumer price to farmers. #

Source: Making farming viable key to pull farmers out of debt trap. BizzBuzz. Sept 17, 2021. https://epaper.bizzbuzz.news/Home/MShareArticle?OrgId=17924a99c3e 

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Time to rewrite reforms, bring in a desi version.

Pic Courtesy: Deccan Herald

At a time when there has been enough of eulogising and back-patting to celebrate the 30^thanniversary of the 1991 economic reforms, former Prime Minister Manmohan Singh, the main architect of these reforms, has in a statement said: “It is not a time to rejoice and exult but to introspect and ponder. The road ahead is even more daunting than during the 1991 crisis.” 

Coming at a time when just two of the global studies -- the first being the first instalment of the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) sounding a ‘code red’ warning for humanity, with the UN Secretary General Antonio Guterres categorically stating: “The evidence is irrefutable; greenhouse gas emissions are chocking our planet and placing billions of people in danger.” What the crucial report fails to however acknowledge is how neoliberal economics, treating GDP as a measure of growth, has literally heated up the planet. Or else, how can one explain that the world’s top 1 per cent add twice the amount of emissions that half the world generates.  

The warning is to ensure that the world doesn’t breach a temperature rise of 1.5 degrees Celsius in another 20 years. But considering that 1.1 degree Celsius increase has already been recorded, I don’t know how many more years it takes to drum up heat by another 0.4 degrees. Nevertheless, the way the world has heated up resulting in the climate going topsy-turvy in the years of industrial growth shows there is something fundamentally flawed with the way the economic growth design was laid-out. 

The second of the global study is the successive rounds of inequality reports presented by the international charity Oxfam at the World Economic Forum clearly bringing out how the rich have become richer, and the poor getting poorer -- a strong pointer to the immediate need to rethink reforms. If the top 1 per cent in India holds a wealth that is equivalent to more than four-times the wealth held by 73 per cent of the population, the role economic liberalisation played in exacerbating inequality cannot be glossed over. If Jeff Bezos, who recently took a space flight, can earn $ 8 billion a day and still pay less tax than a stenographer it tells us how the global model of economic reforms have helped the super-rich to amass wealth. In India, like elsewhere, easy money and economic stimulus have gone into the stock market. No wonder, the stock markets are booming at a time when the global economy is struggling. 

Inequality is bad economics, and accumulation of vast wealth by a tiny group of people is clearly an outcome of some inherent flaws in the growth prescription. As the advocacy group Public Citizen tells us that the collective wealth of CEOs of US Big Tech companies, which had reached $ 651 billion in 2021, was enough to wipe out global hunger, get rid of malaria, vaccinate the world with Covid shots, and end homelessness in America. And these billionaires would still be left with enough to splurge. 

In India, a tiny fraction of the huge wealth that the top 1 per cent has accumulated should have been enough to wipe out poverty and make hunger history. Economist Surjit Bhalla had some time back stated that Rs 48,000-cr can eradicate poverty for one year from India. If that is true, and considering that hunger is a dimension of extreme poverty, I don’t see any reason why India be ranked at a dismal 94 in a list of 107 countries in the Global Hunger Index 2020. And that too at a time when food stocks have been overflowing for several years in a row. Add to it the growing unemployment; and the continuing agrarian distress, amplified by the farmers’ protest around New Delhi; the time is ripe not for deep reforms but to bring in a humane set of reforms that measure up to the growing needs of public health, education, agriculture, environment protection and reducing economic disparities. 

A healthy and dignified life depends on various factors, including a healthy environment. According to the 2020 Environmental Performance Index (EPI) India ranks at a lowly 168 among 180 countries for which the index is prepared. The report says that the countries that ranked higher “generally exhibited long-standing commitments and carefully constructed programmes to protect public health, conserve natural resources and reduce greenhouse gas emissions.” Not that the rich countries have achieved these social and environmental protection goals as would have been required, considering that just 90 companies as per a study have collectively spewed 63 per cent of the emissions since the beginning of the industrial age. This only shows the need for Indian economists and policy makers to work out a more sustainable and inclusive pathway. 

This is something that the chest-thumping original proponents of economic reforms should have focused on, but their sloppy understanding of the phrase - reform -- seen only as an euphemism for privatisation, has pushed us in the same flawed IMF-led global trajectory. Instead, the policy imperative should have been to ensure that the majority population at the middle and bottom of the pyramid too earns more, thereby creating a huge rural demand, and in the process revitalising the rural economy. 

Indian policy makers missed a historic opportunity to look beyond the well-orchestrated ‘Washington Consensus’ design and layout a desi model of economic reforms that was built treating agriculture as the second engine of growth. Instead of pushing people out of agriculture, the emphasis should be on converting this sector, which continues to be the largest employer, into a powerhouse of economic growth. 

It is possible even now. Learning from the devastation that industrial agriculture has brought to the farming landscape in the rich countries, and the huge agrarian distress that globally free markets have resulted in, the key lesson is to redraw reforms bringing in tenets of an economically viable, profitable and ecologically-sustainable food farming systems where farmers receive an assured income by way of an assured price, and consumers get safe and healthy food. #

Source: Reforms must reduce economic disparities. The Tribune. Aug 13, 2021. https://www.tribuneindia.com/news/comment/reforms-must-reduce-economic-disparities-296772?fbclid=IwAR3OuQCXbXk0Cz65ssLgAAQUyI2RQGv5MDN43e5dSG2nNjy0yTP5CMHpURw

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Budget 2021 leaves agriculture behind

 Pic courtesy: NewsNation

My brief take on the budget proposals for agriculture

At a time when protesting farmers on Delhi ‘s borders are asking for an assured income by way of an assured price, Budget 2021 was expected to take the wind out of their sails by announcing provisions for enhancing farm incomes. More so at a time when economists are calling for measures to prop up rural demand, the Finance Minister was expected to open up the purse strings for providing more money in the hands of the agitating farmers by way of direct income support.

Instead, the budgetary allocation under the PM-Kisan Samman Nidhi scheme has been reduced from Rs 75,000-crore to Rs 65,000-crore this year. Under this scheme, land owning farmers are given a cash transfer of Rs 6,000 per year in three installments. I was expecting landless farmers to have been included in this scheme. Considering that agriculture was the only bright spot in the first two quarters, it was expected the government would enhance the allocations to Rs 18,000 per year, which means making a budgetary allocation for an additional Rs 1.5 lakh crore.

However, budget for agricultural sector remains almost same as last year. This year, the budget allocation is Rs 1.48 lakh crore (budget estimate) against Rs 1.45 lakh crore (revised estimate) last year.  

Although agriculture credit limit has been raised from Rs 15-lakh crore to Rs 16.5-lakh crore in this financial year, the continuing agrarian distress calls for measures to pull farmers out of the debt trap. This requires enhanced public sector investments in agriculture and also providing more income to farmers. As per RBI, between 2011-12 and 2017-18, public sector investment in agriculture was only 0.4 per cent of the GDP. Therefore the proposal to create an agricultural investment fund by putting a cess on petrol and diesel is a welcome step but the best way forward would have been to make definite provisions for agricultural investment like the announcements made for rail, road and capital investment. 

What agriculture needs as a priority is to create adequate marketing infrastructure. There are close to 7,000 APMC regulated mandis in India, and if a mandi needs to be created in a radius of 5 kms, the country requires 42,000 mandis. Knowing that the promise of upgrading 22,000 village haats and linking them with eNAM hasn’t been very encouraging, the emphasis on creating rural marketing infrastructure cannot be ignored any more. 

Budget 2021 coming at a time when huge protests by farmers continues for several months, Finance Minister did mention how the amount of Minimum Support Price (MSP) for crops like wheat, paddy, pulses and cotton has gone up in recent years, and also gave the number of beneficiaries. Protesting farmers are however demanding MSP to be made a legal right for farmers, which means no trading to be allowed below the price for all the 23 crops for which MSP is announced every year. 

The claim that MSP for all crops provides for 50 per cent profit over the cost of production (technically called as A2+FL) has been contested by farmers. As per the Swaminathan Commission recommendations, MSP should comprise 50 per cent profit over the comprehensive cost (C2 cost). To illustrate, Punjab farmers would have gained by an additional Rs 14,296-crores in 2020-21 marketing year if they had received MSP as per Swaminathan Commission. 

More money in the hands of farmers is the surest way to achieve Prime Minister’s vision of Sabka Saath Sabka Vikas. This in turn would create more rural demand thereby revitalising the wheels of the economy. At a time when the pandemic has contracted the economy, generating rural demand would not only act as a booster dose but act as a rocket dose for economic growth. A vibrant agricultural sector would create huge employment opportunities by helping to create viable livelihoods. Agriculture therefore has the potential of turning into a powerhouse of economic growth. #

Source: Farm left in the lurch: Guest Column, The Telegraph. Feb 2, 2021

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Farmers' Protest: Answering Frequently Asked Questions.

Even as the Central government and its acolytes in the media work overtime to sell the benefits of the three new farm laws to the Indian public, the farmers protesting on Delhi’s borders have made it clear that they will not retreat till these laws are repealed. Caught between the crossfire of misinformation and facts, the average urban Indian is somewhat confused about the merits and demerits of the farmers’ protest – which has now crossed the 50-day mark.

If there is one thing that has become increasingly obvious over the least seven weeks, it is that big-city dwellers in India live in a very different universe than their rural counterparts, and have a difficult time understanding why the farmers camped on Delhi’s borders are as determined as they are to have their way. One major reason for that is they do not know the ‘back story’ of the protests.

In order to relieve some of that confusion and shed light on the larger context of this movement, I spoke to journalist, author, and food and trade policy expert, Devinder Sharma, who has spent the last two decades campaigning for income equality for Indian farmers and asked him the five questions that invariably come up most frequently whenever the topic of the farmers’ protests comes up for discussion.

Why are farmers so unhappy with the Central government?

Many think that it is just the three new farm laws that have agitated the farming community and that is why they are at the doorsteps of New Delhi. The way I see it, though, is that this is anger that has compounded over decades and is finally finding an outlet. Three studies show how agriculture has faced huge injustice and inequality and has been deprived of its rights over the last 30 or 40 years.A study by UNCTAD shows that for 20 years, between the mid-1980s and the mid-2000s, the output price or the farm gate price of agriculture remained static across the globe. In other words, farmers’ income in the 2000s (after adjusting for inflation) remained the same as it was in the 1980s. Rich countries, of course, addressed this issue by providing direct income support and a whole lot of other privileges to the farming communities, but the developing countries could not afford it and farmers in these countries have silently suffered the consequences ever since.

Then came a study in 2008 by OECD (Organization for Economic Cooperation and Development) along with a New Delhi think tank which estimated that between 2010 and 2016-17, Indian farmers lost Rs 45 lakh crores in farm incomes! What was even more extraordinary than this crisis was the lack of discussion around it. And this was for only for a handful of crops, so the total extent of the loss that the farmers have suffered must have been significantly higher. This meant a loss of about Rs. 2.64 lakh crore every year because farmers were denied their rightful income.

Yet another report by the Economic Survey in 2016 tells us that the average income of a farming family in 17 states of India, about half the country, is only Rs. 20,000 a year, or less than Rs 1,700 rupees a month. I can’t even raise a cow in that amount! I shudder to think how the farming community has been surviving in half of India.

All that to say that agriculture has been passing through a terrible crisis all these decades, and the fact that farmers have assembled at the borders of New Delhi in the dead of winter shows they have had enough. The academia, the elite, and the economists have all failed to help farmers get their rightful dues, and so now they have taken it upon themselves to fight for their survival.

With these farm laws being introduced, they fear that whatever they have left is also going to be snatched away. That is what has pushed them into this kind of protest which is an iconic one, of a kind at least I have not seen anywhere in the world.

Farmers’ representatives during the 8th round of talks with the government over the new farm laws, at Vigyan Bhawan in New Delhi, Friday, January 8, 2021. Photo: PTI

But isn’t this primarily a protest by rich Punjabi farmers?

If the Punjab farmers were so rich, then they should have been a model for the rest of the country to follow. But a study done jointly by the Punjab Agricultural University, Ludhiana, Punjabi University, Patiala and Guru Nanak Dev University in Amritsar — all public sector universities — showed that between 2000 and 2015, 16,600 farmers and farm workers committed suicide. Incidentally, the total debt that Punjab farm households are reeling under is Rs 1 lakh crore!

If the farmers were rich, why did they commit suicide in such large numbers? Pick up a Punjabi newspaper, and chances are that you will find one or two suicides being reported almost daily. Also, every third farmer in Punjab happens to be below the poverty line.

Let us not forget that, in this country, only 4% farmers have land holdings which are more than 10 hectares. So, what kind of rich farmers are we talking about, when only 4% farmers have more than 10 acres of land? 86% farmers in India have a landholding size of less than five acres. The remaining are what are called median or medium farmers who have a land holdings of 6 to 8 acres.

To say that this agitation is being led by the farmers who are rich just because they get minimum support price is ridiculous. In Punjab, roughly 70% of the small farmers get the benefit of minimum support price. Small farmers are those who have less than five acres. They are the ones who benefit largely from the minimum support price.

And to those who say that this is a protest instigated by opposition parties, please go and stay outside your home for one night in the dead of winter to see what it’s like. I don’t think anybody will do that even if they are paid to. Just spend one night in a trolley or tent on a road outside Delhi, and tell me if you would do that for more than a month even if you were paid to. I think it’s time to stop being so contemptuous towards the farming community. Let’s honour and respect the protesting farmers, and try to see what they need and what we can do to help.

But aren’t most farmer unions in favour of these laws?

If the majority of farmers were in favour of these laws, would the number of them on protest be this huge? In fact, it is remarkable that so many farmer unions have come together on one platform. As someone who has worked with farmers for over two decades, I know how difficult it is to get different farmer unions to see eye to eye. And yet, here you have 32 union leaders from Punjab, and many others from Haryana, Rajasthan, Western UP, and other parts of the country. It just shows that the situation is now dire enough for them to put their differences aside and come together for their survival.

As far as the “groups” who are saying that these laws are good, it’s not very difficult to hold up a visiting card saying that you represent x farmer group. We have seen it happen earlier and we are seeing that happening now. What is more important to remember, though, is that such a large section of farmers have actually come out together in strong protest.

Even if a chunk of the farming population is unhappy, isn’t it important to try and understand why they are unhappy and then try and help them, instead of trying to minimise their distress and their numbers?

What is so bad about corporates getting into agriculture?

I was being interviewed on a business channel the other day, and the host asked me, “At a time when the markets are so excited about these farm laws, why are the farmers unhappy?”

I said, “You have answered your own question. The laws are in favour of the market, so of course they are excited. And the farmers feel the laws are not in their favour, and so they are on the streets.”

The world is moving towards corporate agriculture, but contrary to what corporations would like you to think, corporate involvement in agriculture has not boosted farmers’ income. Take the United States, for example, from where we have borrowed these laws. In America, open markets and free trade in agriculture have existed for over six to seven decades, and yet farm incomes there have been in decline. In fact, in 2020, American farmers were saddled with a bankruptcy of more than $425 billion.

If the reforms were so good, why would farmers be faced with that kind of bankruptcy? Most Indians don’t know that America is also passing through a terrible agrarian crisis. In fact, the rate of suicide in rural America is about 45% higher than it is in urban America.

Over the years, small farms in the US have disappeared and only 1.5% of America’s population is now engaged in farming. And yet, the US continues to be the biggest agriculture producer in the world. (Of course when we talk of agriculture in America, we are talking about big machines, big corporates, big business and big agriculture. But when we talk about agriculture in India, we’re talking about millions of small farmers, marginal farmers.)

In America, they don’t have MSP, or APMCs. There, big retailers like Walmart do not have stock limits. They also have contract farming, and do commodity trading, and yet, despite all of that, American farmers are given a subsidy of $62,000, every year. Which begs the question — If open markets are really that efficient, why does the government pump in so much money into the agriculture sector?

The OECD countries, the richest trading bloc in the world, pump billions of dollars into agriculture every year by way of direct income support or subsidies. Europe today is giving about $100 billion of agricultural subsidies annually and roughly half of it goes as direct income support to farmers. So, what we see as ‘market efficiency’ in agriculture or agriculture export, is actually federal support that governments have been providing to the agricultural sector.

We need to be very clear that agriculture is sustainable and viable in rich and developed countries not because the markets are efficient, but because the government provides subsidy support year after year.

Representative image of the APMC mandi at Gariyaband in Chhattisgarh. Photo: Neeraj Mishra

China, incidentally, has now emerged as the biggest provider of agricultural subsidies in the world, beating even America and the European Union. The Chinese government provided $212 billion dollars worth of subsidy support to its agricultural sector in 2016. 38% of the earnings of wheat farmers actually comes from subsidies, as does about 32% of the earnings of the rice farmers. It is not the high yield that they have, but subsidies that gives farmers high income.

Then there is the issue of technology. You’ve heard it all – “When technology comes in, then productivity goes up and income goes up,” etc. Well, since the 1970s, the US had a number of small dairy farms. These dairy farms were technology-rich, and the cattle they had were high- yielding. In fact, American dairy farms were a model for us to follow. But about ten years ago, I read a shocking report in New York Times about a farmer suicide. This farmer was so distressed by the market crash in milk prices, that he first shot each of his 51 cows, and then he shot himself.

The point I’m trying to make is that distress has prevailed in America over the decades and we don’t even know about it. If you look closely at what has happened in the US, 93% of the dairy farms have closed down since the 1970s, but milk production has gone up. This is because big corporates have moved into agriculture and set up mega dairies and this has led to milk prices crashing and 93% of dairy farms closing down.

If technology and productivity were indeed the criteria for agricultural success, then I see no reason why those dairy farms would have closed. They closed down because of the market prices they were getting, which just kept declining. It came to the point that they could not even cover their costs of production, and so they just left farming.

This is a warning for us, and is only one of many examples that show how the things that are supposed to increase farmer income actually don’t. What farmers need is direct income support. In Europe, 50% of the subsidies are allocated for direct income support. The US gives $62,000 as subsidy support or an average to each farmer in a year.

I think it tells us that markets are not what are sustaining agriculture; it is primarily subsidies which sustain whatever remains in agriculture today.

So what do you see as the way forward? How can agriculture be saved and revived?

This is a critical juncture in our history and this farmers’ movement should actually make us all sit up and think about the corrections that need to be made.

First of all, like you and I need some sort of assured income, every farmer also needs to have an assured price for his produce. He needs to be sure that after the harvest, when he goes into the mandi, he will at least get that minimum price. If there can be a minimum wage for the workers, I don’t understand why there can’t be a minimum price for the farmers.

The only way I know to ensure that is MSP. In fact, that is a strength of India, because our policymakers did a remarkable thing at the time of green revolution — they introduced a minimum support price. That is something which has stood the test of the time. I also agree there are problems in the mandis, but we need to reform their structure, not shut them down. Throwing out the mandis is like throwing the baby out with the bathwater.

I would suggest that the government make MSP legal for the 23 crops that it announces MSP for every year. Every year the government announces minimum support price for 23 crops but effectively buys only wheat and paddy. (To some extent, cotton and pulses too, as the need arises, but primarily wheat and paddy.) This needs to be extended to all the crops.

An analysis in The Wire showed that in October and November of 2020, in just two months, based on the government’s own portal where they give you details about how many different crops have been sold in these two months and at what the price etc. — If the farmers had gotten MSP for all crops across the board and not just for wheat and paddy, they would have gained by Rs 1900 crores in just two months! I’m sure you will agree that is not a small amount, and considering that in half the country, the average income is only Rs 20,000 a year, imagine the economic benefit the farmers would have received

80% of the gross crop area in India is covered by these 23 crops. That means a large section of the farming population is covered by a minimum support price regime if it is implemented effectively or made legal. That would be real azadi for farmers. He would know that whether he sells in Punjab or Bihar, he will be getting the same price, the minimum support price. That’s the kind of freedom that the farmers are expecting.

Corporates are saying they will now be able to give farmers a higher price for their produce! But higher price than what? The only benchmark we have is MSP. So if corporates, policymakers and economists are already willing to pay a “higher price”, then what is the problem in setting MSP as a minimum income that the farmer is assured of? The corporate sector should be standing with the farmer saying, “Yes, let’s make MSP a legal right, because we are in any case going to give them a higher price.”

But that’s not happening, which means the corporates are not being honest. They know that they will not be able to give a higher price.

Many ‘corporate activists’ who appear on the television have been saying that if the Center brings in a fourth law, which makes the minimum support price across the country legal, then the reforms would collapse and crash! — That means you are yourself admitting that you are not going to give farmers a higher price!

Secondly, delivering minimum support price poses its own set of challenges. In this country we have about 7000 APMC-regulated mandis. What we need in this country is 42,000 mandis within a five-kilometre radius. That is infrastructure we have to create, so farmers can sell their produce easily.  If you have a good network of mandis laid out, then the mechanism of MSP delivery becomes easy.

In America, after all these decades of the free market, the US Department of Agriculture tells us that the share of a farmer in every food dollar is only 8 cents. This means if the consumer is spending $1 on buying food, then the farmer’s share is only 8%. This should tell us very clearly why the American farmer is in a crisis today.

Now compare that with Amul Dairy Co-operative in India. The Managing Director of Amul Dairy Cooperative has gone on record saying that when you buy Amul milk for Rs 100, Rs 70 of that goes to the farmers. The farmer’s share is 70%! So why not draw a lesson from Amul and replicate that model in vegetables, pulses, fruits, etc, to ensure that the farmers get a larger share of the profit?

Why are we ashamed of our homegrown models? Let’s learn from our own strengths and build on them. Instead of opening up agriculture for the corporates to exploit, let’s expand the cooperative network in this country. Let’s experiment and learn how to make that work for vegetables and fruits.

One last thing — our economic design has treated agriculture as a burden on society. The argument is that unless we move people out of agriculture into the urban areas, we will not have economic growth. This has to change. In just two days of lockdown, we saw 80 million people go into reverse migration both interstate and intrastate, and that tells us that, that the model of pushing people out of the urban areas, was a flawed, economic model. And I think we need to reverse that model. The possibility of making, agriculture a powerhouse of economic growth is what is required today.

Source: Farmers' Protest: Agriculture Expert Devinder Sharma Answers Frequently Asked Questions. The Wire. Jan 17, 2021 https://thewire.in/agriculture/farmers-protest-agriculture-expert-devinder-sharma-answers-frequently-asked-questions

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India needs a rethink on 'free market'

Pic courtesy: Fairtrade Foundation 

All of us like chocolates. But the next time you bite into a chocolate bar, just be reminded. The average income a cocoa farmer earns a day is probably less than the price of a medium-sized chocolate bar that is in your hands. About Rs 100 ($1.30) a day is what a cocoa farmer in Western Africa earns.   

At a time when the $ 210-billion global confectionary industry has been growing leaps and bounds, with chocolate taking the highest market share, the biennial Cocoa Barometer 2020 report illustrates how the prevailing market-driven business model leading to excessive profits for chocolate industry is based on achieving higher productivity of cocoa that in turn has kept nearly 5 to 6 million cocoa farmers perpetually in poverty. Discarding the dependence on markets, if only cocoa farmers had received a minimum support price (MSP) over the decades, it would have helped millions of cocoa farmers ascend the ladder out of poverty, hunger and malnutrition. 

In Britain, after the Milk Marketing Board, which regulated milk prices and marketing, was removed in 1993, the number of dairy farms has come down drastically in the past 25 years -- from 40,000 in 1995 to an estimated 8,310 in 2020. Although 99.9 per cent milk producer had wanted price regulations to continue but market economists thought otherwise. Between 1994 and 2010, milk prices had fallen by 28 per cent and there came a time (in 2015) when prices slumped further by 40 per cent. Farmers were simply unable to even recover the cost of production. The plight and agony emanating from the destruction of farm livelihoods in the process was brushed under the carpet. As a British farmers said: “Every genuine farmer is now stuck unfairly on a treadmill with accumulating debts to meet unless he goes bankrupt, commits suicide or finds another source of income.”    

What happened in Britain or for that matter in Europe was no exception. In America, at least 50 per cent dairy farms have disappeared in the past two decades. According to the US Department of Agriculture, the number of licensed dairy farms had come down from 70,000 in 2003 to 34,000 in 2019.  While small farmers bowed out, mega-dairies have instead taken over. As a result, despite the closure of small dairy farms, milk production has further swelled. This is certainly not what India needs. In a country where roughly 50 per cent of the population remains engaged in agriculture, and which tops the global milk production chart, what India needs is a production system by the masses, where small farmers earn a decent livelihood from an assured price delivery mechanism. 

As expected, ‘free market’ in dairy benefitted the milk processing companies, and pushed small dairy farmers out of business. Thus began a vicious cycle of over-production, bringing down the market prices. Instead of fundamentally addressing the flaws in supply chains, by ensuring assured prices to dairy farmers to begin with, Europe and America focused more on providing bailout packages to temporarily assuage farmer’s ire. British farmers (and also in Ireland) therefore continued to protest against the ‘unfair’ prices and have since been campaigning for a fair deal.   

The tragedy on the dairy farm was further compounded by an unjust WTO’s Agreement on Agriculture which allowed heavily subsidised milk from European countries to be dumped in developing countries. Breaching the five per cent product-specific subsidy support norms for developed countries, EU had actually subsidised skimmed milk powder by 67 per thereby easily dumping cheaper milk in developing countries. In the process, small dairy farmers suffered at both the ends -- in the developed as well as developing countries. 

No wonder, at a time when mainline economists in India are excited at the possibility of ‘free markets’ enhancing farm incomes, Canadian farmers are seeking more protection to save their livelihoods. Three major farm unions in eastern Canada are demanding protection (by way of subsidy and import tariffs) against US President Donald Trump’s recent $ 32 billion subsidy package to American farmers, which they say threatens their survival. “Farmers need to be able to cover the cost of production or many of them will not be able to survive much longer.” 

Now let us look at America. The prosperity that we see on the farm is a reflection of the massive subsidy support. To ensure that small farmers are not wiped out, the US has been coming out with a Farm Bill every five years. In the 2018 Farm Bill, US has expanded the safety-net umbrella for farmers making a provision for $ 867 billion for the next ten years in commodity support, numerous measures to enhance farm incomes as well as for nutrition schemes.

Instead of leaving farmers to face the volatility of markets, the US has time and again come up with programmes to offset the losses incurred. In the 2018 Farm Bill, it has introduced an Agricultural Risk Campaign (ARC) and a Price Loss Coverage (PLC) programme. Both these programme are aimed at covering losses a farmer suffers when crop prices or revenues drop, and covers 24 commodities including wheat, oats, barley, corn, grain sorghum, rice, soybeans, sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe and sesame seed, seed cotton, dry peas, lentils, small chickpeas, large chickpeas, and peanuts. In addition, there are numerous other programmes for relief from natural disasters, crop insurance, structural adjustment and environment. 

Even in China, markets have failed to help increase farm incomes. According to a report in Washington Post, ‘China’s agriculture support includes government purchases at above-market prices, as well as market price support programs, where farmers receive a direct payment from the government if market prices fall below a minimum set price’. This has helped raise farm incomes by 38 percent in wheat, 32 per cent in rice and 29 percent for corn. China provided a farm subsidy support of $ 212 billion in 2016, the highest in the world. The US had challenged this subsidies in the WTO. 

Well, if the agricultural giants realise the inability of markets to help raise farm incomes, India too must rethink its approach. There are significant lessons here. #

India needs a rethink on 'free market'. The Tribune. Dec 30, 2020. https://www.tribuneindia.com/news/comment/india-needs-a-rethink-on-free-market-191160?fbclid=IwAR19TsKH-Uxz5Zdyz1UfgKAWdZl1qdrQp6YRuf-cknlwYksvBU83vsLbyHY#.X-30cqEmiYY.twitter

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MSP provides farmers with a price assurance -- My Interview.

A day ahead of another round of talks between farmers and the Union government, agriculture expert Devinder Sharma tells The Indian Express how the current protests are being watched across the globe and how India can rebuild its agri economy by using assure price.

What is your take on the three farm laws that the Centre terms as a great reform in the field of agriculture?

These market-driven agricultural reforms have been prevalent in the United States for more than 6 to 7 decades. If the markets were so good I see no reason why American farmers should be saddled with a bankruptcy of USD 425 billion this year. The farm incomes have been on a steep decline, if adjusted for inflation, since the 1960s.

No wonder, despite massive farm subsidy support, the rate of suicide in rural America is 45 per cent higher than the urban areas. The point I want to emphasise is that the so-called ‘market efficiency’ in the US is actually built on massive federal support being provided year after year.

Not many people know that the US comes with a Farm Bill every five years. It makes budgetary provisions for subsidy and investment in agriculture for the next five years. For instance, the Farm Bill 2018, expiring in 2023, makes a provision for providing USD 867 billion in food and agriculture support for the next ten years. And yet, despite these Farm Bills, American farmers have been faced with a 50 per cent drop in net farm incomes since 2013 except for this year when an additional subsidy of USD 32 billion was given for the farm sector.

What about other rich countries?

Before every WTO Ministerial Conference the massive agricultural subsidies being provided by the rich countries become a bone of contention. The richest trading block — the Organisation for Economic Cooperation and Development (OECD) — continues too provide mammoth farm subsidies. Despite opposition from the developing countries, these rich countries have not done away with these subsidies because that is what sustains their agriculture, and not markets.

In 2018, OECD countries provided a subsidy support of USD 246 billion, with European countries alone providing USD 100 billion. On the other hand, China has emerged as the biggest farm subsidiser, providing USD 212 billion in 2016.

If all the ‘green box’ subsidies, which in WTO parlance means non-trade distorting subsidies, are withdrawn, a 2007 study had shown that agricultural exports from US, Canada and European Union would drop by 40 per cent. In other words, even the so-called competitiveness of farm exports of the developed countries hinges on subsidy support.

Even the Director General of the Washington-based International Food Policy Research Institute had made a similar policy prescription for India, suggesting: “Move up or move out”. It only tells us that the market reforms are built on moving small and marginal farmers out of agriculture. Considering that 86 per cent India farmers are small, owning less than 5 acres, what India needs are measures to make small farming viable.

Let me illustrate. Since the 1970s, 93 per cent of US small dairy farms have closed down, with 50 per cent or almost 35,000 licensed dairies pulling down the shutter since 2003 because milk prices declined, failing to even recover the cost of production. But instead of milk production declining, it has in fact gone up. Small dairy farmers were out, and corporates took over, setting up mega-dairies. The same is happening in the UK and Europe. The shape of things to come is already before us.

What support are farmers getting from our government compared to the US or other developed nations?

On an average, an American farmer gets a subsidy of USD 62,000 every year. Compared with this, an Indian farmer gets a paltry USD 282. If you take a look at the Producer Subsidy Equivalent (PSE) index, it gives you a clear idea as to how the rich country farmers continue to be subsidised. Besides, as I said earlier, there are numerous other ways farming is protected in developed countries, and farmers receive a number of other privileges too. For instance, Swiss farmers receive family allowance and also get rebate on petrol and diesel costs.

In India, we are made to believe that farmers receive huge subsidies and therefore have no reason to complain. This is a fallacy. Except for direct income support of Rs 6,000 per year by way of PM Kisan scheme, what Indian farmers receive are indirect subsidies on fertiliser, pesticides, and other inputs. These are in reality subsidies to the manufacturers, and also to the consumers by helping in keeping food prices low. Indian farmers need a safety net rather than making Indian agriculture completely dependent on the market.

Even when it comes to farm loan waivers, there is a clear-cut bias that prevails. While economists remain quiet when it comes to massive write-offs of bad debts of corporates by nationalised banks, which totals Rs 7.9-lakh crore between 2014 and 2019, a lot of hue and cry is made when bad farm loans are waived. Strangely, a former Chief Economic Advisor had even said that writing-off corporate NPAs leads to economic growth. But when farm loans are waived, they are blamed for credit indiscipline and upsetting the national balance sheet. That clearly shows we have socialism for corporates and capitalism for farmers.

Punjab’s farmers are at the forefront of farmers’ protests. Many have called Punjab’s farmers a pampered lot, claiming they have been enjoying huge subsidies. How do you see this?

Punjab is the food bowl of the country. Punjab’s farmers have helped make food security possible at an affordable price in India. They worked very hard to reach a productivity level 5.1 tonnes and 6.6 tonnes per hectare in wheat and paddy, respectively, which is among the top in the world. Therefore to call them lazy or pampered is a reflection of the contempt that the elite carries towards farmers.

It is wrong to treat farmers as a burden. Farmers have in fact subsidised the nation by keeping farm prices low. They have produced a record harvest year after year despite being denied the rightful price. Otherwise, I see no reason why Punjab, with such high productivity levels, should be a hotbed of farm suicides. A study had shown that 16,600 farmers and farm labourers committed suicide between 2000 and 2015. Every third farmer in Punjab is below poverty line.

If Punjab’s farmers are indeed pampered and enjoying huge subsidies, then why do 97 per cent of rural households continue to be in debt? That’s a question nobody wants to answer. We have deliberately kept agriculture impoverished over the decades by keeping farm incomes low.

When farmers are placing a demand for rightful income by the way of making MSP legal, what does this mean actually? And why is it being said that it will put an additional burden of Rs 17 lakh crores on the government exchequer?

MSP in reality is a saviour. It provides farmers with price assurance. Like you and me, they too want an assured income. What is wrong in that? Farmers are asking for making MSP a legal right for all the 23 crops for which MSP is announced every year. Basically what they are asking is to raise the benchmark on which trading takes place. This doesn’t mean that everything has to be procured by the government. Private trade too should purchase at MSP. But unfortunately, a fear psychosis is being created by saying that the government will need an additional Rs 17 lakh crore to procure everything.

Take the example of Kerala. It has fixed a floor price of 20 per cent above the production cost for 16 vegetables. It has also made a provision of Rs 35 crore for the purpose but hasn’t yet utilised a single penny out of it. The reason is simple. Market prices so far are prevailing higher than the floor price announced. The government will only enter when prices fall below the floor price.

This is exactly what will happen when MSP is legalised for 23 crops. It is only when prices fall below MSP that the government will be expected to intervene.

Government says that the three Acts will give real freedom to the farmer but farmers are not to buy this. Why?

The real ‘azadi’ for farmers will be when he knows that wherever and to whomsoever he sells his produce to, he knows that at least he will get a price equivalent to MSP. To make this possible, the challenge is to expand the existing network of 7,000 APMC regulated mandis to cover the entire country. We will need 42,000 regulated mandis if a mandi has to be provided in a five km radius.

Farmers need regulated markets closer to the farm. That will enable him to avoid distress sale and to seek real ‘price discovery’.

In the paddy marketing season that ended, unscrupulous traders from Bihar transported more than 50 lakh tonnes to Punjab. This was because in the absence of regulated markets and the failure of state to procure at MSP. Bihar farmers were forced to sell at Rs 1,000 to 1,200 per quintal in the local markets whereas in Punjab farmers at least got the MSP of Rs 1,888 per quintal. This only shows that if Bihar had not thrown away the APMC Act in 2006 and had instead set up a network of mandis as in Punjab, and also provided farmers with MSP, farm incomes would have been much higher.

Take another example of maize, where prices have ruled between Rs 700 and Rs 1,200 per quintal across the country against the procurement price of Rs 1,850 per quintal. This clearly shows that MSP is the real price discovery. In any case, let’s not forget that an OECD-ICRIER study had shown that in the 16 years period, between 2000 and 2016-17, India farmers suffered a loss of Rs 45-lakh crore of being denied the rightful price. Economic Survey 2016 had reported average farm incomes in 17 states of India, which means roughly half the country, to be only Rs 20,000 a year. This is at a time when only 6 per cent farmers were getting MSP and the remaining 94 per cent were dependent on markets.

The time has therefore come to ensure that trading does not take place below MSP. After all, how long can farmers suffer the consequences of distress sales and the resulting loss to their livelihoods?

This has to change, and change for the better. Agriculture is surely in dire need of reforms. But that does not mean borrowing blindly market-driven ideas from US/Europe where markets have failed to prop up farm incomes. What India needs is to build on its own requirements and capitalise on its strengths. To come out with a policy design that ensures an assured income to farmers by way of an assured price coupled with direct income support. In addition, there is a need to replicate the Amul dairy cooperative model for vegetables, fruits, pulses and oilseeds.

How is the agitation being viewed across the globe?

The iconic farmer movement is being closely watched across the globe. Even in developed countries, farmers are keen to know how India expands on the mechanism of MSP as a policy instrument to provide an assured income in the hands of farmers.

Source: 'Farmers need assured income, even rich nations pump massive subsidies in agriculture': Agri Expert Devinder Sharma. Indian Express. Dec 30, 2020. 

https://indianexpress.com/article/cities/chandigarh/farmers-need-assured-income-even-rich-nations-pump-massive-subsidy-into-agriculture-agri-expert-devinder-sharma-7125360/ 

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