A battle only half won

Protesting farmers celebrating the repeal of the three contentious farm laws. 

Pic courtesy: Reuters. 

The sudden repeal of the three contentious farm laws provides a historic opportunity to rethink, reinvent and redesign the future of Indian agriculture, laying the foundations for an evergreen revolution. Once the festivities and celebrations are over, it is imperative for the political leadership to recast the economic design with the underlying objective of making agriculture a powerhouse of economic growth.

Neoliberal economists will cry hoarse but making agriculture profitable, economically viable and environmentally sustainable is the crying need of the times. At a time when the world is waking up to the urgency of transforming the unhealthy and unsustainable food systems, India has the ability to provide a roadmap that is ecologically safe, as well as healthy for the people and planet. With Prime Minister Narendra Modi’s bold but belated initiative in withdrawing the proposed market reforms in agriculture, the first step towards a reformative agriculture has already been taken.

Why I say reformative is because the proposed market reforms in agriculture have failed across countries and continents. From the United States to Australia, from Chile to the Philippines, markets have only added to the prevailing agrarian distress. If in the US, Canada and elsewhere markets have only increased farm indebtedness, succeeded in pushing small farmers out of agriculture, and turned farming into a major contributor of greenhouse gas emissions, to believe that the same markets would perform a miracle in India was a fallacy. In North America, despite higher investments, technological innovations, high productivity and the evolution of sophisticated international value chains, farm incomes had been on a steady decline for over 150 years. So much so that in 2018, the US Department of Agriculture had worked out that farmers share in every dollar of end consumer price had dropped to just eight cents, pushing farmers increasingly towards extinction.  

Whether the decision to withdraw the farm laws in India were taken in view of the impending State elections or for economic reasons knowing that markets have failed to enhance farm incomes anywhere in the world is certainly a subject of public debate, but the fact that the so-called reforms have been set aside paves the way for revitalizing agriculture, bringing back the pride in farming. The perseverance demonstrated by protesting farmers, who had braved the weather extremes for a year, while staying put at the borders of New Delhi, had drawn the nation’s attention to the plight of the farming community. It is time to build on the policy space so created, and redesign a healthy and vibrant farming system that is everlasting.

The decision to take back the controversial laws is a battle half won. Withdrawing the laws means a return to status quo, which means no respite from the severe farm crisis that farmers were living with. It is certainly a victory in the first lap for farmers, but the race is still not complete. Unless farmers are assured of a living income, the supply demand principles that many economists believe leads to price discovery, will only end up further exploiting them. Food systems transformation cannot take place without first guaranteeing farm income. That’s the reform that agriculture, not only in India but globally, is desperately looking for.

Considering that on an average farmers get nearly 40 per cent less in market price compared to the Minimum Support Price (MSP) that the government announces for 23 crops, they do not even recover the production cost. As I have often said, when farmers undertake cultivation they do not even realize they are actually cultivating losses. Except in areas where MSP regime is implemented for wheat and paddy, farmers in the rest of the country do not even know what they have been deprived of. That’s what the Economic Survey 2016 had officially acknowledged, stating that the average farm income in 17 States of India, which means roughly half the country, was only Rs 20,000 a year. The Situational Assessment Survey 2019 has worked out the average farm income from crop cultivation at a paltry Rs 27 a day.

Making MSP a legal right for the farmers, meaning that no trading be allowed below the benchmark price, is the real reform that Indian agriculture needs. This is the second step of the reformative agriculture that I talked about. With more money in the hands of farmers, agriculture will not only become economically viable, but the country’s GDP will also gallop. This will not only strengthen rural livelihoods thereby reducing the employment pressure on the cities, but create a huge rural demand that will revitalize the rural economy and thereby fast forward the wheels of development. It is therefore time to reverse the flawed economic design that was built on sacrificing agriculture for the sake of the industry. Replace it with an economics that works for the people, needing investment on the human capital.

Guaranteeing MSP will still leave a sizeable farming population out. For those small and marginal farmers who have no marketable surplus, but are significant players in ensuring household food security, the entitlements under the PM Kisan Samman Nidhi scheme will have to be accordingly raised.

Farmers’ movement in India, perhaps the largest and the longest in the world, has drawn global attention, and rightly so. Knowingly or unknowingly, protesting farmers have managed to shake up but also challenge an outdated economic thinking that relied on keeping agriculture perpetually impoverished. This is no less an achievement, and if followed with an honest appraisal and rethinking it has the potential to sow the seeds of an evergreen revolution. If I remember correctly, this term was coined by the eminent agricultural scientist Dr M S Swaminthan, and entails a production system that utilizes traditional knowledge, amply available biodiversity, and farm practices that do not destroy the environment.

Redesigning the farming systems, bringing markets closer to farmers, and developing a food distribution system that provides for household nutritional security is absolutely essential. But this cannot be achieved by people who created the crisis in the first place. It needs a fresh thinking, a fresh approach.

To make this possible, let’s begin by first providing farmers with a living income. #

Source: A battle only half won. The Tribune. Nov 22, 2021. https://www.tribuneindia.com/news/comment/a-battle-only-half-won-341193

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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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Continuing drought in framing farmer-friendly policies has to end.

It doesn’t even shock anymore. At a time when consumers shell out Rs 40 per kg for bhindi, wholesale price for this vegetable has dropped to Rs 1 per kg in Badwani in Madhya Pradesh. Media reports showed how an irate farmer had used a tractor-driven cultivator to flatten the standing crop in four acres. Faced with a sudden drop in prices, some other farmers in the same district were forced to allow cattle to feed on the standing crop. Not only peculiar to Madhya Pradesh, distress sale of vegetables has been a recurring tragedy across the country. 

Now let’s look at the plight of sugarcane growers in Punjab. As the new crushing season begins, 14 of the 16 sugar mills (in the cooperative and private sector) have yet to pay outstanding cane arrears of Rs 250-crore from the last year’s cane crushing season. Punjab is not an exception, the unpaid cane dues across the country amount to Rs 15,683-crore as on Sept 11, with Uttar Pradesh topping the chart, Parliament was recently informed in a written reply. A recurring problem, sugarcane farmers have somehow managed to survive for a year (and at times for two years in a row) without being paid their dues in time. Imagine, if the monthly salary of employees is to be delayed by even a month or so ! 

 What is so unusual about these reports, you may ask. After all, this is a routine affair. Every now and then, reports of angry farmers throwing tomatoes, potatoes and onions on the streets appear in the media when prices slump. This is despite the launch of Operation Greens scheme with an outlay of Rs 500-crore, in the budget speech of 2018-19. It aimed at stabilising the prices of tomato, onion and potato (TOP) comprising a larger share of an average household’s vegetable basket. The scheme, which has for all practical purposes remained a non-starter, has now been extended to cover all fruits and vegetables (called TOTAL) for a period of six months beginning June. 

 Notwithstanding these announcements, prices of seasonal vegetables have by and large remained depressed. Even before the lockdown disrupted the local value chain, vegetable growers have been repeatedly hit by price volatility. In the absence of any benchmark price – like the Minimum Support Price (MSP) for cereals and other major crops– most vegetable farmers do not even realise whether the price they are being offered in the markets is truly remunerative or not. There have been instances when farmers have actually returned almost empty handed from markets after deducting expenses incurred for harvesting/plucking and adding transportation charges. 

In fact, as I have often maintained, when farmers undertake cultivation they do not realise that they are actually cultivating losses. An OECD-ICRIER study for the period 2000-2016 has shown that Indian farmers lost roughly Rs 2.64-lakh crore every year on being denied the rightful price. This surely is an underestimate considering that only a limited number of crops were studied but it clearly shows how severely farmers are at the receiving end year after year. 

Diversifying cropping pattern without first ensuring that farmers receive an assured price for their produce is therefore meaningless. This is primarily the reason why Punjab farmers have spurned every effort to diversify from the intensive wheat-paddy crop rotation. There is no denying that diversifying to pulses, oilseeds, millets and pulses is desirable but in the absence of an assured price and an effective procurement system in place, farmers cannot be expected to shift to a cropping pattern that leaves them to face the vagaries of market forces. For decades, farmers have silently borne the brunt of an economic design that has left them struggling and fighting for fair wages while mainline economists over the years failed to see beyond the industry prescriptions. 

Even in America, where market reforms in agriculture have been in place for several decades, small farmers have been left in the lurch. Although US agriculture is perceived to be quintessential, which being part of national and international value-chains is believed to have brought prosperity on the farm, the reality is to the contrary. According to the US Department of Agriculture (USDA), farmer’s share in every dollar consumers spend on food (in 2018) comes to a paltry eight per cent. In addition, there are numerous studies that tell us that ever since big retail came into existence, farmer’s share in food dollar has actually come down. 

Compare this with the Amul dairy cooperative structure where farmers get 70 to 80 per cent of every rupee consumers spend on milk. Isn’t therefore the home grown dairy cooperative model a better design to be extended for agricultural commodities as well? If the entry of big business in American agriculture hasn’t benefitted small farmers, and in reality has pushed them out of farming, shouldn’t India be learning from its own successful brand of cooperative dairies? Why can’t policy makers think of creating a new economic design which provides at least 40 to 50 per cent (if not 70-80 per cent like in milk) of the consumer price to farmers?  

Farmers march to New Delhi actually is a pointer to the injustice that economic reforms have continuously inflicted on agriculture by keeping farm prices low. Braving water cannons in the cold weather, farmers seek an end to the long winter. After all, how long can agriculture be kept deliberately impoverished to keep the economic reforms viable. Farmers too have families to take care; their children too have aspirations; for which they too need an assured monthly income package. Seeking a Minimum Support Price (MSP) below which trading does not take place, farmers are essentially asking for evolving a mechanism whereby they do not have to throw vegetables on the streets, where they do not have to resort to distress trade. 

The continuing drought in framing farmer-friendly policies has to end. Farmers march should be seen as a wake-up call to make appropriate policy corrections to set the historic imbalances right, thereby bring back the pride in farming. #

Farmers' stir lays bare unjust economic policy, The Tribune. Nov 27, 2020. 

https://www.tribuneindia.com/news/comment/farmers-stir-lays-bare-unjust-economic-policy-176476?fbclid=IwAR1ETBoSZSkoLTQAlDaahMBClPNrxoea_4yFP6WK3z4j6Y-bnqY_-ViluQw

 

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