The anatomy of the farmers' agitation

(The writer can be reached at kalpajitsaikia@gmail.com)

The year was 1966. India was coming out of a severe drought and widespread famine. Massively short of food grains and dependent on other countries, the government entrusted the responsibility of making India self-sufficient on the young shoulder of a scientist from Indian Agricultural Research Institute (IARI), M S Swaminathan. Exponential increase in food grain production was planned with adoption of technology and promotion of variety of high-yielding seeds, starting with wheat. That's how one of India's most successful movements – the Green Revolution – started.

It was felt that, unless proper market access and right incentive on their produce is provided, the farmers will not be motivated to produce more, and the entire campaign will fail. The architects of the revolution decided to provide the required guarantee to the farmers. It was decided that whatever they produce will be bought by the state at a minimum value. It will be called MSP (Minimum Support Price). What started with wheat was later expanded to 23 other goods under MSP. APMCs (Agricultural Products Marketing Committees), were formed by state governments to facilitate the purchase of agricultural products. The purpose was served. With the relentless effort of some of the visionaries coupled with strong government policies, India became self-sufficient in food grains in mid-1970s.

A lot of water has gone under the bridge since them. India opened its economy in 1992, triggering a spurt of Industrial growth. Once unimaginable GDP growth of 8-9% was a reality post-liberalization. India became 5th largest economy of the world. Indian businesses grew multifold in a short period of time, services Industry became the pillar of the economy, Indian Pharma companies started controlling majority of global production, affluent middle class started a revolution in consumerism and Infrastructure and real estate developments saw phenomenal growth. Internationally, India was recognized as one of the emerging powers of the world.

But MSP and APMCs still remained, more because of political considerations than the real effectiveness of the regime. Only around 6% of the rich farmers actually benefitted from MSP. 86% of the farmers who are small and marginal, never had enough produce to bear the transportation cost to nearest mandi. They just consumed what they produced and sold a small portion in local markets.

It is mandatory for farmers to bring their produce to APMC yards (mandis) and sell. With no competition, this gave rise to monopolistic behaviour and the middlemen had a field day. On top of it, there were not enough APMC yards. In March 2017, there were only 6630 mandis in a large country like India which means one mandi needs to cater to 496 sq km instead of recommended 80 sq km. An average farmer cannot travel such large distances to sell their produce. Various states recognized the reality and occasionally removed some legal restrictions pertaining to APMCs. As many as 19 states included the provision of contract farming in their APMC acts. States like Kerala and Bihar don't even have an APMC Act.

The question is: why are the farmers protesting when MSP and APMCs are not benefitting them? To get the answer to that question, we need to understand who these protesting farmers are. The current protests are confined to mainly 3 states – Punjab, Haryana and Part of Uttar Pradesh. Let's take the case of Punjab. In Punjab, the affluent farmers (with land holding more than 2 hectors) constitute around 65% of the total farming population. Contrast to that with other states, the number for Assam is 16%, Bihar 7.5% and West Bengal 4%. At the country level, merely 18% farmers are affluent. More landholding means more production and the farmers who produce more have the ability take their output to the mandis and sell. For most of the farmers in Punjab, agriculture is more of a business venture than a profession and they are the people who will be negatively affected by any change in the status quo.

The present MSP regime has done a huge disservice to the country. The government pays 1.5 times the cost of the produce to the farmers. This means tax-paying consumers need to fund the profit of these rich farmers. With assured price and guaranteed procurement, the farmers keep producing the same grain year after year without any consideration of demand-supply dynamics. This leads to excess inventory of few food grains and scarcity of some others, leading to food inflation on one side and wastage of food grains in government warehouses on the other. The hardworking citizens of the country pay the ultimate price. That's not all. Around 75,000 crore of taxpayers' money is spent on fertilizer subsidy. In the states like Punjab electricity and water for field is also free. The bottom line is, the taxpaying citizen of the country funds the affluent lifestyle of BMW driving farmers of Punjab and Haryana. Not to forget, the farmers don't have to pay tax. Agricultural produce is not taxed in this country.

The environment is also paying a big price in this bargain. To increase yield from excessively exploited land, these farmers apply large quantities of fertilizer leading to degradation of soil quality and pollution. The annual ritual of stubble burning affects the health of the people of the neighbouring states. But the so-called farmers are always unapologetic. If any industry would have done the same, the government would have taken the ultimate step of banning it. It is time to consider agriculture simply as one of the industries contributing to the economy of the country. Every industry contributes to the prosperity of the nation and agriculture is just one of them.

The farm bills passed by the government are the need of the hour. No Industry can survive indefinitely under protection. It requires competition for an Industry to flourish. Take the example of Indian industries post liberalization. There were concerns about the survival of the Indian companies in the onslaught of foreign juggernauts. Instead, the Indian companies not only became efficient, but became relevant globally with expansion to various markets. The farm bills will bring a lot of advantage to Indian farmers. They will become innovative, will focus on alternative crops, adopt technologies to increase yield and turn India to be a major exporter of agricultural produce. The small and marginal farmers can get together and get into contract farming with the corporates. The corporates will help the farmers to be competitive and adopt technologies. The narrative of the saintly farmers and exploitative corporates is misleading. Both need to work together for prosperity of the Nation.

The farming community will be positively affected by the farm bills. The government should not buckle under pressure and repeal any of the bills. India will lose a golden opportunity of reforming its most important sector if the provisions of the bills are not implemented.