So Shall They Reap

The word ‘reforms’ can carry a double meaning. One calls attention to the literal sense, a positive one; the other insists on its exact opposite, a shadow meaning with an edge sharp enough to kill. The Indian farmer reaping acute distress is an age-old one—but it was in the post-reforms phase that death formally entered the frame. The grim harvest of suicides began in the mid-1990s. Farm policy has had a schizoid quality to it ever since. It was routine till the mid-2000s for pro-reforms economists to blithely foretell the death of agriculture as the mainstay of India’s millions: it was fundamentally unremunerative, and only a mass shift to urbanisation and services could feed India, they’d say. At the same time, the realisation that this line was politically unremunerative set in by UPA-I, and so it went hand in hand with ‘pro-farmer’ language. The era of loan waivers was upon us, followed now by talk of ‘doubling’ farm incomes. It’s within this frame that the latest bills of reforms ruffle the air.

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Economic factors are in play here, and deeply political ones too—but the space granted within democracy to articulate these is often fraught. Judge by the way these reforms were turned into law: via a voice vote, with a division being disallowed. (Because, as is suspected, the numbers likely didn’t suffice.) The Modi government had to turn off the TV cameras and turf out angry Opposition members as it shoehorned three contentious farm bills past the Rajya Sabha. Even a Union minister, from an allied party, submitted her resignation in its aftermath. It was not quite the day for genteel parliamentary discourse: rules, norms, the Speaker’s mics…none survived particularly intact. The Opposition accused the government of denying MPs the right to vote and ignoring the demand for referring the bills to a select committee—eight of the noisiest protesters were suspended. The ruling BJP demanded an apology from Opposition members for “hooliganism” and “goondaism” in the House of Elders. BJP Rajya Sabha MP Bhupender Yadav, who was present in the House, claims the governm­ent was ready for a division, but couldn’t proceed due to the “Opposition ruckus”.

It was a tragedy, because instead of an illuminating debate on the actual pros and cons, Parliament became an arena for political sub-plots. The deputy chairman who took the call—Harivansh Narayan Singh, a senior JD(U) leader—is now being offered as a symbol of ‘Bihari asmita’, against whom the Opposition affront was directed. PM Modi, who has been vociferously defending the three bills—the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill; the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill; and the Essential Commodities (Amendment) Bill—made it a point to laud the Bihari leader for his “big heart” and “statesman-like conduct” on Twitter, citing his action of taking tea for the suspended MPs sitting on an overnight dharna in Parliament. “For centuries, the great land of Bihar has been teaching us the values of democracy,” he tweeted.

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Bihar is due for assembly polls within a month, of course, so it’s not a bad time to acknowledge the value of democracy. No wonder Congress Rajya Sabha MP Jairam Ramesh tweeted: “The shadow of the forthcoming Bihar elections has fallen over Parliament now.” West Bengal will follow soon after—not coincidentally, some of the most aggressive Opposition voices on view were from the Trinamool Congress. BJP leaders, meanwhile, have been told to be aggressive in their defence, explaining the value of the new bills and how they will help ‘double the income of farmers’. Nor is the party trying to woo its old ally, the Akali Dal, whose sole representative in the Union cabinet, Harsimrat Kaur Badal, was the one who quit over the bills. With Punjab’s assembly polls also due in less than 18 months, it was politically imperative for the Akalis to choose a side. Their main opponent in Punjab, CM Amarinder Singh of the Congress, called it a gimmick and “too little, too late” to be of any help to the state’s farmers.

The ‘reforms’ on offer now seek to deepen a kind of managerial efficiency. It evokes the sense of cleaning up the channels of sale and distribution, being smart about marketing—getting business savvy into agriculture. The ‘market’ and the ‘Indian farm’ here are not two polar opposites of a value system, but complementary—indeed, conjoined—entities. Why, then, is not everyone convinced?

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Well, that relates not just to what benefits these bills can bring, but who corners those benefits. Amarinder Singh’s words cut to the nub of the debate. The bills needed wider discussion precisely because they would throw small farmers to the big sharks, he said. One of the proposed objectives of the reforms is to eliminate the brokers and intermediaries who line the highway of farm produce sale via state-regulated mandis. They are seen to be vital but unaccountable entities who can control and distort the farm economy. In the envisaged future, there will be more platforms for the farmers to sell to. That essentially means big business, which has long smelt a huge opportunity in the extended chains of agriculture. The government offers this as more “freedom of choice” for farmers; those who see it critically spy a move towards ‘marketisation’ that will, over time, enfeeble and replace the system of state procurement. The modicum of financial security farmers enjoy via the Minimum Support Price (MSP) is itself seen to be threatened—by implication, if not in actual letter. And the beneficiaries, it is felt, will be big farmers—and big business. In short, a deepening of the pro-market logic of reforms that may also deepen the iniquitous cut of profits.

The pro-reform lobby in the Congress is scarcely different from that in the BJP in favouring this overall shift. That’s why the BJP is accusing it of “hypocrisy”. The Congress had itself promised, in its 2019 manifesto, barrier-free trade and facilitation of sale outside the mandis notified under the Agricultural Produce Market Committee (APMC). “It is opposition just for the sake of it. Just because they are seated on the Opposition benches, they cannot change their stand,” says BJP spokesperson Sambit Patra. The Congress, in turn, cites the caveats and safety valves in their policy.

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Politically, no party can afford to be seen as antagonistic to farmers, who make up almost 43 per cent of India’s workforce—indeed, it’s natural and right for them to articulate the fears of common farmers. Parties like the Trinamool, CPI, CPI(M), BJD and TRS were all set to vote against the bills in the Rajya Sabha, while YSR Congress favoured them. The issue is unlikely to die down soon; the Opposition believes it has got a firm handle against the BJP after a while, and are planning to organise protests across India. Widespread farmers’ protests have already been seen in Punjab and Haryana: the fear of losing MSP support is the rallying point. It’s not politics for the sake of it, therefore. The fears are genuine. The RSS-affiliated Bharatiya Kisan Sangh (BKS), too, has expressed reservations about the bills, though it stopped short of joining a bandh call for September 25 by the All India Kisan Sangharsh Coordination Committee (AIKSCC), a pan-India collective of hundreds of farmers’ unions. BKS national secretary M.M. Mishra says the government has to ensure private companies don’t buy below the MSP. “Farmers are sometimes unable to sell their produce at MSP even in the mandis. So what’s the assurance that private contractors will buy at MSP?” asks Mishra.

Seen in their pure sense, agriculture marketing reforms have long been in the making and even longer in implementation. Touted as ‘the biggest reforms since 1991’, the bills affect the rights and revenues of states, with implications for the federal setup. Agriculture, in fact, is a state subject. “When it pushed through the legislation, it became evident the government has given up on trying to control the majority of states,” says Balveer Arora, chairman of the Centre for Multilevel Federalism. “When the Centre exercises its powers of legislation on such subjects, it is taking away the legislative space of the states—even if, technically, it’s not encroaching on their rights if the subjects are on the concurrent list.” This has been a general trend in recent years, even during the pandemic under the Disaster Management Act.

“The reform ideas are not new,” says former agriculture minister Sompal Shastri, one of those who had “initiated, articulated and helped prepare” the ­Bhanu Pratap Singh Committee report 30 years ago, which contained these seed ideas. Submitted on July 26, 1990, the report was accepted by then PM V.P. Singh and deputy PM and agriculture minister Devi Lal, but the three major reforms it suggested could not be implemented due to the government’s short tenure. “So, the three reforms, in this very form, are not the BJP’s brainchild. It has pulled out long-pending proposals and taken the initiative to implement them, which is commendable,” adds Shastri.

At the heart of the ‘reforms’ are contract farming, which ties farmers to the big corporates; freeing trade from APMC mandi monopoly; and doing away with the limits and licensing for stocking and trading in items listed under the Essential Commodities Act (ECA). The rationale behind contract farming is that over 96 per cent of India’s farmers have less than 10 hectares of land, while 86 per cent have less than 4 hectares. Aggregating the produce, planners feel, could help small farmers get the best price—particularly in global markets they otherwise have no access to. Exports of basmati and elite varieties of mustard and wheat are cited as examples of the success of this approach.

Shastri feels India still shies away from exports because of the legacy of food shortages. “That memory still haunts us, as demonstrated by the ECA. But our stocks of wheat and rice have been in continuous surplus since 1996. Our buffer stock norms require us to maintain 20-30 million tonnes, but government godowns have surplus stocks of 60-80 million tones. That’s a lot of wastage,” he says. Other experts say the bills will help traders, exporters, processors and corporates to connect farmers with national/global markets, generating higher farm incomes. The diversity of India’s produce, particularly in fruits and vegetables, offers plenty scope for aggregating and creating a global market—say, for mangoes—through brand-building, they say. S. Mahendra Dev, director and vice chancellor, Indira Gandhi Institute of Development Research, is, in fact, disappointed that “the changed ECA… allows the government to intervene when domestic prices spiral or there is a shortage in supplies as seen recently in the case of onions.” He prefers “unfettered freedom” for exports.

So much for expanded options, but what about security? Here’s where the APMC mandis come in. Their genesis can be traced back to pre-Independence times, but the model APMC Act in force in most states dates to 2003. “There should have been more discussions with states and farmers’ organisations” while trying to trim the operations of APMC mandis, Dev admits. The states also fear loss of revenue as there will be no taxes outside the mandis. The buzzword, though, is MSPs. To be sure, no bill talks of doing away with it. But once the trade moves out of the APMC mandis, will government agencies still procure food grains? Food security and other government schemes hinge on that. A big if. Also, will small and marginal farmers be able to cope with the marketing arrangements under contract farming? The experience so far has not been very salutary: the majority could remain vulnerable to market manipulation. The spectre of indirect corporatisation is real; instead of APMC monopoly, it’s feared that big players will dominate the market. It will be left to the still-evolving mechanism of Farmer Producer Organisations (FPOs) to protect the interests of small and marginal farmers.

“If the government throws out the MSP regime, it would be hazardous,” says Shastri. “It should be retained with greater commitment to buy every grain produced.” Government procurement is currently limited to a few states and hardly benefits 10-15 per cent of farmers there—mostly, the more vocal sectors. And hardly two dozen commodities enjoy the benefit of MSP: vegetables, fruits, milk and eggs are out of its ambit, and most headline-grabbing price fluctuations often happen there. But if, in reality, we only replace one form of monopoly (the state’s) with another (private), the systems of exploitation may remain—whether from the old traders in new garb, or new players.

Noted agriculture economist Y.K. Alagh believes “the legislation is in the right direction”, but says the reforms mean nothing without careful protective layers. Will the government set up the first stage in processing infrastructure? Will it provide price information? Will it help frame simple model agreements, in local languages, to help those entering contract farming? At present, the field is being sown with seeds of doubt.

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Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020

How it works

• It allows intra-state and inter-state trade of farm produce outside the regulated wholesale markets. At present there are about 7,000 regulated markets called the Agricultural Produce and Livestock Market Committee (APMC) mandis. Under the new law, the private companies will be allowed to set up their own markets along with these APMC mandis. The state governments will not be allowed to levy market fees or cess outside APMC areas. The government argued that the middlemen/commission agents who worked in APMC mandis formed an extra layer in the supply chain, and that their commission pushed up prices for consumers.

What government says

• Farmers will have the freedom to sell to anyone. Agri-business companies, corporates and traders will be allowed to open their own markets to purchase from farmers. The APMC system will continue and so will be minimum support price (MSP) determined by the government.

What farmers fear

• The biggest fear that it will destroy the level playing field between APMC markets and other traders. Under the bill, trade outside APMC mandis is virtually unregulated. Many believe that if the regulated wholesale markets lose relevance, private buyers could arm-twist farmers to sell at lower rates. If the farmers are not satisfied with the price offered by a private buyer, they cannot return to the mandi or use it as a bargaining chip during negotiations.
• Moreover, farmers argue that commission agents helped them grade, weigh, pack and sell their harvests to buyers. They also ensure timely payments to farmers. Also, farmers could complain about unfair practices to the APMC officers located in the market. However, under the new law, farmers will have to approach the sub-divisional magistrate court in case of any market dispute.

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Farmers (Empowerment & Protection) Agreement of Price Assurance and Farm Services Bill, 2020

How it works

• It draws a framework for contract farming agreement between farmers and buyers before sowing of a crop. It also prescribes a three-level mechanism for dispute settlement—the conciliation board, subdivisional magistrate and appellate authority.

What government says?

• The law will enable farmers to get pre-fixed prices for their produce, but they cannot be bound against their interest by the agreement. Farmers will be free to withdraw from the agreement at any stage, without incurring any penalty.

What farmers fear?

• It does not have any provision to penalise companies in case they deviate from the contracts. It does not prescribe or specify that contract price of the crop should be at least equivalent or above the MSP. It means the contractor/companies can pay whatever price they want to the farmer subjected to latter’s agreement. India’s experience of the contract farming has been really poor with farmers getting very low rates through contract farming as compared to selling it in government mandis at the assured price.

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Essential Commodities Act (Amendment) Bill, 2020

How it works

• Through the amendment, the government gave up its power to prevent hoarding and controlling price inflation. The government can now intervene only if there is a 50% price rise over previous year’s price in case of non-perishable goods and 100% price rise over previous year’s perishable goods.

What government says

• The move will help for better price realisation of essential commodities like food crops, etc and will benefit the consumer.

What farmers fear

• Till now, farmers didn’t have any limit for stocking, producing or selling their crops. As a result, they took conscious decision of selling their crops only when the market or the buyer is offering good price. The new law allows companies and traders to store as much quantity of food as they want, which amounts to promoting hoarding. This stockpile could be used to create artificial shortages, enabling the hoarders to push up prices.