A Case against India's farm bills

Farmers are fighting in India. It’s been ten months since the current BJP government fast-tracked three new bills to change the regulatory environment of India’s agricultural markets by opening it up to private players. The government’s position was that this would give farmers more freedom of choice to connect directly with non-traditional private suppliers. However, many of India’s farmers felt that this was just another step in this government’s agenda to corporatize the country and that it paved room for big businesses to dictate the price of their products, at the expense of their incomes and livelihoods. 

 And so, from all across villages and towns in India, they began their long march to Delhi. At the peak of the movement in December and January 2020, our nation’s capital barricaded itself with wires and spikes, physically separating itself from its citizen’s calls of distress with the threat of pain. There were (and continues to be) violent acts of police brutality, and, characteristic of our country, stories of some anti-national ‘Khalistan’ supporters riling up farmers circulating in the media. So far, eleven rounds of negotiations between farm union leaders and the government, and a devastating second wave of COVID-19 have barely put a hamper on the movement. With the recent protests in Muzaffarnagar and police violence in the Karnal district in Haryana, it is only going to get fiercer. Farm union leaders are now planning to make it an election issue in Uttar Pradesh, where the state assembly elections will be taking place next year. If they succeed in painting the BJP as an ‘anti-farmer’ party, this could be a huge blow to the party in a traditionally supportive constituency. 

The scale of the farmer protests in December-Jan 2021. Source

 Historically in India, agricultural markets have been the responsibility of the states, regulated through the state-level Agricultural Produce Marketing Committees (APMC). The APMC by and large mandates the purchase of ‘notified’ agricultural commodities through government-regulated wholesale markets, or mandis, which players have to pay commission and marketing fees to access. Although some states, such as Karnataka, have enabled farmers to sell directly to private parties, the price signals from each state’s APMC forms the basis of the highly fractured agricultural market. The APMC also regulates the market such that at the bare minimum, farmers receive a minimum support price (MSP) for their products. However, they are subject to inefficiencies, inequities, and corruption. Commodities operating in these mandis can change hands between players as many as five or six times in the supply chain, while the traders and middlemen operating can often exploit farmers, who receive a fraction of the price actually paid by the consumers. This price is inadequate to cover their costs of production and debts, particularly in times of low yield. And as the tragic epidemic of farmer suicides in India shows, this crisis is only worsening. 

 Mainstream neo-liberal economists seem unable to fathom why farmers are protesting. After all, each of the three new bills are said to reduce barriers between farmers and agricultural supply chain actors, giving them greater choice, allowing scope for greater profit. The Farmers’ produce and Trade and Commerce (promotion and Facilitation) Bill, 2020 (or “APMC-bypass bill”) attempts to limit the APMC’s oversight and jurisdiction by creating an alternate market free from state regulation, in the form of trade areas and electronic market platforms. The Essential Commodities (Amendment) Bill, 2020 allows private entities to hoard produce in accordance with price signals, with the government regulating supply only under ‘extreme’ circumstances, such as war, famine, or severe price rises. And the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 (“Contract Farming Bill”) allow private entities to engage with farmers via written contracts, without mandating them. 

 It is definitely true that these bills will reduce barriers in trading, storing, and growing produce, improving market efficiencies, and benefitting private actors and agricultural corporations. However, they are not particularly built to enhance farmer wellbeing. 

 Agricultural economists such as Sudha Narayan from the Indira Gandhi Institute for Development have highlighted in much detail the potential downsides of the bills. For one, there is a lack of transparency and oversight. The sole proof of goods transaction is a receipt that farmers are supposed to get upon delivery. This receipt is left entirely up to the buyer and the ability of the farmer to demand for one. Additionally, the basis of the entire dispute resolution mechanism enshrined in the bills relies on this receipt as proof of transaction. Secondly, there are no mechanisms by which a single national agricultural market, as stipulated by the “APMC-bypass bill” will emerge. Private players today tend to look at the price signals from the APMC as a guide, so creating an alternative market will either make no difference or could become subject to farmers’ relative bargaining power with their buyers. Either way, India’s farmers don’t benefit. And thirdly, it is highly probable that the cartels of traders and middlemen within the mandi simply reorganise outside of it to escape regulation and detection, continuing on the exploitation, without even needing to provide an MSP. This in particular is what farmers are concerned about. 

 Mainstream economists must understand that contrary to our economics textbooks, the market is not truly competitive. Instead, it is dominated by large monopolies and oligopolies, with entrenched partnerships with big players. These corporations have a vast assortment of buyers to choose from, whether in the domestic or international market, and will not be compelled to buy from those who request higher prices for their produce, for lack of machinery, difficulty in transportation, or low yield. Therefore, private businesses tend to be very selective in the geographies they work in, choosing areas with already existing infrastructure, skilled farmers, and higher productivity to reduce their placement and transaction costs. So, rather than the bills being for the vast majority of smallholder farmers in India, it will most likely be the larger farmers with greater capital who will reap its rewards. As always, the rich will get richer, while the poor stay poor. 

 It is a strange, tragicomic paradox that these new laws ensure that the burden of preventing exploitation, of standing up to power, is on the powerless- the farmers. Meanwhile, it is the powerful, large agricultural corporations, pocket-deep with the government who are presented with the freedom of choice- to share their wealth with them. If history has taught anything, it is that this rarely happens. And then there is the elephant in the room. 

Between 50-60% of Indian agriculture is rainfed. Agriculture employs more than 50% of the country’s population, most of them smallholders. 68% of them own less than one hectare of land. The environmental crisis and climate change, driven by increasing greenhouse gas emissions and a misplaced growth paradigm, are going to wreak havoc on our agricultural economy. It is already happening. Heavy rainfall events over vast areas of central India have been occurring thrice as frequently as compared to the early 1950s. The recent floods in Kerala in 2018 and 2019, and unseasonal rainfall in Rohtak, Haryana in 2020, have damaged crops, incomes, and lives. Increased instances of drought, water scarcity, and heatwaves have dried out soils, affected yields, and made agricultural labour more dangerous to lives. In the summer of 2015, over 2500 excess deaths occurred in India in a heatwave exacerbated by climate change. Meanwhile, sea-level rise, witnessed today in the submerging of the Sundarbans, will destroy fields, homes, and everything in between. These events are only going to become more frequent, lethal, and pervasive in our daily lives as global warming increases. It seems only fair that farmers, who are risking their lives and livelihoods to support the country in the face of this crisis, are guaranteed support. Surely as human beings with a conscience, our government feels a moral obligation to do so. 

Heatwave in Chennai, India, 2019. Source

 Predictably, some agro-economists proclaim that these new laws will lead to environmental sustainability. They will result in more holistic production planning and diversification towards crops more suitable to India’s future climate scenario, such as millets that grow in areas of low water availability. Private engagement with farmers, they say, will provide an incentive to invest in new technologies such as precision agriculture. Additionally, the rising instances of contract farming and private partnerships will require farmers to tailor production to suit their buyer’s needs- which the way global consumer preferences are shifting, will lead to better environmental practices. However, this is not necessarily the case. For example, before the Green Revolution, Punjab had a diverse agricultural system producing wheat, maize, pulses, and vegetables. While agronomists have advised a reduction in water-intensive farming required by rice and wheat, the corporate interests in the region have led to an expansion of basmati rice farming and specialization in wheat and rice paddies. Corporatisation, let alone privatisation, does not imply environmental sustainability, particularly if driven solely by the market. If anything, the corporate norm is short-term thinking, speculation, and practices that decimate ecosystems and livelihoods in the name of profit. 

 Once again, these farm laws maintain the onus of responsibility of sustainable practices on the farmers. It’s not those in power- the corporations, the government- who pay the price, but those bearing the brunt of the uncertainty and vulnerability of climate disaster. In the highly de-regulated system free from oversight that the new farm bills propose, where are the accountability measures for corporations to provide support to farmers, in the face of potential low yields, water scarcity, and climate change-driven extreme events? 

 These reforms follow the tradition of what progressive activist Naomi Klein calls ‘disaster capitalism’- the tendency of governments to ram through free-market policies in the wake of major crises. The current government took advantage of the food and water insecurity and economic inequality in India, compounded by the COVID-19 pandemic, to pass these laws with no consultation with or explanation of how they could potentially impact those it was made to serve. In doing so, they showed scant disregard for the people whose fruits of labour they literally feed on. There is a reason why eleven rounds of negotiations between farmer union leaders and the government have failed. Forget the issues in the economics, or the government ignoring farmers’ concerns- these laws were never meant for their wellbeing in the first place. India’s farm laws debacle has now become an issue of rights- of rights to support, to land, to be included at the decision-making table. It has now become an issue of respect. Akhilesh Yadav, Samajwadi Party president said that “the BJP must respect the farmers of this nation. The nation will not tolerate disrespect to them”. That’s all it boils down to - respect. 

 In 1948, Nehru, when speaking to the villagers about to be displaced by the Hirakund dam, said “if you are to suffer, you should suffer in the interest of the country”. The BJP government loves to display disdain towards Nehru, so they would be delighted to replace this saying. I suggest “if you are to suffer, you should suffer in the interest of the corporate elite”. Either way, unless some fundamental changes are made to how those in power think, unless information is provided in a clear, accessible way to the people it is meant to benefit, unless the responsibility of providing justification to new power structures are on the powerful themselves, there will be no change in India. Farmers will continue to fight (and rightly so), police will continue to lathi charge, and the corporations will continue to line their pockets. Meanwhile, our farmers will continue to be let down, fighting a broken agricultural system that has deserted them.