Farmers Protests and Agriculture Reforms Impasse – Contra National Interests

Escalating “Farmers Protests” is the real challenges faced by the BJP/NDA. With vested political interest groups joining the bandwagon of vested farmers/traders groups, there is total obfuscation of real issues and resolution impasse a distinct prospect. The political parties – the Congress Party, NCEP, AAP, Left etc., have hijacked the protests. Status quo ante - “Repeal of the 3 Laws” – is their war-cry with utter disregard to not only hurt farmer’s interests, but also national security interests on the rebound in posterity. Consequently scope for resolution appears remote.

Fact One: India a self sufficient in Agro-products but also a net exporter due to several revolutions including the “Green”, “White - Milk”, “Blue - Fisheries”, “Red – meat/poultry”, “Golden – fruits/vegetables” and “Gene – Cotton” triggered by innovations in technologies.

Fact Two: Milk is the largest Agro-commodity - about 177 million tons in 2017-18. As per experts, in value terms, value of milk exceeds that of rice and wheat combined. Yet, there is malnutrition of Children.

In reality, there is food insecurity, particularly malnutrition. Cost of living continues to escalate with unemployment to the fore and wages static resulting in inadequate consumption. Various schemes sponsored by the Central and State governments to address the issue include: PM-KISAN Samman Nidhi; PM Kisan Pension Yojana; MGNREGA; mid-day meals in the schools; Antyodaya Anna Yojana sponsored by Government of India to provide highly subsidized food to millions of the BPL families based on PDS-yellow Card (green in color); white ration card issued by State governments for APL families above Rs.1,00,000.00. Thus, majority of farmers and labor living in rural and even urban areas are covered.

Economic insecurity, low productivity and lack of modernization are the major challenges. Most important are procurement and public distribution considered vital to making agriculture economically viable and sustainable. It remains a far cry what with traders/commissioning agents fleecing the farmers at Market Yards and low procurement. But ultimately, technology is also important for farmers to make agriculture economically viable and ecologically sustainable.

Loan waiver is a fraud since tenant farmers are left out. And, majority of farms nearby cities and towns, owned by city-dwellers, are cultivated by tenant farmers who take loans at astronomical interesL rates. Land reforms mentioned in the Swaminathan Commission report remains pending - Not only just redistribution of land, but also surety of jobs for landless laborers.

Today, production and supply of products outstrip the internal consumer demand, particularly Wheat, Paddy, Cotton and Sugarcane. Ironic but true, the Central Government imposes export restrictions of onion to control the escalation of Onion prices in local markets thereby depriving profits to the Onion farmers. India imports value added agricultural products like Palm oil, Almonds, Cashew Nuts, Pista, and Finished Garments etc.

Commonsense of basics of economics: demand, supply and production must be governed by market demand – domestic and exports. No point merely producing surpluses. At the same time, farmers must exploit opportunities available for import substitution. It impies diversification and in situ value addition. Hardly there is informed debate on the above issue. For over three decades agriculture experts have been expressing the need for “Agricultural reforms”. Yet, none of the regimes made an attempt to formulate and implement them out of fear of losing vote banks.

Who are to be blamed for the cumulative mess or chaos prevailing in the Agricultural sector? All alike, including farmers, State and Central governments for their failure to formulate and implement appropriate agriculture reforms and policies.

Current agricultural policies and prices are skewed towards curbing inflation which is consumer centric. At the same time, farmer’s interests are managed through subsidies and MSP. State governments procure farmers supplies at the Market yards at the prevailing MSP rates. States like Telangana and Chhattisgarh have announced their inability to procure at the Market Yard due to losses.

MS Swaminathan chaired the National Commission on Farmers (2004–06) appointed by the Union Government in 2004. The Commission submitted five reports in 2006, outlining comprehensive measures required for the sustainability and viability of agriculture in India. The farmers’ demand to implement Swaminathan Committee report, particularly pricing C2 + 50% (total cost of production + 50%) for MSP and total procurement remains only on paper – barely 15-20%.

Ipso facto, least realized is that input costs varies from States to States and agro-climatic regions to regions. And, 50% of cost of production is also difficult to determine on annual basis. Merely taking expenditure on inputs for fertilizer and seeds and labor, cannot be used to determine the cost of production. One must add the imputed value of family labor, land cost, the interest on land, etc., as suggested by Swaminathan in the Farmers’ Commission report. And, land costs – official market values of Rs.3-5 lakh an acre near cities and towns. Near Megacities, rates are astronomical and vary. No common denominator can be applied.

Realities of agriculture sector are quite complex; not merely guaranteed annual MSP centric and the government procurement through Mandis – Wheat, Paddy, and Sugar Cane centric and subsidies (seeds, fertilizers and power). No more, deficient Wheat and Paddy States need to import from the Punjab-Haryana-NCR-Western UP regions. For, they too have developed canal irrigation systems and are producing surpluses to their demand requirements in their own backyards – Telangana and Chhattisgarh. No simplistic solutions can be found to address on a common template.

What does it imply for the farmers of certain agro-climatic regions like Punjab, Haryana, NCR and Western UP.? They cannot thoughtlessly continue cultivating Wheat, Paddy and Potatoes using classical and conventional cultivation practices by flooding with fertilizers and pesticides adversely reducing soil fertility with hardly any profit returns despite enjoying 3-4 assured Canal-fed cultivation.

Yet another critical factor that confronts political economists is management of Consumer Price Index (CPI) used as a measure of inflation at manageable levels. Annual increase of MSP automatically results in CPI inflation that may have adverse political fallout what with the working middle class demanding higher wages and salaries. In retrospect, it is a vicious chain-cycle. NO DEBATE! Why?

Surplus marketing management is an imperative through exports. In reality, India does not figure in the top 10 agriculture product exporting countries: USA (150 USD); Netherlands (94 billion USD); Germany (86 billion USD), Brazil (79 billion USD); France (74 billion USD); China (63 billion USD); Spain (50 billion USD); Canada (49 billion USD); Belgium (44 billion USD) and Italy (43.7 billion USD). It may be noted that all countries with the exception USA and China are insignificant in size in contrast with India, and their agro-climatic conditions do not permit more than 1-2 crops annually.

India agriculture commodities export is valued at USD 38.5 billion (2018) that constitutes 12.6% of total exports. Top ten exported commodities during 2018-19:Marine products (USD 1.5 billion); Basmati rice (USD 4.71 billion); Buffalo meat (USD 3.59 billion); Spices (USD 3.31 billion); Non-basmati rice (USD 3 billion); Cotton (USD 2.1 billion); Oil meals (USD 1.5 billion); Sugar (USD 1.3 billion); Castor oil (USD 0.9 billion); and Tea (USD 0.8 billion). Top ten destinations for exports are Vietnam, Iran, Saudi Arabia, U.A.E., U.S.A., Indonesia, Nepal, Bangladesh, Malaysia and Iraq.

More important it is to note that for promoting exports of agricultural commodities, not only prices have to be competitive in the international market but also value added products. So, the issues of farmer’s incentives like subsidies are inescapable imperative. China supported its farmers by $212 billion in 2016, and the OECD as a group supported its farmers by $235 billion per year in 2016.

Agriculture Export Policy (AEP), 2018 was formulated with the vision: “Harness export potential of Indian agriculture, through suitable policy instruments, to make India a global power in agriculture, and raise farmer’s income”. Unless holistic reforms are formulated and implemented, India can in no way traverse on the path emerging as a global power.

Next, the issue of import substitution by diversification of crops is also critical. International purchases of imported palm oil cost an estimated total US$24.5 billion in 2019. India tops the list of importing nations - US$5.4 billion (21.9% of total palm oil imports). Not only Palm Oil cultivation needs to be promoted by States and Central Governments as import substitution initiative but also to exploit opportunities for export. Similarly, imports of Almonds, Cashew nuts and finished garments while exporting cotton.

All alike are aware of the inherited strongly entrenched trader’s practices in Agricultural Produce and Marketing Committee (APMC) - farmers to sell their produce only through these markets. These markets have been rigged by commission agents taking away an unduly high share of consumers’ rupees in the value chain. As a result of these restrictive trade and marketing policies, India’s farmers have been implicitly “net taxed” despite large input subsidies. The 2018 OECD-ICRIER report on India’s Agriculture Policies estimated that the Producer Support Estimates (PSEs) for 2000-01 to 2016-17 was minus (-) 14.4 per cent of the value of gross farm receipts. This amounts to an implicit “net tax” of about ₹2.65-lakh crore ($38 billion) annually to farmers.

The way to escape from the trap is to reform the archaic policy structure – reform the Essential Commodities Act (ECA) of 1955, the APMC Act and the export and import policies - in a way that at least ensures farmers a “level playing field” with consumers. Then only, Indian farmers can get better incentives and higher profits and to encourage them to adopt better technologies, raise yields, and make India much more competitive. If India does that, it can not only feed its population but can also create surpluses for exports.

Even critical is the reduction of losses in agriculture and horticulture sub-sectors at various stages of production and movement. The estimated the total volume of losses for all commodities to be about Rs 92,651 crore. In the case of cereals, losses ranged between 4.65% (maize) and 5.99% (sorghum). In the case of wheat and paddy, the losses were 4.93% and 5.53% respectively. Moreover, the losses were higher at the level of farm operations. They were 4.67% in the case of paddy and 4.07% in the case of wheat. The loss in storage was only 0.86% for both wheat and paddy. The perishable crops - fruits and vegetables - suffered much higher losses: Fruits - mango’s (9.16%); guava (15.88%); and apples (10.39%); and vegetables - potato (7.32%); and tomato (12.44%).

Diversification is the Mantra for enhancing formers profits. There are many incredible stories of adoption of innovative cultivation practices to ensure diversification that have made farming a profitable occupation. The example of Gansu Mahto, a farmer from Sadma village of Jharkhand, who was earning Rs.50/Day as a daily wage worker to earning Rs. 50 Lakh/Year needs to be adopted to achieve diversification as means to achieve higher profits.

Gansu’s father owned a 9-acre plot of land. In 1991 when he was just 18, he was working as a daily wage construction worker at Ranchi, where he earned Rs 50 per day. After working for three years as a laborer, Gansu returned to his barren land and started toiling day and night to make it fertile. Initially, he began by growing ‘Goda Dhan,’ a type of paddy that can be grown on barren land. In 1998, Gansu tried planting capsicum in just 0.15 acres of his farm, which was a huge success and he earned Rs 1.2 lakh from it that year.

In 2015, he joined a 5-day training program at Chhattisgarh organized by successful farmers to help marginal farmers by paying Rs.5, 000. Gansu started organic farming. He gathered all the dung from the cattle on the farm, made organic fertilizer and fed his land with the same. After 15 days, when the soil looked ready, he started planting watermelons. The watermelons were ready to be harvested in 75 days, and all the above techniques gave him an excellent quantity and quality of the harvest. Consequently, Gansu made a profit of Rs 2 lakh after selling them for a reasonable rate in the market.

Gansu made use of his Kisan credit card to get a loan of 1.20 lakh through the Kisan Card and installed drip irrigation, mulching, and a greenhouse and poly house on his farm. Under the Prime Minister Krishi Sinchayee Yojana, Gansu got subsidy of 90% to install a drip irrigation system on their farm. Gansu has set up poly house in 4000 square meters of his farm. Farmers can get a subsidy of 90% for this purpose as well. Gansu also used the mulching technique, which protects the saplings from excessive heat or cold and limits the growth of weeds too. In 2018 Gansu planted capsicum in 2 acres, brinjal in 2 acres, tomatoes in 1.5 acres, cucumbers in 1 acre, cabbage in 0.50 acre land and paddy in the rest. Along with this, he planted gerberas. His turnover from this was Rs. 50 lakh and the total profit earned was Rs 20 lakh. So far, Gansu has given free organic farming training to almost 15,000 farmers.

Finally, one cannot expect farmers to actively practice production, stock holding, value addition in situ and supply chain management all by oneself not only pan-India but also exploit available export opportunities. Participation of “Start-ups” and new marketing honchos is inescapable for exports.

The ruling BJP has promised to double farmers’ incomes by 2022-23 in its 2019 manifesto. It has announced higher MSPs for about 23 major commodities in 2018-19, but in the absence of a large scale procurement mechanism by the State governments, the market prices for most commodities have remained 10-30 per cent below the announced MSPs. Also, the BJP invoked direct income transfer to farmers’ accounts. However, it constitutes just 5 per cent of farmers’ incomes. The cost of this is likely to be ₹3.6-lakh crores ($51 billion) per year. Doubling of farmers’ incomes by 2022-23 would require much bolder reforms in Agri-marketing.

Next, the Congress party has made great turnabout having explicitly promised to carry out Agri-marketing reforms along with a direct income support to the bottom 20 per cent of the population. Sonia Gandhi, in pursuit of vote bank politics, has given a clarion call to repeal “Draconian 3 Laws”. Not to be left behind, Arvind Kejriwal, AAP, self style Anarchist CM of Delhi, tore the “Laws’ in the Assembly.

And, the Modi-led BJP/NDA has bitten the proverbial “Bullet” and blamed for not consulting the real stake-holders – farmers – prior to passing laws. Considering the viciousness of “vote bank politics”, can the BJP emerge out of the present crisis and implement agriculture reforms? Be that as it may, holistic agriculture reform which is an imperative may remain a forlorn hope.