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The Indian Farm Bills to force farmers to “get big or get out”?
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Images of turbaned farmers cooking meals for the langar (traditional community meals), women farmers explaining why they are striking, and Punjabi youth rapping and taking to social media have been streaming in from India for weeks as protests mount against three recently passed central government bills. Not only The Guardian and Democracy Now but also the Wall Street Journal, The New York Times and The Washington Post have reported on the strike, and Canadian Prime Minister Justin Trudeau has extended his support to the striking farmers. But in India, the national mainstream media, with a few exceptions, have been trying to paint the striking farmers either as misguided, as coming under the sway of opposition parties, as “Separatist, Khalistan elements” or as “anti-nationals,” a term used to criticize anyone who questions central (federal) government policies. The central government has responded by taking out full-page advertisements in English dailies insisting that its recent bills will help farmers; this mantra is being repeated by government spokespersons and pro-government media outlets.
The men and women of Punjab who have been striking since early fall disagree. They perceive an existential threat to their survival in these three bills, collectively known as Farm Bills, and two other ordinances that have not become laws yet but have the potential to further adversely affect their access to electricity and farming operations. Their overwhelming fear is of losing the state-backed markets (known as APMC-mandis) that guarantee minimum support prices (MSP) for the main crops they produce, leading them towards bankruptcies and loss of their land down the road.
The legislative process itself had been undemocratic. The Modi-led NDA government has used the coronavirus crisis and the associated lockdown period as a smokescreen for hastily passing a number of laws that have implications for several sectors including labor, agricultural marketing and farming itself. Together, these acts affect the food security of more than 80% of the country, while enriching the ultrarich further. During Modi’s time in power, the net worth of select Indian billionaires has grown exponentially while unemployment has skyrocketed. Even before the COVID-19 crisis hit India hard, the economy was in shambles and the state was selling off its stake in profitable public sector undertakings. The two top Indian billionaires, who the farmers point to as poised to benefit from the Farm Bills, are Ambani (who became 4th richest person in the world in 2020, up from 40th in 2014) and Adani (who grew to be 40th richest in the world in 2020 up from 609th in 2014); both are in the business of food and agriculture, including in marketing related infrastructures such as ports and retails.
The farmers’ protests started in early September in Punjab. (See the map from 2013 above: The state shaded darkest green, indicating the state with highest monthly agricultural income.) Initially the farmers stopped rail traffic in some parts of the state, and by October 1 they had grown into a state-wide “rail roko” (stop rail traffic) movement. These protests soon cascaded. One-quarter of a billion workers went on a national strike on November 26 and extended their support to the striking farmers, who too were taking their protests to the national capital. Harshly attacked when they tried to enter new Delhi and barricaded at several entry points surrounding Delhi border, the farmers of Punjab are staying put on the interstate highways leading to Delhi despite below freezing temperatures. Farmers from other states, especially from Haryana, are joining them. (In the map, see the lighter green south-east of Punjab.) It is considered the largest mobilization in recent memory.
Even before these new bills, things were not going well for the agricultural marketing and farming sectors in India, especially for the country’s small and marginalized farmers. With high input costs and unfavorable terms of trade, the rate of indebtedness among farmers is very high in general, with the impact even worse on those with smaller landholdings. Faced with the necessity of reducing their input costs, some of these farmers have turned to agroecological practices; however, most have continued with conventional green revolution technologies. Farmers are indebted, but under the current system, at least they are assured a guaranteed market for their crops and a price based on the state determined minimum support price.
The history and function of APMCs
APMCs are marketing boards set up decades ago, and the “mandis” are physical marketplaces regulated by individual states to ensure that farmers receive guaranteed minimum support price from retail traders. They also function as sources for price signals for governments, enabling state intervention in markets when necessary, and help with price discovery for other non-state buyers. The government policy of public procurement of crops at Minimum Support Prices (MSP) has been central to the successful implementation of the green revolution in Punjab and a key pillar of India’s food security. However, incentivizing agrochemical intensive monocultures has come at tremendous cost to people’s health and severe ecological crisis in the green revolution belt, such as contaminated and/or depleted ground water levels.
The functioning of the APMCs has been uneven across the country. The APMC system in Punjab has performed better than almost all others, despite the grip "arhityas" (commission agents) have over the functioning of the mandis. The revenue generated through APMCs (as tax or fees) is an important source of income for the states for its development; in the case of Punjab, it is used to develop agricultural marketing related infrastructure — for storage, open mandis and for transportation from “mandis” to “godowns” (silos).
Almost three-quarters of the wheat and rice bought in Punjab and Haryana by the APMCs is sold to the Food Corporation of India (FCI), and these two states account for close to half of the India’s public procurement of wheat and rice, according to latest procurement data from Food Corporation of India. The FCI uses much of this rice and wheat for India’s public distribution system.
Why the three Farm Bills are problematic
While the APMC system has many flaws (including politicization of the market committees and cartelization by traders and commission agents that suited vested interests), it has also placed some limits on the ability of private traders and corporates to manipulate prices. These limits are the implicit target of the three bills: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, referred to as the APMC Bypass Bill; the Essential Commodities (Amendment) Bill, 2020 or the Freedom of Food Stocking by Agribusiness Bill and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, better known as the Contract Farming Bill.
The proponents of the bills claim that they will open up new marketing opportunities for farmers. But this claim makes little sense. There is nothing stopping farmers from selling in the open market or across the state lines now. At the national level, APMCs purchase less than one-quarter of the marketed crops. Even though the rest is sold in the private market, these private traders, too, look to APMCs for price signals. In fact, it has been pointed out that the low APMC density in the country is one of the barriers preventing farmers’ access to the APMCs in many states. Clearly, one purpose these bills will serve is to streamline operational guidelines across state lines, enabling traders to operate easily in multiple states and helping integrate markets at the national level. While national level market integration can help manage supply better, without adequate regulations in place such initiatives can make farming communities vulnerable to external forces.
Regulations to address these challenges are imperative, but instead of building on existing rules, the Farm Bills would dismantle them. Together, these bills will reorganize how farmers access credits and inputs, and how they market their produce (when they sell, who they sell to and at what price they sell), and at what price they as consumers can buy food. In case of any disputes, farmers would be required to go to a sub-divisional magistrate court — which is beyond the capacity of small farmers to pursue given their financial constraints. The Contract Farming Act, when combined with APMC Act and Essential Commodities Act will pave way for vertical integration, where an agribusiness corporation can provide inputs on credit, and determine what crops the farmers should grow, reorienting the purpose of agriculture from food security to that of exporting away from the foodshed.
Opposition to the Farm Bills
The Right to Food Campaign of India put matters well in their email update in support of the Farmers Strike: “In passing these bills, the government has ignored all provisions under the National Food Security Act (NFSA, 2013) that aims to ensure food security for all with state required to make provisions for advancing food security through measures that protect rights of small and marginalized farmers. It proposes land reforms, minor and small irrigation systems, remunerative prices, affordable power and crop insurance. It also includes provisions for procurement, storage and movement related interventions towards decentralised procurement. Instead these three Farm Bills [….] shifts the onus of the State on corporate entities without any protective regulation.”
In contrast, the Farm Bills will also undermine India’s public distribution system, which has been source of food security for millions through the COVID-19 months when unemployment has been high. The changes in the Essential Commodities Act especially will have implications for affordability of basic food items like pulses, grain, oil and onions that could be impacted by price fluctuations through hoarding.
Unless they are repealed, these ordinances will be in hindsight the moment when Indian farmers were told to “get big or get out” — the mantra repeated to U.S. family farmers over the last several decades. These policies, embedded in the U.S. Farm Bill, have resulted in the number of U.S. small and medium-scale farmers dwindling and farm-consolidation increasing; with agribusiness having a strong grip over farmers and farmworkers lives, and agribusiness determining much of what we eat in the USA. The result in the U.S. is clear: a crisis in public health, ecological health and for rural communities.
The Right to Food Campaign of India, in addition to asking the president of India not to approve these bills has also demanded that the Union Government should increase the MSP for agriculture produce to 150% of cost, backed by the law and that "mandis" should be developed at every block level under the decentralized procurement system, with special focus on women farmers. The campaign asks not only that “Facilities of storing food-grains should be made available at the village and panchayat level and purchase of agriculture produce from small and medium farmers should be prioritized,” but also that “the Government of India should provide adequate budget to strengthen the system of FCI and should ensure that private companies and corporates should not interfere in the functioning of FCI, as has been done recently for storage facilities with Adani Logistics.
As Sudha Narayanan of the Indira Gandhi Institute for Development Research (IGIDR) and Kavita Kuruganti of the All India Kisan Sangharsh Coordination Committee (AIKSCC) discussed in a webinar hosted by Alliance for Sustainable and Holistic Agriculture (ASHA) in early September, reforms are needed, but not these. The new laws seem to worsen the already uneven playing field with a new institutional regime in which they will flounder even more.
The call for Bharat Bandh (to stop all activities for one day in India) on December 8, 2020, by Samukt Kisan Morcha — the coalition of 500 farmer organizations across the country — received broad-based support. Almost all the political parties outside the ruling coalition at the center, trade unions and women’s organizations, as well as student and youth organizations, across the country joined the strike or expressed their support.
A rally at the Minnesota Capitol in solidarity with the farmers' strike in India.
The way forward
Advocates of the reforms agree that decisions on these reforms and how to go about them must be taken at the state level in consultation with food producers and consumers. Since sustainability concerns must inform decisions from farm to fork, such reform should pay adequate attention to incentivizing sustainability even where they are primarily about agricultural marketing. Given the backward and forward linkages, marketing-related reforms, too, have the potential to promote farming practices to cropping patterns that are agroecologically appropriate and enhance biodiversity and water conservation while limiting the use of agrochemicals. Incentivizing such change must be part of the reforms, if India is to do right by its food producers and its workers, not by its billionaires.