How Will The New Farm Laws Impact India’s Primary Sector?

by Syed Suhail Yaqoob and Haroon Bhat

The farm bills will create vultures in the agriculture sector, which will feed on poor farmers. Farmers now will not be sure whether they will be able to sell the produce or not.

Kashmiri Muslim villagers thrash paddy after harvest in Mirgund Central Kashmir on Wednesday, October 3 2018

The Indian economy is now in deep crisis and there is no doubt about it. Some economists had warned about the impending crisis but the government questioned their intentions. These economists were blamed for downgrading the image of India in the world.

However, in 2020, the full facts came out which haunted every right-thinking person in India. The economy was not only in deep crisis but was contracting. The latest data showed that the economy contracted by almost 24 per cent, something which was not seen since the independence of India. All sectors, except agriculture sector, saw sharp and even negative growth rates. The buck stopped on the spread of Covid-19 and subsequent strict lockdown imposed by the Central government to contain the virus.

Although all countries showed negative growth rates, India was the worst hit. The onus lies on the demonetisation of 2016, and faulty implementation of Goods and Service Tax (GST) in 2017. It is estimated that demonetisation alone peeled off 2 per cent of GDP of the Indian economy. For a populous and growing country like India, this must-have worried many.

Although the intentions of the government were honest, however, on the ground the policies backfired. The demonetisation was carried out without proper planning and also GST was launched without having a necessary digital infrastructure.

The same is happening in the agriculture sector in India. The latest data showed that only the agriculture sector showed a growth rate of 3.5 per cent in 2020. The government has in the meantime passed three controversial agriculture-related bills which have become a new farm policy which will debilitate the Indian farming community and hence the agricultural economy. The passage of these bills has caused a huge uproar in the parliament and the country also witnessed farmer protests on a huge scale. The farmers are on roads, especially in Punjab and Haryana. Although the government has tried to pacify the farmers, they seem to be in no relenting mode. The opposition leaders have already taken advantage of the crisis and are swindling no opportunity to criticise the government. The opposition has already cornered the government over miss-handling of Ladakh crisis, economy, migrant deaths and now high profile Hartas rape case. The seriousness of the issue can be gauged from the fact that even Prime Minister of India, Narendra Modi, was forced to comment on the farmer protests. Even after his assurances, the farmer protest continues, especially in Haryana and Punjab.

The New Laws

The three bills, now new farm policy on agriculture seek to change the way agricultural output is marketed, sold and stored across the country. Although the new laws seem to aim at freeing the farmers from exploitive tendencies of middlemen and Mandi-system, it is however to be seen how much successful these laws will be on the ground.

For instance, the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, allows farmers to sell their harvest outside the notified Agricultural Produce Market Committee (APMC) mandis without paying state taxes and fees. This may enable farmers to get better prices through competition and a reduction in transportation costs. However, the policy means states will lose revenues.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, also allows farmers to enter into a contract farming with agri-business firms or large retailers on pre-agreed prices of their farm produce and the Essential Commodities (Amendment) Bill, 2020, seeks to remove the commodities including cereals, pulses, oilseeds, edible, onion and potatoes from the list of essential commodities. This will end the imposition of stock-holding limits except in case of extraordinary circumstances. This is surely to impede food security in India. The government has passed several laws like the Food Security Act to promote food security in the country.

Why Farmers Protest?

It is a misnomer that farmers have started to protest after the passage of the farm bills by the BJP-led NDA government. In 2018, the farmers almost stormed Delhi. Farmers from different parts of India came knocking at the doors of Delhi led by the opposition leaders.

Golden fields: Parts of Kashmir are looking like golden as the farmers are busy harvesting paddy. KL Image: Bilal Bahadur

The protesting farmers demanded a special session on the agrarian crisis in India. They demanded one-time full loan-waiver and long term institutional measures to ensure that farmers are not pushed into debt. They also demanded the implementation of Swaminathan Commission Recommendations (2004) that recommended the minimum support price should be fixed at 50 per cent above the comprehensive cost of production. The other demands include free electricity used in farming and insurance scheme should include the entire family including the head of the family. The latter demand was to make sure that the family doesn’t suffer in case of farmer suicide, which has become rampant in India.

This is exactly why the farmers are protesting against the farm bills, which aim to dismantle the Minimum Support Price (MSP) system, Mandi-system in India and also dilute public procurement. The government has a well-established system of MSP, which ensures that farmers are able to receive payments for their produce, which at least covers their costs and is considered as the survival of the agricultural sector.

The MSP is a “minimum price” for any crop that the government considers as remunerative for farmers and hence deserving of “support”. It is also the price that government agencies pay whenever they procure the particular crop. The centre currently has fixes MSPs for 23 farm commodities but is not legally bound to pay these even if market prices for the said crop are below the announced floor prices. These 23 farm commodities include 7 cereals (paddy, wheat, maize, bajra, Jowar, ragi and barley), 5 pulses (chana, arhar/tur, urad, moong and masur), 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower and nigerseed) and 4 commercial crops (cotton, sugarcane, copra and raw jute).

In addition to MSP, the farmers were assured that they could sell their produce to the government in the Mandi’s all over India even if they might not find private buyers. The so-called reforming agriculture will give another shock to already stressed agriculture. The farm bills will create vultures in the agriculture sector, which will feed on poor farmers. Farmers now will not be sure whether they will be able to sell the produce or not. They will not also be sure of the payment they will receive for the produce.

Furthermore, the state governments are also worried over the farm bills as these may lose a big source of revenue especially Punjab and Haryana are worried that they might lose a big chunk of their revenues. According to the Constitution, agricultural marketing is a state subject due to the much localised nature of farm production but the new farm laws bypass the states by creating a separate structure of trading. They also dealt a blow to states’ rights and federalism.

State governments are also worried that Public Procurement and PDS will be jeopardised and this might impede the regulation of the food security system that has been created under the National Food Security Act, 2013.

Although the government has provided assurances that MSP and Mandi-System will not be scrapped and adequate protection of land ownership was in place to protect the farmers. However, the farmers think that the farm bills will eventually lead to it.

The Agriculture Minister told the Parliament that the new laws have absolutely nothing to do with MSP. However, the farmers want a clause in the bills that specifically refers to the retention of MSP and Mandi-system in India. The farmers believe that this new farm policy will not deliver freedom to them but to private capital. Amarinder Singh, Chief Minister of Punjab in his opinion piece on farm bills in The Indian Express, argues that these farm bills will throw small farmers to big sharks. He states that the bills are silent on MSP regime, which is the lifeline and key to survival for the poor, small and marginal farmers of India which constitutes 85 per cent of India’s farmers.

Is It Ill-timed?

The reform of any sector is important to make it compatible with the emerging world. It is then imperative to analyse the facts about agriculture sector in India. Indian agriculture sector contributes less than 15 per cent of Gross Domestic Product of India. However, it employed more than 50 per cent of the labour force in India. Furthermore, around 70 per cent of Indian population resides in rural areas, which indirectly or directly have to rely on the agriculture sector. However, over the years the sector has become stressed owing to a lot of issues that most importantly include declining average land holdings. As per the Agriculture Census (2015-16), the average size of operational landholdings has declined from 1.15 hectares in 2010-11 to only 1.08 hectares in 2015-16. The small and marginal landholdings are now close to 90 per cent of total holdings. Nearly one-third of farmers have land parcels smaller than one hectare while 37 per cent of farm households owned land parcels smaller than 0.4 hectares, another 30 per cent had holdings, which fall between 0.41 and 1.0 hectares, can potentially make the profession unfeasible. Only 13 per cent agricultural households owned landholdings bigger than 2 hectares in India.

Farmers throwing the bunches of paddy saplings towards the group for transplantation. KL Image: Bilal Bahadur

The other issue concerning Indian agriculture is the debt situation among farmers. A study by the NABARD showed that around 55 per cent of farmers are under debt in India. The farmers have on an average 1.04 lakh rupees debt, which is huge given the less amount of land available to them. The frequency of the droughts coupled with the shrinking of groundwater has only led to an increase in debt situation in India. Although the government aims at doubling the farmer’s income by 2022, it requires more than 10 per cent agricultural growth, which is impossible to achieve.

A report in the Print showed that the incomes are not increasing but debt is continuously growing among farmers in India. No doubt it is pushing farmers to suicide. The latest data showed that around 10 thousand farmers died by suicide in India. The crisis in the sector can be gauged from the fact that around 50 per cent of farmers want to quit farming and settle in urban areas. This surely reflects the bleak future in farming, fewer prospects and declining incomes. Further climate degradation, high input costs, ill-health, costly dowries that are rampant in rural India and a lack of alternative livelihoods continue to pose severe challenges to farmers.

Missing Women Farmers

 Indian society is still very much patriarchal even after 70 years of its independence. The farmer protests reveal deep upsetting patriarchy. The latest data available with the government shows that Indian agriculture sector is deeply feminised. As compared to only 48 per cent of male farmers working in agriculture, the sector employs more than 75 per cent of women.

A woman walking through a paddy field when the farmers are busy in trans-plantation of paddy.

The research has shown that women comprise more cultivators and farmers compared to men in the sector. The feminisation of agriculture has started right through the 20th century when less female workers were absorbed in the industrial and service sector. Moreover, there has been a steady male-oriented rural to urban migration that has pushed women to flock in the households to work in agriculture. It has to be noted that rural to urban migration has been termed as distress migration. Men are forced to leave to urban areas for better income whereas women, who lack social mobility and have to look after the farms. In this situation, the government has introduced laws at such a time when more women are involved in agriculture. It is likely that they will be exploited by private corporations who have enough social, political and economic resources.

The government should have provided more resources to the agriculture sector in order to increase the economic potential of women rather than backtracking from the sector. There is a consistent decline in capital formation by the government throughout the 21st century. The government still adopts policies that aim at male-farmers rather than female-farmers. The new farm bills will surely impede the empowerment of female farmers in the country.

(Authors Syed Suhail Yaqoob and Haroon Bhat research scholars in the Department of Economics at the AMU, Aligarh. The opinions expressed in this article are those of the author’s and do not purport to reflect the opinions or views of Kashmir Life.)

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