Without heeding the cry of farmers for immediate financial assistance to pay off loans, the Narendra Modi government has leveraged the coronavirus pandemic to push reforms in the agriculture sector that are essentially meant to stimulate growth of agri-businesses and promote corporate farming.
With emphasis on contract farming and exports, the reform measures are meant to commercialise agriculture and encourage ease of business for corporations and multi-national companies.
This has been the effort of successive governments. But the private sector and corporations have consistently shied away from investing in loss-making agriculture and value chains, seeking tax rebates and subsidies in public-private partnership mode.
The fund allocation measures announced by Union Finance Minister Nirmala Sitharaman as part of the overall Rs 20 lakh crore stimulus package announced by Prime Minister Narendra Modi earlier this week are for the better part, an extension of various budget proposals.
The long-term steps do nothing to bring immediate relief to farmers who suffered huge losses under lockdown in the wake of coronavirus pandemic. Debt-ridden farmers have been demanding direct income in hand and input subsidies to tide over the situation.
The National Sample Survey Office data has shown that 40 per cent farmers would like to quit agriculture if they had other means of livelihood.
And therefore, at a time when the migrant labour is facing crisis of livelihood and there was necessity for creating employment opportunities in the countryside, Sitharaman’s pronouncements have fallen short.
After all, migrants are mostly youth who do not want to return to a non-profitable occupation like farming which employs over 50 per cent of the population.
“Having suffered losses, farmers were looking for immediate monetary relief to be able to buy seeds, fertilizers and other inputs for sowing kharif. Instead, the government has come up with long-terms reforms that are more tilted in favour of corporations and big companies. Contract farming goes against farmers as nothing is binding on big companies as we saw in PepsiCo example in Punjab,’’ said Yudhvir Singh, general secretary of Bhartiya Kisan Union.
According to him, farmers tend to get short-changed when they sell their produce to private sector as traders and companies tend to dictate the prices for their produce which are far below the minimum support price fixed by government.
The three key governance reforms announced by the minister aimed at freeing pricing, production and trade of agriculture. These had been in the pipeline for a long time.
The proposals are to dismantle the Agriculture Produce Marketing Committee Act to allow farmers to trade outside of notified markets, to amend the Essential Commodities Act that imposed stock limits on certain commodities and promote contract farming for an indicative price signalling mechanism between farmers and a corporate.
By bringing a central law, the intention is to circumvent states that are reluctant to amend the Agriculture Produce Marketing Act so as to not lose substantive mandi tax revenues.
E-trading (e-National Agriculture Market) has been around for some time now but hasn’t picked up as desired because of issue of quality control and dispute mechanism.
Dispute mechanism has been an issue in contract farming as was evident years ago in a PepsiCo deal with farmers in Punjab. The government has been resisting bringing in regulations on disputes resolution which are normally tilted in favour of corporations.
The government proposal to amend the Essential Commodities Act to “deregulate foodstuffs including cereals, pulses, oilseeds, onions and potatoes’’ has been in the offing since long. The Act has been used to impose export restrictions as well as stock limits at times of shortages and price rise.
Even now, the government proposes to keep the levers in its hand and allow clamping of stock limits only under "exceptional circumstances" like natural calamities and famines that cause “surge in prices".
However well-intentioned government’s reform measures may be, unless the producer (farmer) gains out of the value supply chain, it will remain business as usual. It is only when the farmer is not given Rs 2 for a kilogram of tomatoes that sell for Rs 60 in the retail market will reforms have raised the quality of life of a farmer.
Moreover, agriculture being a state subject, government will have to use its clout to bring on board all state governments, particularly the opposition-ruled ones, though the finance minister did say that inter-state trade was a central subject.