State governments must use the agri-reforms to create a roadmap for agricultural transformation that takes them beyond the short term Rice-Wheat-led gains
A farmer will have the right to sell anywhere and to anyone who offers her the best price
By Baskar Reddy & Anish Kumar Several commentators have hailed the passing of the farm bills in Parliament as a historic, bold and transformative initiative taken under the leadership of the prime minister. Simultaneously, we are witnessing massive farmer protests in the agrarian states supplying the bulk of the government’s MSP procurement. How did APMC, a critical pillar to ensure fair play in the 1960s, turn restrictive and regressive (in not allowing farmers to sell freely, to whomever they wished)?
It is pertinent to know that only a farmer in India cannot exercise her fundamental right to sell what she produces to anyone she wishes, while a person in any other profession can do so. Caught in a time-warp, these set of reforms, in the Covid-times, have understandably laid bare conflicting positions, with many well-meaning farmer voices and entrenched interests on the same side.
There has been bipartisan consensus over the last two decades or so—both the UPA and the NDA governments have tried and failed to convince state governments to reform APMC Acts, notwithstanding periodic manifesto promises and model APMC Acts. They failed with both the ‘carrot’ and the ‘stick’ approaches, trying to link financial support to agriculture based on reforms. The present crisis created the perfect window to usher in these transformative reforms.
We urge the commentariat and practitioners to locate these reforms within the wider changes in the overall rural economy, demographic shifts, role of the state, advent of technology and critical shifts in post-Covid supply chains. People on both sides of the divide, and even outside who know nothing about agriculture, can arrive at the commonsensical benefits that would be ushered in as a result of new laws as also the risks. The four fundamental changes proposed are:
1 A farmer will have the right to sell anywhere and to anyone who offers her the best price 2 There is no need for a farmer or a company to pay mandi tax if the mandis are not providing any additional services 3 Companies will only invest in infrastructure and food processing if they are given the freedom to procure and store whatever inputs are required for their business. Ad hoc-ism in the form of stock controls leads to uncertainty, and as a result, companies do not invest in infrastructure 4 Companies engaging farmers in contract farming and providing crop advisory, inputs and assured buy-back is boon for the farmers. Of course, the government can always have a strong oversight on the way the companies engage with farmers and can anytime blacklist companies that are violating the prescribed norms.
If the benefits are so obvious, then why is there an opposition to these bold reforms? It is also pertinent to note the opposition is largely from two states, i.e. Punjab and Haryana, the two states regularly reporting farming as a profitable vocation. Unlike elsewhere, farmers from these states get 100% MSPs, thanks to the procurement by the Food Corporation of India (FCI). Two other stakeholders who stand to lose are state governments and commission agents (arhatiyas).
Mandi boards play an important role in agriculture development; their stellar role in procurement during the Covid lockdown is widely acknowledged. Flexibility on the part of the central government to compensate for the loss of revenue or let FCI continue to pay mandi taxes for the next few years would help upgrade them into market exchanges for modern times.
As far as the commission agents are concerned, the governments should work on a clear roadmap to modernise them by facilitating them in providing value-added services. As most of these commission agents are well-off, they could be leveraged to set-up grading and sorting, warehousing, cold chains and food processing infrastructure. This way, it is a win-win-win for the state government, farmers and the commission agents.
If the rice-wheat monoculture continues for long, climate change and depleting water tables may turn Punjab into a desert. It is in this context that the state governments should take the LEAD in developing a roadmap for agriculture transformation:
1 Leverage the reforms and move forward rather than getting stuck in the past: States can invite the private sector to invest in agriculture infrastructure and food processing units. Can we challenge ourselves to be the world’s largest exporter of agriculture products and do better than small countries such as Israel and the Netherlands?
2 Engage in environment-friendly and climate-smart agriculture practices. Soil health improvement and water conservation measures should be the top priority for the governments. Measures for the elimination of straw burning, the practice of zero tillage and conservation agriculture should be directly linked to farmer subsidies.
3 Accelerate research and academic excellence to bring in the ‘best in class’ technologies which can double, or even triple, farmers’ incomes compared to their incomes from rice and wheat system. More importantly, these institutions should have 10-15 years of vision in identifying threats posed by climate change and develop appropriate solutions.
4 Diversify to grow high-value commodities such as vegetables, nutri-cereals, oilseeds and pulses. India currently imports $10 billion of edible oils; can we take this as a challenge to reduce our import dependence, earn better incomes and conserve the environment? Similarly, by diversifying into high-value crops such as vegetables and fruit, India could become the food- processing hub for the world.
With the short-term mindset of better incomes through rice-wheat monoculture, you may win a few rounds but could lose the war on agriculture transformation. If you want to ensure future generations see gainful, dignified opportunity in agriculture, it is time to reboot and LEAD farmers. Farmers have to be made part of the entrepreneurial ecosystem (FaME—Farmers as Micro-Entrepreneurs).
This will accelerate the application of science and technology in agriculture production, minimising farmers’ risks and add value in the agriculture sector through the use of modern business practices by building synergies between large scale micro-entrepreneurship and dynamic ag-tech startups.
Authors have been working in the social sector for the last 2-3 decades. Views are personal
Co-authored with R Venkataramanan, who has also been working in the social sector for the last 2-3 decades