If there is anyone who should not be surprised by the sustained and widespread opposition of farmers to the laws passed in September, it is Prime Minister Narendra Modi. Because these “reforms” bear exactly the same stamp of arrogance, lack of consultation and foresight that has characterized all the important initiatives that your government has taken in the last six or more years.
This is not the first time that Modi has announced draconian measures that have far-reaching consequences, without warning, much less consultations. He did this with demonetization in 2016; with the Tax on Goods and Services in 2017; with the Citizenship Amendment Act (CAA) and the National Population Registry in 2019, and with a hasty shutdown to combat the COVID-19 pandemic in March that turned out to be a monumental failure but inflicted incalculable hardship on 40-50 million migrant workers this year.
The many failures that have followed his exaggerated promises, and the unease that many of them have generated, have sowed growing skepticism among people. Therefore, it is not surprising that farmers are wary of government assurances that the laws will help double their profits and demand their repeal.
A farmer holding a flag stands on top of a truck during the ongoing protest against the Center’s new agricultural laws at the Singhu border in New Delhi on December 10, 2020. Photo: PTI / Arun Sharma
What is not so easy to understand is their refusal to discuss amendments to the three laws even after the government assured them that it will. no abolish the minimum support price (MSP) system that has existed for the past five decades. This will allow farmers to sell their MSP-covered rice, wheat, and other crops on the open market while enjoying the security of knowing they can sell them to the government if the need arises.
So, unsurprisingly, Modi’s spokesmen have returned to coercion and accused the farmers ‘leaders of being’ leftists ‘,’ Khalistanis ‘and puppets of the’tukde tukde gang ‘who want to’ dismember ‘India under the pretext of protecting its ethnic, political and religious diversity.
These tactics will not intimidate farmers because, unlike India’s English-speaking elite, and unlike thousands of Muslim women and their non-Muslim supporters of the Shaheen Bagh movement, they are and will remain the foundation of civilization and politics. from India. for many more decades. So if the government really wants to improve the situation of farmers, it must first understand the causes of their stubborn resistance.
The benefits of the Green Revolution have been exhausted
These arise not so much from doubts about the government’s intentions, as from its doubts about its own ability to take advantage of these new “freedoms.” This capacity has dramatically diminished in the last three decades as the growth momentum given by the Green Revolution of the 1960s and 1970s wears off and nothing has taken its place.
The Green Revolution was made possible by the development of hybrid varieties of wheat and rice, but India was able to take advantage of it spectacularly only because of the immensely fertile soil of the Indo-Gangetic Plain and the abundant supply of groundwater, often compared to an immense underground lake – below. of the.
By the late 1980s, both were being fully exploited. In 2015, 28.6 of the 37.5 million hectares of cultivated land in these five states were irrigated, with almost a small part growing both wheat and rice, or two rice crops. The intensity of cultivation was highest in Punjab and Haryana, where 7.2 of their 7.6 million hectares of cultivated land grew rice and wheat each year. Uttar Pradesh lagged a bit behind, with 14.5 million of its 17.6 million hectares growing both wheat and rice.
Representative image of rice farmers. Photo: Feng Zhong / Flickr CC BY-NC-ND 2.0
This relentlessly intense crop has depleted the soil. The telling indicator is the need to use more and more fertilizers for every ton of production. Although the production of food grains increased by 134%, from 126 to 285 million tons, between 1977-78 and 2018-19, the consumption of fertilizers grew by more than 600%, from 4.2 million tons to 27.2 million tons.
This increase has made India a food surplus country, but trapped farmers in a “scissors crisis” of rising production costs and falling market prices. To avoid a collapse in the latter, successive governments have converted what used to be a mandatory purchase price in the 1950s and 1960s, designed to guarantee the supply of food grains at reasonable prices, into a support price that would support income. real farmers. in the villages. This was the genesis of the MSP and Agricultural Products Market Committee (APMC), which the government’s new agricultural laws will make redundant. What this will mean for the farmer can be deduced from the statement of his purpose as explained by Wikipedia:
“An Agricultural Products Market Committee (APMC) is a marketing board established by the state governments of India to ensure that farmers are protected from exploitation by large retailers as well as to ensure that the price difference between farm and retailer do not reach excessively high levels. “
CMPAs are farmers’ shields against the stormy winds of the free market. Therefore, it is not surprising that state governments have attempted, albeit with limited degrees of success, to extend the MSP system to 21 more agricultural crops.
But over time, this shield has become a trap: the more farmers produce, the higher the cliff becomes from which they will fall if the MSP system is abolished and thrown into an open market. In such a market, well-to-do farmers, who have the means, the leisure, and the connections to make direct sales to merchants in other states and abroad will thrive. But small and marginal farmers will find themselves at the bottom end, forced to sell to intermediaries who do not have any of the obligations that state governments have imposed on CMPAs.
And today, 125 million of the country’s 146 million farmers own or operate, an average of just over two hectares of land. For them, the abolition of the MSP and with it the disappearance or castration of the APMC is practically a kiss of death. Yes, given enough time, many, perhaps most, will learn to survive and even prosper in a free market. But time is precisely what farm laws will deprive them of. If they are forced to go through even with the MSP withholding, the APMC will survive: farmers will have the option to sell to them. But they will progressively weaken. Many, probably most of the merchants, will migrate out of them. Those that remain will have a much lower turnover and therefore no longer have the resources to carry out the many functions, from warehousing to electrification to rural road construction that they now help to perform in Punjab and Haryana.
That is why farmers are simply not satisfied with the retention of the MSP. They need much more support, but as of now they cannot see how and where they will get it from if the laws are not repealed.
Unsold stocks of wheat and rice
However, in fairness to the government, it must be admitted that the current system is not sustainable either. The Food Corporation of India (FCI) warehouses are stocked with unsold stocks of wheat and rice and this mountain of food continues to grow. At the end of June, they had 27.7 million tons of rice and 55 million tons of wheat. Together these amounted to 42.1 million tonnes more than the buffer stock requirement stipulated on July 1. Wheat is hygroscopic, that is, it absorbs moisture from the air. Therefore, it cannot be stored for more than a few months before it becomes inedible.
The only way out today has been to export the surplus. As a result, India has grown from the chronic food importing country that it was in the 1960s to the world’s largest rice exporter. In 2019-20, it exported 12 million tonnes, a third of world exports, and more than 6 million tonnes of wheat, much of the latter as livestock feed after having become ‘unsuitable for human consumption’ in the granaries of the FCI. There are no reports of what the wheat sold to the government, but the rice sold for $ 7.1 billion, or $ 591, or Rs 44,325 per ton. The MSP for rice in 2019 was Rs 1,815 per quintal, or Rs 18,150 per ton. The net profit of rice exports in 2019-20 was therefore $ 4.18 billion..
This is the golden apple that has led the government and its big business supporters to choose. The immediate beneficiaries will be the large urban exporters to whom the FCI will sell its surplus stocks. No one knows how much the FCI will sell these surpluses for to private traders, but it has already been selling some of its shares in the MSP or a little more. So this is likely to continue. The annual bonanza may be somewhat reduced from the $ 4.18 billion in 2019-20 by the fall in world prices that will trigger the increase in supply, but it will remain huge and reach exporters and their political backers everywhere. .
Workers load sacks of rice after unloading them from a train car on an FCI descent in Jammu on April 16, 2020. Photo: PTI
In fact, I would be surprised if this is not the main motivation for this supposedly benevolent reform. But the reform itself is necessary, so to be accepted, it must be benevolent. The simplest way would be to impose a state GST of 10% on all sales made to private traders, and something like a GST of 28% on rice and wheat exports, and funnel them back to the CMPA through governments. state to continue to perform the functions to act today.
There will be cracks, even in such a system, whereby some farmers may fail. But the gulf faced by all but the wealthiest today will be closed.
.
