ISSN 2330-717X

Agricultural Reforms In India Paves Way For Commercial Farming To Protect Poor Farmers, Amid Protests By Rich Farmers – Analysis


India has undergone two phases of agriculture reforms since independence. In 1960’s, it launched Green Revolution to increase productivity of agriculture produces. In the second phase, it introduced three farm bills in September 2020 to dismantle the restrictive agriculture marketing. The main aim is to protect the poor and small land holding  farmers through corporatization from licensed agents and rich farmers.  

Eventually, the second phase of reforms triggered farmers’ agitation, alleging that dismantling of APMC and reducing the scope of MSP purchases warrant bad days for poor farmers. The irony of the protests is that the farmers’ agitation was led by rich farmers in Punjab.  

Agitations against new  farm bills, which sparked nationwide initially, is losing steam. It is now concentrated in Punjab. Initially, most of the agrarian states pledged support of solidarity with the Punjab farmers by maintaining one day national bandh as a token strike. Gradually,  nationwide vibration receded and slipped into moribund. 

Given the volta-face of the nationwide farmers’ agitation, eyebrows were raised over the efficacy of the protest. Mamata Banerjee – Chief Minister of West Bengal – known for her strong critic of Modi’s  reforms and welfare schemes – preferred to slip into silence. Mr Navin Patnaik – Chief Minister of Orissa – the strongest opposition state and a major agrarian based economy – followed suit. Even Capt. Amrinder Singh, Chief Minister of Punjab, lamented the prolonged agitation, passing the buck on farmers. He said that his State has suffered a major damage to the industry due to agitation.   

Where does the fallacy lie? Why is the agitation losing its steam? It is the conflict between borderless agricultural marketing and commission agents and the rich farmers, which marred the tempo of agitation. APMC and MSP were launched in sixties to protect the poor farmers. At that time India was far from agricultural self reliance. Wheat used to be imported from USA under PL 400 scheme for survival. Rice eaters in Bengal were dependent on smuggled rice from neighbours. Today, India exports wheat to buy oil from Iran under the “food for oil” scheme. Rice is one of the major items of exports from India.

New farm bills have become an overriding concern for the rich farmers in Punjab. The main factor fueling the agitation is the turndown of mandatory provision for  MSP purchases and dismantling of APMC. Punjab farmers monopolize MSP benefits. FCI is the nodal agency for procurement of wheat and paddy under the Central Pool procurement system. According to  government statistics, Punjab farmers have big stakes in the procurement  of  for wheat and paddy by FCI through MSP. In 2019-20, 38.9 percent of wheat and 30.4 percent of paddy were procured from Punjab by FCI in its total procurement from the country.

Ironically, while West Bengal is the biggest producer of rice, Punjab grabbed the  biggest share in Central government purchases of paddy by FCI. Another case in point in favor of  Punjab’s dominance is that about 37 percent of the total procurement of wheat and paddy by FCI was from Punjab in 2019-20 – the biggest procurement from any state. This is despite the fact that Punjab is not the biggest producer of wheat and rice. It is the second biggest producer of wheat and third biggest producer of rice  in the country.

MSP (Minimum Support Price) is an agricultural product price set by the Government of India to purchase directly from the farmer. APMCs (Agricultural Produce Market Committees (APMC)) are the marketing board, established by the state governments. All the food produce must be brought to the market and sales are made through auction in Mandi under APMC. The mall owners, wholesale traders, retail traders are not given permission to purchase the produce from the farmers directly.  

One of the main aims of new farm bills is corporatization of agriculture. It paves the way for commercial farming and extend support to the poor and small land holding farmers, who are lacking marketing expertise and technology farming. Commercial farming are usually capital intensive. To this end, private investment will create beacon of hope for the small holding farmers. It includes corporate ownership of the farms, selling agricultural products through proper marketing channels, in house research and development facilities.

At present, farming in India is informal in nature. It is undertaken by family members by the poor farmers and small holdings of land owners. Eventually, farming lacks modern farming with big machineries like tractors, combine harvesters, rice planters and so on. Contract farming, which is an important component of commercial farming, is a distant future for poor farmers. The new farm bill, The Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020, ensures benefits to both parties – that is, farmers will have guaranteed purchases at a pre-determined prices. This will protect the poor farmers from volatility in prices under the agreement framed under the bill.  

The Bill said that 10,000 Farmers’ Producer Organizations (FPO) were being formed throughout the country. These FPOs will bring together small farmers and work to ensure remunerative prices for farm produces. In case of disputes, there will be local bodies for redressal, the bill ensured. 

Corporatization will increase competitiveness even among the small land holding and poor farmers for better prices. Eventually, better price realizations and improved productivity will yield better returns to these farmers. 

Another benefit of the new farm bill is that it will open opportunities for the farmers to be compliant with  labour laws under the ambit of corporatization. These farmers can be brought under the various labour regulations, which protect industrial workers . 

Some critics were apprehensive and raised the ire that the new bill is a  shift of the plights of poor and small farmers – from the clutches of rich farmers and licensed auctioneers to corporate monopoly. The truth is that corporate survives on competitiveness. Competitiveness means improvement and development of farming through research and technology upgradation. Given these, Indian agriculture is foreseen for a new dimension in the development.

Subrata Majumder

Subrata Majumder is an adviser to Japan External Trade Organization (JETRO), New Delhi, and the author of “Exporting to Japan,” as well as various articles in Indian media, including Business Line, Echo of India, Indian Press Agency, and foreign media, such as Asia Times online and Eurasia Review .

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