Published in The Horace Mann Review, February 2021
In a largely agrarian economy of nearly 1.4 billion people, it is natural that concerns about farm income and food security have often been paramount in Indian policy discussions. In recent years, mass farmer suicides caused by chronic debt have only further demonstrated the extreme significance of farm incomes to thousands of Indians. Given this context, the recent upheavals to the Indian agricultural sector driven by the ruling Bharatiya Janata Party (BJP) government seem absurd and cruel. Especially considering the global economic instability caused by the COVID-19 pandemic, protecting farmers and universal access to food should be part of the central government’s top priorities. Instead, the three new laws hastily passed by the Indian legislature in September 2020 will begin to treat food as a mere commodity rather than the essential good that it is, leaving already struggling farmers at the mercy of big agribusiness corporations. Such a shift does not fit the Indian context and could not be more ill-advised; the massive resulting protests, in which hundreds of thousands of farmers from different states around the country have camped outside the Indian capital of Delhi and demonstrated through rain or shine, are entirely justified in their rage at the BJP’s lack of concern for the nation’s welfare.
Food crises used to be a fact of life for India, continuing from British colonial rule to well after independence. Historical events like the 1943 Bengal famine, in which nearly 3 million Indians were starved to death by Winston Churchill’s resource diversion from India towards British soldiers in World War II, are still well alive in the country’s memory. Even in an independent India, there was a time when the nation was the largest receiver of food aid in the world, and its population was said to survive on a “ship-to-mouth basis.” Chronic food shortages were overcome only after Prime Minister Indira Gandhi started to aggressively pursue a policy of agricultural self-sufficiency in the 1960’s. Farm productivity started to jump from 1968 onwards as part of the global “Green Revolution,” where high-yield crop varieties were introduced to Indian farmers and modern agricultural practices were adopted to increase output. With these new agricultural surpluses and a revamped “Public Distribution System,” through which rationed government-procured grain is freely provided to citizens, the repeated plague of extreme food crises was finally quelled. Only by breaking all forms of foreign exploitation, whether by a colonial power or by conditional aid, did India achieve a state of food security.
It is telling, then, that the new BJP farm laws are clearly driven by the whims of globalization and free market fundamentalism instead of the traditional Indian policy of prioritizing self-sufficiency and societal wellbeing. Simply put, the three laws at the center of the controversy will disrupt the public procurement system, uharness powerful market forces, and further shift the power balance away from farmers and towards big corporations. The first law reforms local produce-trading markets by allowing farmers to bypass Agricultural Produce Market Committees (APMCs) and sell directly to private buyers. The latter two bills in the legislative package contain provisions that alter contract farming safeguards and remove stocking limits on essential foodgrains (essentially permitting corporations to hoard produce and drive up food prices). However, most of the grievances with the reforms pertain to the first bill, The Farmers’ Produce Trade and Commerce Act, specifically related to the provisions that undermine APMCs.
APMCs are existing institutions under the jurisdiction of state governments that operate market yards, known as mandis, where procurement for the Public Distribution System (PDS) and regulated trading occurs. Mandis were originally established as part of a price support system in order to protect farmers from exploitation by middlemen traders. Not all states even have an APMC, but many of these non-APMC states (such as Kerala and West Bengal) operate publicly-regulated agriculture markets to prevent extreme price volatility. In states where APMCs do exist, however, the first sale of all produce goes through the APMC-operated mandis. This is where farmers sell their produce to traders and the publicly-owned Food Corporation of India, which stocks PDS, at a “minimum support price” (MSP) set by the central government. Since APMCs are state-operated, their success depends entirely on local implementation. More often than not, they are far from perfect and historically have not succeeded in relieving the incredible plight of many farmers in India. Despite the system’s flaws, the alternative being pushed by Prime Minister Narendra Modi, where corporations and middlemen will be allowed to bargain with farmers before they even reach a mandi, will undoubtedly be worse for farm incomes. The legislation completely lacks the necessary safeguards for a market-driven system to work in the interest of Indian farmers.
Take a micro-example of this kind of anti-APMC reform in the state of Bihar. In order for a free market system to actually offer prices higher than the minimum support price, there needs to be ample competition instead of monopolies controlling the market. Yet no such competition occured when Bihar abolished the APMC system in 2006 and allowed farmers to sell to buyers directly; farmers in the state remain largely reliant on traditional middlemen, the kind that are ubiquitous in other states, who keep prices low with few other competitors in the market. In terms of prices, a nine-season study of three staple grains––wheat, maize, and rice––showed that the gap between the governmentally determined minimum support price and average market prices either widened or stayed the same as pre-reform levels. Additionally, the low prices suppressed the wages of farm workers in the state and led to labor migration. In comparison to the APMC states of Haryana and Punjab, Bihar farm laborers earn only around 60% of what they could earn in these two other states. If an APMC bypass policy aims to raise farm incomes by diversifying the buyers in the market, Bihar serves as an example of how this idea is terribly misguided; diluting the power of APMCs will not automatically attract real market competition, especially in the Indian system where farm suppliers already have deep connections with other industries and limit choice in buyers. The new law only further gives big agribusinesses and exploitative middlemen the green light to swoop in, take advantage of farmers by offering low prices, and maintain an oligopoly that benefits only themselves. If the BJP were serious about promoting competition and higher prices, they would make large public investments in infrastructure to connect urban centers to remote rural areas or expand the number of mandis nationwide so that more farmers are able to actually access government-supported prices–––real ways of improving incomes as opposed to the false gospel of market freedom.
An added dimension to this debate is the global pressures leading to these changes. As agriculture economist Utsa Patnaik explains, industrialized Western countries have used international institutions like the World Trade Organization (WTO) to lobby developing countries like India to end their own public procurement systems, which encourage agricultural self-reliance through extensive subsidization. Instead, nations such as the United States and European Union member states would prefer that India import surplus produce from the West while utilizing its own land for export-oriented crops desired by these developed countries. The U.S. went so far in its efforts to undermine Indian agriculture as to formally complain to the WTO in 2018 about India’s subsidized farm prices, despite the fact that the American government heavily subsidizes its own farmers as well. Advanced economies like the U.S. are trying to recreate a colonial-style global agricultural system of imports and exports that will threaten the food security of Indians, and the BJP is playing right into their hands. The new laws could potentially open up the market to foreign agribusinesses which will enter contract farming deals with local farmers for preferred crops, threatening the economic viability of domestic foodgrain production for the Indian PDS. Such a shift would destroy all of the progress made since the ’60s towards building a self-sufficient, food-secure India.
These are only a handful of the problems with the new laws, which have thankfully been temporarily suspended by the Supreme Court of India until a government committee considers the demands of the farmers and makes recommendations for how to resolve their grievances. The other two less-discussed bills contain equally egregious attacks on farmers and food security, such as dubious changes to contract dispute resolution that would put farmers at a disadvantage in negotiations. Additionally, the third law’s legalization of hoarding by private companies could drive up food prices and threaten access to nutrition for millions of poor Indians. At a time when a global recession has pushed 400 million Indians into deep poverty, COVID-19 has disrupted supply chains, and farmers are facing uncertainty about their own income, the changes to the Indian agriculture sector being pushed by the BJP government are irresponsible and wrongheaded. It is disappointing that the priorities of corporations and market institutions are at the top of Prime Minister Modi’s mind rather than hunger and insecurity among India’s masses.
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