In August 1947, East Punjab had just 4 lakh acres (out of 47 lakh acres) of cultivable farmland irrigated. The rest of the state had just 1,973 tubewells, and only 325 of these had an electricity connection! All this meant that the production of rice was just 11.3 lakh tonnes. Then came a series of infrastructure improvements, all sponsored by the government—the Bhakra Nangal dam was completed in 1963, with Norman Borlaug introducing high yielding dwarf Mexican wheat to India in the 1960s. Institutional infrastructure was carefully set up—the Punjab Agricultural University was necessary to adapt this wheat to Indian conditions, while the state’s local agricultural marketing body, Markfed, enabled farmers to sell their produce in a structured manner. Additional institutions like the Punjab Mandi Board, Punjab Agro Industries Corporation and the Land Development and Reclamation Corporation were also set up during this period. The Food Corporation of India was actually instituted in 1964, with procurement of wheat happening a year later.
The local state government was proactive as well—when seeds from Mexico were imported, Punjab sent across a fleet of trucks to bring them by road to Punjab from the ports quickly, instead of awaiting rail travel. Meanwhile, to distribute such seeds to farmers, cloth bags were stitched by prisoners. Meanwhile, the state government also sought to import significant fertilizer inputs from Kandla Port; farmers were also offered financial help, along with tubewell connections and diesel pump sets (90,000 diesel pump sets were bought in 1965). Training was given to around 250 diggers who then formed additional teams to go and dig tubewells across the state. Very few other states had the institutional wherewithal to actually implement a holistic approach towards catalysing the Green Revolution. By 1968, Punjab started having record harvests of wheat. Over time, this success expanded to other crops.
To expect the private sector to foster such a revolution is folly, especially in other states where there is simply no institutional wherewithal. The Green Revolution was brought in by the state, not by contract farming.
BJP’S TRACK RECORD
There exists a huge chasm between the government’s words and deeds towards our farmers, with actions speaking louder than words. In 2014, the BJP election manifesto promised the implementation of the Swaminathan Committee recommendations, which meant fixing the MSP at 50 percent more than the production cost. With no action for a couple of years, the PM came up with a catchy slogan about doubling farmers’ incomes by 2022. Yet, by the end of the year, he announced the hardly-deliberated, ill-thought and even poorly implemented demonetisation, at a time when the kharif produce hit the markets.
In 2017, the government announced the implementation of the Swaminathan Committee recommendations, but the devil lay in the details. Most of the MSPs announced—the MSP was announced over A2, with only three crops having MSP 50 percent more than A2+FL (bajra, arhar and urad), and no crop having MSP at 50 percent more than C2 costs (H. Damodaran, Indian Express, Jun 2017). In addition, the lack of actual public procurement of farm produce meant that some crops had to be sold at prices less than the MSP, and analysis reveals that farmers were denied around Rs 1,900 crore due to sale below MSP prices in last two months alone (Kabir Agarwal & Dheeraj Mishra, Indiaspend, Dec 2020).
The premise of MSP implementation, which should be a farmer’s right to minimum realisation, has thus remained elusive, with government announcements only providing an example of headline management.
TALE OF UP & BIHAR
Our track record in implementing laws for the “liberalisation” of the farm sector is abysmal. There is ample evidence that the absence of APMCs do not really lead to increased private investments. In fact, investments happen when long-term incentives are aligned, especially for farmer benefits.
Kerala, for example, never had an APMC Act, yet it is the State Government (and not private investment) that helps in market infrastructure for farmers’ benefit, despite its export-oriented cropping pattern. Bihar, in another example, deregulated the APMC in 2006 and, even after 14 years, is yet to witness a rise in private investment for market infrastructure. The lack of private facilities and constant degradation of public facilities actually led to a decreasing density of mandis in the state (NCAER, Nov 2019), leaving the farmers to the whims of private traders who could artificially depress farmers. NITI Aayog (Task force on agriculture, 2015) itself recognized that the abolishment of mandis, in absence of any alternate dry and cold storage facilities, has led to even fewer options for farmers. Simple changes in law, without providing incentives for alternate development, don’t attract investments.
The delicensing of the sugarcane industry in UP in 2006 has yielded similar results. Productivity has remained stagnant, and sugarcane farmers have long petitioned for improved prices. The state government announced a state advisory price, in addition to Fair & Remunerative Price by CACP, yet mill owners complain of low cane quality and farmers grieve about late or less payments. Meanwhile, private contribution for infrastructure development remains muted.
CONTRACT FARMING
This Act provides for establishing a nation-wide legislative framework to enable contract farming, yet the stated objectives are far from the reality. The Act doesn’t provide details for empowering and protecting the farmers, while outlining the basic conditions of the contract that it may enter into with buyers (mostly corporates and large business). The Act allows private agencies to impose compliance burden on farmers, particularly with respect to quality, grades and standards which can be arbitrary and detrimental for the farmers. Allowing the buyer, the right to monitor standards, even during cultivation (Section 4.2.4), leaves the farmer with hardly any freedom to decide their farming operations, reducing them to perform paid labour in their own fields. To compound the issues, the Act is unclear on the party responsible for compliance with labour and social development standards, and risks such costs to be passed on to the farmer (Section 4.2.3).
Another fundamental issue with contract farming in India is the asymmetry in negotiating farming agreements between the farmer and the buyer. With more than 80 percent of our farmers being small and marginal, it is not difficult to understand where the bargaining power lies when it comes to finalizing “mutually agreeable” contracts. Even in its implementation, it provides farmers with little succour. The buyer may refuse to buy the entire produce on minor non-compliance, forcing the farmer to sell at artificially depressed rates. While the farmer has the option to raise a dispute, the resolution is three-level (conciliation board, Sub-Divisional Magistrate and Appellate Authority), making it cumbersome for the farmer to get his just dues.
In addition, contract farming has certain other challenges. Firstly, the purchaser, with his sole focus on near term profit maximization and ability to procure from a large pool of farms, may impose practices which may be detrimental for the land or farmer assets in the long run. Secondly, the purchaser may prefer to enter into contracts with only large landholders, in order to reduce administrative time and costs, thereby providing little to no benefit for 80 percent of our farmers. Thirdly, the purchaser is highly likely to shift to cash crops instead of edibles, thereby impacting the food security of the farmer and the society at large.
IMPACT ON PDS
Going by historical experiences, leaving farm procurement in private hands has led to a withdrawal of public procurement. The law allowing private mandis to be set up will actually lead to the dismantling of the APMC structure itself, as APMC mandis will cost taxes and compliance on part of the buyer, increasing preference for private mandis and deterioration in farmers’ terms of trade in reality. This remains further compounded by the consistent stand of the government to exclude any MSP-related provision in the farm laws. Public procurement, besides offering farmers a definite price return, also helps build food stocks which can iron out food price volatility and ensure adequate food grains for the PDS. In the absence of public procurement, the PDS’s collapse is inevitable, especially when an initial phase of surveys by the National Health & Family Survey (NHFS) indicate an increase in child stunting (the first since 1998-99).
The law also removes stocking limits for farm produce, intervening only if there is a 100 percent rise in horticultural produce or 50 percent rise in non-perishables, over preceding 12 months. This leaves food stocks vulnerable to hoarding and food prices susceptible to astronomical rises. This shall have grave consequences not only for the farmer, but for the entire country at large.
The writer is former Congress MP from Bhiwani and granddaughter or former Haryana Chief Minister Bansi Lal. The views expressed are personal.
