The week-long farmers’ march which reached Mumbai earlier this month, on the anniversary of Gandhi’s Dandi March of 1930, was unprecedented in many ways. It was mostly silent and disciplined, mostly leaderless, non-disruptive and non-violent, and well organised. It received the sympathy of middle class city dwellers, food and water from bystanders, free medical services from volunteer doctors, and also bandwagon support of all political parties from the left to the right.
Beyond lip service
Indeed, even the Chief Minister of Maharashtra said he supported the cause (not the march), but as head of government his job was to address their issues, not to agitate. The most remarkable thing about the march was that it was successful. The State government agreed to all the demands, including pending transfer of forest land to Adivasis, expanding the scope of the loan waiver and ensuring higher prices for farm produce. There was ceremonial signing of acceptance of the demands, although the Chief Minister said that he had tried to dissuade the farmers from undertaking the gruelling 200 km march itself.
The farmers, however, were determined to march to make a point, and to ensure that they received firm (signed) and publicly visible commitment, rather than assurances and lip service.
Recurrent farmers’ agitations in the last few years across the nation lead us to ask: why have we come to this pass, that only extreme distress and street protests alert us to the deep and chronic problems of agriculture? Not all agitations have been peaceful or successful. Last year, in Haryana and Rajasthan they tried to block highways which led to traffic chaos. In Madhya Pradesh, in Mandsaur district, the protest turned violent, led to police firing and deaths of farmers. The electoral outcome in Gujarat too was a wake-up call (if any was needed) to the ruling party to pay attention to rural and agrarian distress.
It is not as if governments of the day have not paid attention. Over the years and decades, there have been numerous committees, reports and commissions with extensively researched policy recommendations. Yet farming is a story of recurring distress. This implies that the recommendations are not working and need a paradigm change, or there is a huge gap in their implementation — or a bit of both. The most comprehensive recent blueprint for reforms and rehabilitation of the farm sector is the report of the National Commission on Farmers, chaired by M.S. Swaminathan. That report is already over 10 years old. Several of its ideas are yet to be implemented. For instance, decentralising public procurement of food grain to the lowest level possible, and setting up of grain banks at the district level.
What is the priority?
The “farm problem” of India is a huge mountain, but it is surmountable. The biggest priority is to reduce the workforce which depends on agriculture for its livelihood. There is considerable underemployment and low productivity but farmers are unable to exit to other livelihood options. This points to the obvious conclusion, that the solution to the farm crisis lies largely outside the farm sector. If job opportunities abound elsewhere, then we should see an exodus out of farming. That points to the urgency of accelerating industrial growth and improving the ease of doing business.
But we also need to acknowledge that the farm sector has been shackled for far too long. Farming is to be treated as a business and has to be viable on its own terms. Historically, farm prices were kept suppressed to keep industrial wages low. This meant monopoly procurement laws and the intermediation through the Agriculture Produce Market Committees (APMC). But that was compensated by providing the farmer with highly subsidised inputs — water, electricity, fertilizer, credit and seeds. But this did not benefit the really needy, subsistence farmers. Nor did it alter the terms of trade which to this day remain tilted against agriculture. Over the years the policy framework is increasingly complex and a patchwork quilt of mutually compensating measures. Thus, we have ended up with all the shackles which remain intact. The APMC is not discontinued. Monopoly procurement continues. There is little progress in direct link between farmer and buyer. Foreign direct investment in farm to fork chain is very restricted. Half the farmers don’t have access to formal credit, since most of them don’t own the land that they till. Contract farming remains virtually banned. Land leasing is not possible (but done informally). Moneylenders are taboo, even though they might be in the best position to address credit needs, albeit with proper regulation.
Thus the farmer’s plight is full of woe, exposed to risks from prices, demand, weather, pests and whims of policy and regulation. It’s no surprise that crisis is chronic, and loan waivers become imperative, more for moral and ethical reasons, than economic. Loan waivers punish those who worked hard and repaid, and the cash anyway goes to banks, not to farmers. Banks don’t issue fresh loans out of their own risk aversion. Hence, loan waivers are a bad economic idea but often a political compulsion. The same is true of rewarding farmers with 50% more minimum support price (MSP), no matter what the cost. This paradigm of cost plus pricing is bad economics. Sugarcane grows cheaper in Uttar Pradesh in the Gangetic plains than in drought-prone Maharashtra. But with an assured cost plus MSP, there is little incentive to diversify crops to suit weather and cost conditions.
Some positive steps
To its credit some recent initiatives of the government are laudable. Neem-coated fertilizer has reduced leakage, and direct benefit transfer to the farmer-buyer will reduce subsidy further. Soil cards ensure appropriate matching of inputs to soil conditions. Giving tax holiday to the farmer producer companies is also the right fiscal incentive. The government’s aim to double farm income in the next four years is a near impossible feat, but signals the right intention. The big agenda is to unshackle agriculture to make it a truly commercial market-based enterprise; to create opportunities outside farming for large scale exit of the workforce; to connect farmers to the value chain of farm to fork, including agribusiness; to remove restrictions on movement and exports of farm produce and let them tap into international market, to also allow easier land transfers including leasing; to encourage crop diversification and land consolidation that reverses fragmentation. As said earlier, the farm problem is a huge mountain, but surmountable.
Ajit Ranade is a Mumbai-based economist
