Agrarian reforms: Will they help farmers farm a fortune or force them to flounder

Lakshmana Venkat Kuchi *

Is it the 1991 economic liberalisation moment – liberalisation, privatisation, globalisation - for the country’s agriculture sector?

Would Prime Minister Narendra Modi be remembered for the drastic overhaul of the rules and regulations relating to farmers and farming sector like Messrs PV Narasimha Rao and Dr Manmohan Singh are for the path-breaking and far-reaching economic reforms that turned the socialistic structure upside down and led to the uncaging of the tiger – Indian economy.

It took a crisis for Rao and MMS to come up with a total rewrite of economic policies followed since Independence and it can be argued that it is taking a health pandemic of epic proportions to spur the Modi government into action.

The union government moved three bills -- the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill; the Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill; and the Essential Commodities (Amendment) Bill – in Lok Sabha on Thursday and they were passed with ease, but there were strong protests from the opposition benches.

Sections of opposition also staged a walk out. A determined government, however, seems poised to ignore even its trusted ally, Shiromani Akali Dal, which withdrew from the union government on the farmers bills, that it terms are anti-farmers, just like the opposition parties.

The Congress, of course, views this overhaul of rules relating to the farming sector as nothing but an extension of the government’s attempts to loot the lands from the people for the benefit of their industrialist cronies.

What can be a pin prick for the ruling dispensation is the strong stand taken by its ally Shiromani Akali Dal which is also a founder member of the National Democratic Alliance. Farmers interests have been totally ignored, the SAD maintained, giving enough fodder to the opposition to attack the government.

But the government maintains that these proposed laws would help the small and marginal farmers who would be free from the clutches of the middlemen and the corrupt APMCs. The new laws will give farmers and traders freedom to choose where and to whom they sell their produce, which at present is strictly regulated. Incidentally, there is a chance that the industry and corporate sector could be enthusiastic to enter the agriculture sector via contract farming.

It is perhaps misconceptions arising out of these elements that are leading to farmers unrest, most notably in Punjab and Haryana, the two states that predominantly produce rice and wheat that are procured by the government agencies.

The proposed changes, the farmers feel, would place them at the mercy of the private sector, which has over the years not acquitted itself very well and was not seen as farmer friendly. Theoretically, market forces are expected to end up giving a fair price to the farmers, but the main worry of the farmers is that the markets are never perfect. The big business would enter and gobble up the smaller ones and eventually the farmers would be forced to sell their produce at the rate fixed by the buyer.

In the light of these apprehensions, it becomes imperative that the government makes that extra effort to convince the farmers and remove all their apprehensions. Or else, the farmers movement at present limited to Punjab, Haryana and few pockets in Uttar Pradesh could spread to other areas.

The BJP had promised agriculture reforms and doubling of farmers income, and notwithstanding the rants of the naysayers and dissenters, the new farm bills will free the farmers from the stranglehold of the vested interests that are well entrenched in the rural economy.

Eventually, the agricultural reforms would benefit the farmers and the farming community, as they would lead to higher prices for their produce. Elimination of middlemen from the farm to fork chain will of course lead to greater prosperity of the farmers.

For the present though the union government appears to have failed to convince the farmers that the move is in the overall interest of the farming community. The trust deficit of farmers on anything to do with any government activities and their resentment over transactions with procurement agencies or attempts to get bank credit is something that the government will have to work hard to remove.

The farming community at present feels cheated that a promise made to them of a procurement price that was cost plus 50 percent promised by the BJP was still elusive. Farmers associations and leaders never tire to make a mention of this and express doubt over the government assurances on the new farm legislations.

Prime Minister Modi stepped in swiftly and attacked the opposition that he charged was misleading the farming community and reiterated that the farmers will continue to get Minimum Support Price and that the government will continue to carry out procurement as has been taking place for the past several years. The reforms will only give options to the farmers to explore newer markets for better profits.

But the opposition, the Congress, the DMK and the Left parties will have none of this, and had expressed their intentions when they walked out of the Lok Sabha on Thursday when the bills were put to vote. The opposition slammed the bills saying that they were toxic, anti-farmers and ones that would destroy livelihood of the farming community. Moreover, once the big companies move into contract farming, many farmers who now own lands would become labourers. As most of the farmers own smaller lands, chances are they would be unable to compete in the market.

Is it a move to help the corporate sector to enter and control the one sector that has bucked the trend of downward slide of the rest of the economy? A section of the agronomists believes that the movement is something like the delicensing of the industry in 1991 when Messrs Rao and Dr Manmohan Singh unleashed the new economic policy on the nation as it woke up one June morning that year.

Through this agriculture market reforms, the farmers will be getting more choice, but the opposition is coming from people controlling the agriculture mandis (trading hubs) as their domination over the market place would be over. And hence their ability to make money. It is this personal stake that could be at the centre of the protests taking place in a few places.

How much and if at all the farmers benefit from the new legislation depends on how best it is implemented on the ground. Till then, let us reserve our judgment. But for the present a thumbs up for the Modi government.