In agri-reforms, go back to the drawing board

Context: Recent protests against newly passed farms laws have highlighted various trade-offs among mechanisation, farmers income and associated concerns for ecological sustainability.

Challenges to the Agri-reforms:

• Productivity vs employment opportunities:
  • For increasing farm productivity, fewer people must work on farm. But poorly developed industries can’t absorb extra workforce; In industry too, technology is supposed to replace human labour.
• Small and marginal landholding prohibits an increase in farm mechanisation.
• Flipside of productivity: Large-scale specialisation, standardisation leading to mono-cropping upsets the ecological balance.
  • Reduced diversity of flora: enables pests to spread more easily; soil quality is reduced; water resources get depleted.
  • Solutions to these new problems require more industrial inputs, increasing costs for farmers.
  • The deleterious side-effects: E.g. In Punjab farm incomes have grown there while water resources have depleted and soils have been damaged.
  • Case study: Scientific forestry’ in Germany-- the clearing out of other vegetation to plant a single variety of commercially useful tree in neatly spaced rows enabled mechanisation of timber production. However, the ecological imbalance made the trees more vulnerable to pests, and over time, the quality of the timber also reduced.
• Farmer’s concerns: Though increased integration with global value chains will increase income; however, the farmers do not have adequate pricing power in large supply systems and less regulated markets.
• Industrial reform of 1991 vs Agri-reforms of 2020:
  • The 1991 reforms changed industrial licensing and trade policies — both subjects of the Union government. ‘Factor market’ reforms in land, agriculture, and labour regulations are State subjects.

Way forward:

• Increasing market access: Connections into global supply chains can increase volumes of sales.
• Strengthening cooperatives: Institutions for cooperative ownership and collective bargaining must be strengthened to give power to small farmers before opening markets to large corporations.
  • Indian dairy sector’s per person productivity is much lower than New Zealand and Australian dairy producers’ but they provide income to millions of tiny producers and enjoy political clout.
  • This led to non-participation of India in Regional Comprehensive Economic Partnership.
• Multi-disciplinary thinking at the policy-making level: along with active participation of farmers.
• Policymakers need to build trust: for effective implementation of reform policies.
• Shift towards economies of scope for sustainability: from the current pursuit of ‘economies of scale with standardisation’, It will be good for the ecology, employment and incomes for people in the lower half of the economic pyramid.