Shock Treatment will not Work in Agriculture

Context: While the recent farm laws has opened up the market to let market forces improve efficiency and create more value for farmers; the ‘shock treatment’ induced by the laws will have an adverse impact.

Aim of these laws:

• Freedom to sell: agri-produce outside the Agricultural Produce Market Committee (APMC) mandi.
• Contract farming: through establishing partnerships between farmers and food-processing companies.
• Permit unlimited hoarding: of food except in special circumstances.

Associated concerns with Farm laws:

• Fear of unknown markets: unlike Mandis where any dispute gets resolved through local leaders' mediation (Members of Parliament, Members of the Legislative Assembly, Panchayats).
• Uncertainty about continuing the mandi-Minimum Support Price (MSP) system: Mandis will eventually be rendered out of business due to diversion of produce to other markets.
• Exploitation by traders: By finding faults with the product; declining to buy on the pretext of glut (a wait and watch strategy); defaulting on payments, and so on.
  • Lower prices: Trader form cartels combined and farmers suffer from high transportation cost. (which worsens farmers’ immediate cash needs).
• Position of the strength of corporations and traders: in terms of better access to a battery of lawyers, the fine print in contracts, the advantage of language, and, above all, the capacity to wait it out.
  • They can refuse to buy full quantity of the product on one or another pretext or delay payments.
• One size fits all approach: The country is diverse with some 15 agroclimatic zones and has over 50 crops grown. Still, the new policy opts for uniformity in terms of farmers, land, crops, and markets.
  • Protest from different regions reinforces this diversity. E.g. in eastern India, farmers revolted in 1860 against indigo-farming, Mappilas revolted in 1921, or the Warli Adivasi Revolt of 1945. 

Way forward:

• Addressing the problem of stagnation and high input prices in agriculture: through a systematic approach proposed in the S. Swaminathan Commission and/or the Ashok Dalwai Committee.
• Diversification of crops: Farmers to move out of water-soaking paddy crop in Punjab-Haryana to other crops which could reduce the area under paddy by 25-30% in next five years.
• This could, for example, also be done for sugarcane in western Maharashtra.