The Farmers’ Protest, Truths and Half-truths

Context: In the context of ongoing farmers agitation against new Farm Laws, finding a meeting ground for farmers and the government is the need of the hour.

Structural issues in Indian Farming:

• Unsuccessful contract farming: While the contract farming will help small farmers by freeing them from their tiny plots and seek jobs elsewhere, it has been a failure due to two reasons:
  • Non-adherence on commitments by contractors: either by refusing to buy the produce or reducing the price once harvesting is done.
  • Fear of illegal occupation of farmer’s land: as no contractor will invest in the land if the contract is just for a year and is renewable annually.
• Minimum Support Price (MSP) as a policy and not a law: therefore, demands for its legality is unfair; agricultural produce should also obey market price fluctuations.
  • Farmers get huge subsidies from the State to the tune of 2%­ 2.5% of GDP:
    • Total subsidy in India is in the range of $45­50 billion, while in the U.S. - $20 billion, in the EU - $39 billion and Japan - $46 billion
  • As there is no food shortage today, the provisions of the Green Revolution should be abandoned.
• Low concentration of Agricultural Produce Marketing Committees (APMCs): Most small farmers find the transportation cost too expensive as APMC­ run mandis are few and far between.
• Low-per capita income of farmers: Only 2% of U.S. farmers are below the poverty line, but 85% of Indian farmers are small and marginal.
• Over-concentrated crop production: If MSP is active only for wheat and rice, it is because there is a strong farmers’ lobby in the northwest.
  • This created an ecological crisis of magnum proportions; as rice is water-guzzling which lead to exploitation of groundwater.
  • Proposal for diversification has been discussed from the time Professor S.S. Johl recommended it as early as in his 1986 report.

Significance of MSP and APMCs

• Led to surplus production: Due to the MSP and APMC, 45% of the marketable surplus of wheat and rice is provided by farmers from Punjab and Haryana.
• Middlemen as a functional lifeline for the farmers: They help in the weighing, grading and sorting of grain, act as fertilizer and pesticide agents, money lenders and general knowledge providers.
• A source of infrastructure investment: APMC transaction fee/cess used primarily to make better roads and storage facilities.
• Wide coverage of the MSP: applies to 22 crops in all.
• It is true that the farm subsidy in India can be as high as $50 billion (about ?3.83­lakh crore), but per farmer, the subsidy is low at $48, compared to over $7,000 in the U.S.

Political truths about subsidies: it benefits everybody and withdrawal of it would surely lead to protest by the affected party. Subsidies are bad, but only for other people, never for oneself!

Conclusion: Among are so many truths, half-truths and an overwhelming politically unacceptable truth, various stakeholders must find a meeting ground to resolve the present conflict in the interest of all.