The farmers’ protest, truths and half-truths
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The farmers’ protest that currently ring-fences Delhi resists resolution as the air is dense with contrary sets of truths and half-truths.
- This has made activist farmers suspicious of the reactivist state, and the general public too is equally divided.
- Farmers of Punjab and Haryana alone provide as much as 45% of the marketable surplus of wheat and rice by leveraging Agricultural Produce Market Committee (APMC) regulations and the Minimum Support Price (MSP).
- These provisions were put in place more than 50 years ago to attract farmers to participate in the Green Revolution. That this programme worked best in Punjab and Haryana is because progressive farmers were at the political helm in these States.
- As a result, the MSP became identified with wheat and rice, the two main crops of Punjab and Haryana.
- Other crops did not get much prominence as APMCs and its attendant MSP did not receive prominent support outside northwest India.
- The “arhtiyas” (or, the mandi middlemen) are not seen as villains by farmers in Punjab and Haryana but function as lifeline links.
- Besides helping in the weighing, grading and sorting of grain, most of them are also fertilizer and pesticide agents, money lenders and general knowledge providers. Many arhtiyas today are Jat Sikhs and are substantial farmers too.
- APMC mandis charge a transaction fee, or cess, which the State pockets. The proceeds of this money are used primarily to make better roads and storage facilities.
- Contract farming has not been a success for two reasons. Small farmers complain that big contractors easily renege on their commitments and either refuse to buy the produce or beat down the price once harvesting is done.
- Second, if they give their lands to them then they may not get them back for no contractor will invest in land if the contract is just for a year and is renewable annually.
- The anti-zamindari policy of land to the tiller might now work against the interest of farmers if they are not the actual tillers for an extended period.
- The Minimum Support Price has never been a law, only a policy. Therefore, to demand it be made a law now is unfair. Farmers try to duck this question, but it is a major sticking point.
- Like everything else, agricultural produce should also obey market price fluctuations.
- There will be good years and bad years and this is how agricultural markets function everywhere, and for every other crop in India as well.
- As there is no food shortage today, the provisions of the Green Revolution should no longer be binding.
- Contract farming will help the mass of small farmers by freeing them from their tiny plots and they will now be free to move outside the village and seek jobs elsewhere.
- Farmers get huge subsidies from the State to the tune of 2%-2.5% of GDP. This is much higher than subsidies farmers receive in the United States, the European Union (EU), Latin America or Japan.
- Total subsidy in India is in the range of $45-50 billion, while in the U.S. it is about $20 billion, in the EU around $39 billion and Japan nearly $46 billion.
Half-truths of protesters
- Protesters are putting out a half-truth when they argue that the MSP should be made a law.
- The MSP was never law, it was always a policy. So the farmers’ demand is not really to roll back the new agricultural Bill, as they claim, but to bring in a fresh one that makes MSP a law.
- The second half-truth protesters refuse to fully acknowledge is that when international prices are higher than domestic prices, they resent not being able to sell outside the country. Onions and sugar are recent examples.
Half-truths of the government
- On the other side there are half-truths too. True, contract farming ought to release farmers from their uneconomical holdings, but this does not acknowledge the actual difficulties farmers face with contract farming.
- As we have elaborated, a little earlier, farmers face problems both in terms of selling their produce and when they want their lands back from the contractors.
- It is true that mainly big farmers, not small or marginal ones, go to mandis. This conceals the fact that most small farmers find the transportation cost too expensive as APMC-run mandis are few and far between. If there had been more of them nearby, then these mandis would have been their preferred choice.
- It is true that the farm subsidy in India can be as high as $50 billion (about ₹3.83-lakh crore), but per farmer the subsidy just about touches $48, compared to over $7,000 in the U.S.
- Only 2% of U.S. farmers are below poverty line, but 85% of Indian farmers are small and marginal. We should not forget either that in India, the social cover for health, education and unemployment is poor.
- The MSP does not apply only to wheat and rice, but to 22 crops in all. If it is active only for wheat and rice, it is because there is a strong farmers’ lobby in the northwest. Also in the early years of food shortages, it was wheat and rice that received attention.
- It is true that farmers in Punjab and Haryana have created an ecological crisis of magnum proportions.
- Aided and abetted by the APMC and the MSP, farmers in the northwest primarily cultivate paddy and wheat and this has robbed the soil of vital nutrients besides depleting groundwater reserves.
- As rice is a thirsty crop and it does not rain very heavily in Punjab and Haryana, groundwater is increasingly being used, leading to its rapid depletion.
- If the APMC and the MSP were to go, farmers would diversify and the ecology would be restored, so also the economy.
Political truth about subsidies
- An uncomfortable truth looms above all this but is conveniently ignored by most. This truth is that everybody benefits from subsidies.
- The farmers benefit (cheap electricity and fertilizers, for example), central Government employees benefit (the Central Government Health Scheme, for example), Ministers benefit, corporates benefit (for example, the “revenues foregone” by the government to help business; this increased by 16% in the 2018-19 Budget), the armed forces benefit (rations for the services are priced much lower, for example), poor children benefit (government schools), universities benefit (State and central universities), even prisons benefit (in the U.S., as many as 8% of prisoners are in privately-run prisons).
- When a particular subsidy is withdrawn, the population that was being served by it will protest. If the CGHS is shut down, bureaucrats will rise in opposition; withdraw perks to Members of Parliament, and our lawmakers will object; cease cancelling the “revenues foregone” provision in the Budget and businesses will complain.
- Subsidies are bad, but only for other people, never for oneself. If there are so many truths, half-truths and an overwhelming politically unacceptable truth, a meeting ground will always be hard to find.