Paving the way for corporate dominance over Indian Agriculture

B. Sivaraman

Farmers’ suicides might have abated temporarily to a 12-year low in 2018 according to the NCRB figures but the agrarian crisis has not eased. A single weather event or adverse market condition could trigger a suicide wave again. The deeper malady is the lack of profitability in farming.

In the Union Budget of 2016–17, Modi Government came up with a slogan—“Doubling of farmers’ income by 2022”—as a way out of this crisis. It is to be noted that the government is not talking of doubling of net income after deducting the cost but only doubling of nominal sales income. If the cost also doubles, this exercise becomes meaningless. Likewise, the government talks of nominal income and not doubling of real income after adjusting to price hike. Four fiscal years have passed since the announcement, this is the fifth year and only one more year is left. Modi Government is nowhere near achieving the target according to ground reports from farmers. Worse, the government announces a policy of increasing income without the means for measuring it through a survey!

In this year’s Union Budget 2020–21, Finance Minister Ms. Nirmala Sitharaman has come up with a 16-point action programme for agriculture. Will it help in doubling the farmers’ income?

Farmers’ incomes would increase if there is a matching increase in the prices they get for their produce. Much has been written on how the Modi Government distorted the MS Swaminathan formula and came up with a curtailed version of cost plus 50% profit margin. Even under this truncated formula, how much increase was there in MSP? In 2014–15, the year NDA came to power under Modi, for farmers got Rs.1360 for paddy and Rs.1450 for wheat per quintal and in 2019–20 it was Rs.1815 for paddy and Rs.1925 for wheat. The increases during Modi regime work out to 33% in the case of both the main crops. The increase in MSP for other crops like pulses was even less. With just 33% increase in farm prices, how do they expect farm incomes to go up by 100%?

Even this 33% increase in MSP would not translate into matching increase in incomes because of poor procurement by the government. Last year, among wheat-growing farmers those who sold to government procurement agencies under MSP accounted for merely 3% of total farmers in the country. The figure is 7.64% among paddy farmers and 6% among farmers growing pulses. So forget doubling, this would not bring increase in farmers’ income into double digits even! Farm activist Yogendra Yadav has pointed out that the funds allocated to the FCI for procurement and PDS operations have been slashed from Rs. 1,51,000 lakh crore to Rs. 75,000 crores.

With the government failing to procure, the farmers sell in the open market and the market prices are often much lower compared to the MSP fixed by the government. This makes fixing of the MSP itself meaningless. To overcome this problem and to ensure assured income for the farmers, the government introduced the PM-AASHAA scheme in September 2018. Under this, if the market prices are lower than the MSP, the government would compensate for the loss incurred by the farmers to the tune of 30% of the loss. On paper this scheme sounds impressive. But this was limited to farmers producing oilseeds and pulses. Worse, till December 2019, only 3% of the target was achieved under the PM-AASHA scheme! This year the allocation for PM-AASHA has been slashed from Rs.1500 crore to a mere Rs.500 crore. Thus another price support scheme too was a flop.

If the agriculture markets are electronically integrated and farmers brought under it, middle men would get eliminated, and farmers can get higher prices and hence their incomes would go up, Modi Government claimed. The government launched e-NAM in April 2016 and declared that the 6500 Agricultural Produce Marketing Committees (APMCs) and 22,000 village agricultural markets in the country would be brought under e-NAM. But Nirmala’s budget says upto now only 585 markets have been brought under it.

The government came up with Model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017 in this context which is one of the three model acts the Finance Minister highlighted as part of her 16-point action plan. This Model Act belatedly acknowledges that the present agricultural marketing arrangement under the APMC Acts is dominated by trading monopolists, who manipulate the markets in their favour and against small farmers.

The alternative proposed by the Model Act seeks to push the small farmers from the frying pan into the fire by allowing even corporates to get license to operate private market yards integrated under electronic trading platform e-NAM and also to invest in warehousing and coldstorages called market sub-yards of these e-platforms. In other words, the local trading mafia would give way to national, and even transnational, corporate mafia. The government has also introduced the Private Procurement Stockists Scheme (PPSS) under which private companies are already procuring wheat, pulses and oilseeds from the farmers charging upto 15% of the value of the produce as service charges. Their gain is farmers’ loss.

Instead of opening up the agricultural marketing field to the corporates, the government should have come up with a law that gives preference to the small farmers’ marketing cooperatives and established their sway over agricultural markets taking positive lessons from Varghese Kurian’s Amul model or even the Karnataka’s HOPCOMS model for marketing of vegetables. In fact, the government came up with a model for farmer-producers organisations but they too are dominated by well-to-do large farmers engaging in capital-intensive farming.

True, the government also set up Small Farmers’ Agribusiness Consortium (SFAC) in 1994 and launched the electronic national agricultural marketing (e-NAM) under that in April 2016. By eliminating middlemen and enabling farmers to directly sell to buyers, 21 States came forward to promote SFACs under e-NAM but the Centre gave only a paltry amount of Rs.50 lakh to each State as corpus funds! So naturally SAFCs did not take off. Even in Karnataka where e-NAM is the most advanced, only large farmers are using it mainly and large sections of small farmers are still selling to middlemen registered under the same e-NAM.

 This 16-point action plan might not deliver as per the target of doubling of farmers’ income even in nominal terms but that is not the major issue. Rather, this plan seeks to introduce some structural changes to pave way for corporate dominance over Indian agriculture. This is clear from the other two model acts. They are the Model Agricultural Land Leasing Act, 2016 and the Model Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2018. While the land leasing act would facilitate corporates to lease in the land of small farmers, even in States where tenancy is banned. Corporate lords would replace old landlords. Corporate farming would subordinate small farmers to produce for corporates. There is no regulation by the State and no safeguards for the farmers. Only perverse “nationalists” can come to the conclusion that the solution to India’s agrarian crisis is in the hands of Unilever and Pepsico!

Farmers’ incomes could go up if productivity goes up. Productivity can go up if inputs use gcan increase. But in 2020–21 budget, the FM cut the fertiliser subsidy from Rs. 79,996 crores to Rs. 70,139 crores this year.

Even on the aggregate, the total allocation for the agriculture sector, allied activities and rural development is Rs 2,83,202 crore for 2020-21, which is just a net rise of Rs 6,822 crore over last year’s budgetary allocation. The nominal rate of growth turns out to be 2.5 per cent. Assuming 5% inflation, this works out to 2.5% reduction in real terms!

So, in sum, this budget is a jumla budget as far as farmers are concerned!

This is English translation of the article appeared in Hindi Newsclick.
Courtesy: https://hindi.newsclick.in/index.php/Budget%2020-21-Opening-way-corporate-domination-Indian-agriculture

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Frontier
Feb 21, 2020