A lonely furrow: Why farmers need more than a rewrite of regulations

The constant protests of farmers near the national capital, while in the worst times for the meetings of large groups that even with icy winds passing through the cold nights of Delhi, have caused different reactions depending on who is speaking.

But then, any debate over Indian agriculture, with all its regional variations and nearly 60 per cent of rain-fed cultivation on dry land with farmers producing mostly one crop rather than three, is bound to provoke reactions. strong. Agronomists and economists like CH Hanumantha Rao, have always underlined the importance of regional variations and the role of policies. For example, the minimum support pricing policy or MSP has worked effectively in states without many multiple cuts like Punjab and Haryana, but it is not so in some other states. While grain belt farmers are associated with APMC yards or mandes, other regions, such as Kerala down south, have never had an APMC mandi system.

Critical consultations

Farmers’ protests have brought to the forefront the fundamental shortcomings in the treatment of Indian agriculture. Whether about the risks of mixing regulations with policies or striving for a one-nation market solution, as is evident in the currently debated regulations. Even the often stated challenge of fragmented and small farms as Indian farming farm and as a sign of inefficiency is also debatable. At the core of all this is of course the message on the degree of consultation needed in a sector that is a state entity. Veteran academic, economist and member of the Thirteenth Finance Commission Indira Rajaraman, who has seen the sector closely, says there is little doubt that Indian agriculture is far from being an efficient and rewarding activity for most farmers. But since it is so essential to the Indian economy and involves a large number (about 150 million farmers) dependent on it for a living, the changes need to be well thought out and debated to avoid room for any doubt. “Therefore, she thinks, given the current degree of agitation and the concerns raised, some of them quite genuine, maybe it’s time to review the legislation and amend it to address the concerns.

The Challenge of Regulation

Professor Sukhpal Singh, former Chair of the Center for Agricultural Management at the Indian Institute of Management, Ahmedabad (IIMA), who has studied Indian agriculture closely over the years, says the big problem is mixing rules with policies in debate

The regulation, he explains, is about establishing the rules of the game and ensuring fair play and protecting the interests of all parties, especially the weakest party farmers, in a transaction. Here, he says, most of the major agricultural states in the country have already established new agricultural marketing channels. These are in line with the APMC (Agricultural Products Market Committee) Model Act, 2003 and subsequent amendments (Model Law 2017 and Special Model Law on Contract Agriculture in 2018) to provide a better approach to market for farmers, including the creation of direct purchase provisions, contract farming, the private wholesale market, and e-commerce in addition to the single state-wide purchasing license. But, all these are within a state, while what the government has proven with the Union level Acts is the achievement of a one nation market. However, this is debatable for a diverse country like India. Some see, for example, that the Centers focus on what is needed in interstate trade, where states can do little.

In fact, there is a report of the Standing Parliamentary Committee of January 2019 on agriculture, which describes what each state has already done.

Policy imperatives

The other dimension has to do with policy, which, unlike regulation, really has to do with facilitating and establishing enablers for production and transactions for both farmers and buyers. This is where most major agricultural states, including Punjab and Haryana and others, do not have a policy.

In addition to regulations on market access, pricing and procurement, the Indian agricultural sector needs attention in irrigation, credit, crop insurance and farm expansion services. With clearly formulated policies in the states, these can be addressed especially those aimed at small and marginal farmers.

Today, a topic that is very much in focus is the Minimum Support Price (MSP), which is a political issue an administrative measure that the Union government has taken over the years in order to support farmers and run the public distribution system and deal with the procurement of agricultural products. If the EMP becomes a law instead of a policy, which it currently is, there may be long-term implications because if the government regulates a price and the private sector is not willing and decides to rely on imports and if the government is also unable to provide then may be the end of the road for the farmer. Also, it brings a contradiction as when the government aims to give freedom to the buyers, then the price fixation becomes a step in the opposite direction. This is all the more so when the MSP fixation is variable and can be influenced by an election year or influenced by political priorities.

Incentives that matter

To bring in the private sector we need incentives and not just regulation. For example, Professor Singh says, if you want to encourage contract farming, it should not happen that you are free to go and contract with a farmer, but rather involves setting incentives such as those that encourage procurement units engage with small farmers or have group contracts. In such arrangements, certain exemptions may be granted or there may be a lower cost loan to the contract producer or in such cases the government may cover the cost of the extension for the farmer. It can also encourage group contracts as well as work with small and marginal farmers.

One of the main problems of the Indian agricultural sector is that neither most states nor the Center have a proper agricultural policy and therefore there is little visibility in terms of the changes that the sector has to deal with. The net result is that Indian agriculture has to fall largely into schemes from the Ministry of Agriculture and a host of ad hoc decisions from the center and states, says Professor Singh. Some sector experts have also pointed out that although changes in the Indian agricultural sector have been revised from time to time, there has also been delayed progress. For example, even now the need to look at the recommendations of the MS Swaminathan committee report of the National Commission on Farmers 2004 is a topic under discussion.

Sector of the Future

From the perspective of leading the sector in the future, Professor Singh recalls that perception and belief in agriculture as a sector of the future could play a critical role. “If it is seen as a liability (40 percent of the population involved in it and contributing to 15 percent of GDP) to be declared consistently paid, then there will always be ad hoc subsidies and incentives along with uncertainties and Instead, he thinks, agriculture should be defined within the spheres of agribusiness so that everything based on agricultural raw materials is part of the agricultural sector, and then its share in GDP. (Gross Domestic Product) would also be in the current levels range of 25 percent, if not more, and suitable growth enablers can be set as then the public perception of the sector will also change.

Focus on the flawed size

He also feels very much that it is being done with small size and fragmented farm structure that color small farms as a detriment of Indian agriculture. This is not true and in fact, says the professor, a small farm can be an efficient unit of production and the size of the farm does not matter. What matters is what you do on the farm, how much is produced and for whom and why, and that makes all the difference.

This, as is obvious, should be seen in the context of the rationale that is often gained in favor of contract farming as a means of consolidating farms and thus bringing greater efficiency.