Passing the Three Agri Bills is not enough; the government must address the core problems in Indian Agriculture

As thousands of protests erupt in many parts of the country, the farmers are indeed an angry lot. 

The ‘Delhi Chalo‘ protest march of the farmers reached a crescendo; with farmers entering Haryana, the police had to use water cannons and tear gas to disperse them.

Since the president gave his consent to the contentious Agricultural Bills passed by the parliament, it resulted in massive protests and has seen much resistance since then.

In the latest updates, the farmers entered Haryana to come to Delhi; on the way, they broke barricades even as two governments and one private vehicle were vandalized.

The Delhi Police, meanwhile, has strengthened its presence in border areas surrounding Delhi.

The Political upheaval against the Bills

Minister of Food Processing Industries and the only SAD representative in the Modi government, Harsimrat Kaur Badal, had resigned from the Union Cabinet, citing that the Bills were detrimental to Punjab’s agriculture sector. 

Shiromani Akali Dal quit the National Democratic Alliance (NDA) and came as a second blow to BJP.

Others from the opposition parties protesting against the bills include TMC, Congres, DMK, and BSP. Congress went a step further and accused the government of a ‘conspiracy to defeat the Green Revolution.’

Initially, the ‘Delhi Chalo’ call given by the All India Kisan Sangharsh Coordination Committee (AIKSCC), a body of more than 200 farmer’s organizations across the country, soon garnered support from more than 500 farmers’ bodies.

Even though Punjab Vidhan Sabha passed the three bills, the protesting farmers’ main grievance is that the Bills makes minimum support price (MSP) a legal provision. 

According to Jagmohan Singh, general secretary of Bharti Kisan Union (Dakuanda), the protests are because the central laws have high legal value; however, the state bills do not have the same legal validity.

He mentioned that the protests would continue until the ‘anti – farmers laws’ are not revoked or until the central government does not pass a Bill related to MSP. 

He also said that the farmers’ protest will not be limited to Punjab farmers but that the entire countries farmers will join in the protest. 

The Three Agri reforms – 

1. The Farmers’Produce trade and Commerce (Promotion and facilitation)
2. The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services 
3. The Essential Commodities (Amendment) Act 

 What does the Government say?

• According to the government, these reforms would quicken growth in the sector via private sector investments both in infrastructure and supply chain for farm produce and in national and global markets.

• It is intended for small farmers who do not have the resources to get a better price for their produce, nor can they invest in technology to improve their farms’ productivity.

• The Bills will allow the farmers to sell their produce outside APMC’ mandis’ and give them the freedom to sell it to anyone they desire.

• Farmers would getter better prices for their produce through competition and cost-cutting on the transportation of their goods. 

• It will allow and give flexibility to the farmers to enter into contracts with agribusiness firms or large retailers on the pre-agreed prices. 

• Commodities like cereals, pulses, oilseeds, edible oil, onion, and potatoes will be removed from the list of essential commodities. This move is intended to end the imposition of stock–holding limits except under extraordinary circumstances. 

What is the Economic Rationale in support of the Bills?

• One of the most significant economic arguments for the Bills is that it will give the farmers greater freedom to sell their produce to who they want.

• This will help in eliminating ‘intermediaries’ between farmers and buyers.

• This will help improve farmers’ incomes by ensuring that the farmers will get a bigger share of the price paid by customers.

• The MSP, Minimum Support Price for which there is a vast demand, is in reality enjoyed by a handful of farmers in the country today. 

• The pursuit of Minimum Support Prices (MSPs) into law seems to be a pursuit with little advantages to the farmers and actually favoring vested interest. 

• The Green Revolution regions of Punjab, Haryana, Western Uttar Pradesh, where MSPs were the basis, have prevented reforms. These changes will churn the whole system into being more productive for the farmers. 

Do the Bills actually address the problems in the Agri – Sector?

• It has been assumed that the problems the farmers face are mainly because of the ‘intermediaries.’ However, this may not be entirely true; the inflation data shows that retail and wholesale prices for essential food items – cereals, pulses, vegetables, and fruits, in fact, move in tandem with each other.

This basically shows that the farmgate prices do move in tandem with the prices in retail markets. 

So the argument that the Bills solve the intermediaries problem is not entirely correct since these intermediaries do pass on the change in prices at the Wholesale level. 

• The bigger problem for farmers is, in fact, the large volatility in the prices of crops, mostly pulses, and vegetables. Cereals such as Rice and Wheat are covered under the MSP and face the lowest price volatility; the government procures almost one – third of the total rice and wheat production.

And this is the primary reason why the farmers demand MSP – based procurement for all crops. 

For farmers who produce – pulses and vegetables – more volatile in prices – MSP is the primary concern. 

• The main reason for the Agri – crises is because agriculture employs too large a number of people for it to be remunerative. The sector generates less than 15% of the country’s GDP, but agriculture employs at least 40% of India’s total workforce. 

The ratio of revenue generation to the number employed is too skewed. 

The Bill does not address this issue. 

• Largely in India, agriculture is practically unviable exercise. 

Even with MSP, farming is not viable in India. The costs incurred – hired labor, family labor, seeds, fertilizers, insecticides, irrigation costs, interest on working capital, land revenue, depreciation of farm buildings and implements, and rent paid for leased land – the costs and the revenue generation is not a lucrative prospect. 

Farmer’s Organizations have demanded that the MSPs at least cover 50 % of revenue to cost ratio.

A farmer should be able to use his income other than only using it for farming.

Sadly, the farmers seldom can rise above the costs and enjoy profits that raise their standard of life. 

• As compared to the rest of the world, India – spends very little on agricultural research and development. It is even lesser than that of China. 

Even MSPs for Rice and Wheat have been growing at a much slower pace in recent years. Unfortunately, the costs continue to be on the rise owing to inflation. 

Hence even if the prices are at peak, it means little to the farmers, and if the prices crash, the loss is enormous.

 What is needed?

• The future of Indian Agriculture must be safeguarded. It cannot be salvaged by offering greater freedom to farmers to sell their produce to who they want, alone.

• The mismatched ratio between the number of people employed in the farming sector and GDP contribution needs to be addressed. 

• More employment opportunities are needed so that the excess workforce in agriculture can be employed in other sectors. 

The incomes based on better employment opportunities will increase the demand for agricultural products considering that in India, most people are not even able to afford a decent diet – Food Basket.

The governments heavily support agriculture in most countries; hence, passing the three bills may ensure greater freedom to farmers, but it does not address the Agri sector’s core problems.

The Indian Government needs to develop policies that support and safeguard the interests and the future of our farmers, and in doing so, improve the whole country’s future.