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Indian farm bill repeal: Setback to reforms, betrayal of poor farmers

The repeal of the farm bill stretches the plight of poor farmers and hurts the potential growth of food processing in the country, writes S. Majumder for South Asia Monitor 

S. Majumder Dec 09, 2021
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Indian farm bill repeal (Photo: Scroll)

The opposition was jubilant over the withdrawal of the three farm bills. They celebrated Prime Minister Narendra Modi’s decision to blink after over 700 farmers died in the prolonged protests. The opposition vented its ire against the way the bills were passed. The government did not discuss with the farmers elaborately or send the bills to the Joint Parliamentary Committee. After the repeal, the opposition blasted the NDA, ahead of state elections, particularly in Uttar Pradesh and Punjab. 

But the reality is different. Who were these protesters? Poor or rich farmers? Poor farmers were the frontline soldiers and succumbed to death. They were less concerned with the procedural systems to pass the bill. They were interested in how the new bills benefit them and get freedom from the clutches of traders. Reformists argued that the repeal is a boomerang for poor farmers.

Mama kept away 

West Bengal Chief Minister Mamata Banerjee, a staunch opponent of Modi, refrained from joining the protest, except giving lip service. Odisha Chief Minister Naveen Patnaik preferred to emulate Banerjee.  Erstwhile Punjab Chief Minister Amarinder Singh lamented the prolonged agitation, blaming it had damaged industries in the state. 

The new farm bills became the Damocles' sword for rich farmers. They were earning high profits through 'mandis' (wholesale grain markets) and Minimum Support Price (MSP) - guaranteed prices - which were originally aimed at protecting poor farmers. Mandis and MSP were launched in the early 1960s. The main objectives were to support poor farmers to reap better prices and get rid of middlemen. Over time, the real objectives were mutilated. Rich farmers became wealthier and poor farmers continued to reel under poverty. 

Nearly 80 percent of the farmers in India are smallholders of land.  Mandis and MSP are no insurance to them. Instead, they become tillers in the land of rich farmers who benefit from mandis and MSP besides huge government subsidies as well as the tax sops in agriculture. 

Punjab benefits most 

Punjab is the richest state and West Bengal is the poorest in terms of farm income, according to a survey. But Punjab is the biggest user of MSP.  In 2019-20, the largest procurement of wheat and paddy, 39 and 30 percent respectively, took place in Punjab under MSP.  

West Bengal and Uttar Pradesh are the biggest producers of rice and wheat respectively. But they are the least beneficiary of MSP. The new farm bills vowed to turn down the anomaly by withdrawing mandi and recalibrating MSP so that the benefits reach the poor farmers. 

The new farm bills made a debut for corporatization of agriculture. It would have paved the way for mechanization of farming and commercial farming. It could have been a big support to the poor and small land-holding farmers who lack marketing expertise and farm technology. 

Commercial farming is usually capital intensive. To this end, private investment will create better opportunities for small farmers. Corporatization of farming could have enhanced the scope for selling agricultural products through proper marketing channels, in-house research and development facilities. 

At present, farming in India is informal in nature. It is undertaken by family members of poor and small farmers. Most farmers lack machinery like tractors, combine harvesters, rice planters and so on. Contract farming, which is an important component for commercial farming, is a distant future.  The Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill 2020 ensured guaranteed purchases at pre-determined prices. This would have protected the poor farmers from the volatility in prices under the farm bill. 

Food processing hurt 

The repeal of farm bills opens Pandora’s Box for food processing industries. Currently, only 2 percent of agricultural products are processed as compared to 40 percent in Southeast Asia. The repeal will nix the recently launched PLI (Production Linked Incentive) scheme and force the industry majors on the back foot to invest in the industry. The Nestle Chairman and MD had said: “The scheme would give a boost to the food processing industry.” 

The major food processing stakeholders were ready with a blueprint for enhancing the capacity of their industry. In some states like Karnataka and Maharashtra, much headway was made by establishing collection centres. The repeal of the farm bill stretches the plight of poor farmers and hurts the potential growth of food processing in the country.  

(The author is a Former Adviser, Japan External Trade Organization, New Delhi. The views expressed are personal. He can be contacted at subratamajumder0604@gmail.com)

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