WeeklyWorker

18.02.2021

Revolution from above

Small farmers are in revolt against the Modi government. Jeff Singh looks at the drive to replace peasants with capitalists

Bitter winter protests are becoming something of a habit among Indians, who, under the rule of Narendra Modi’s Hindu nationalist government, are testing out the claim that they are citizens of ‘the world’s largest democracy’.

Three new farming laws are the proverbial bone of contention, intended to reform an agricultural market system which was spawned during the exploitative era of British rule.1 However, the national laws allow little flexibility for individual states and have been challenged by small and large farmers alike, who feel there is little to no support provided for them to adapt to the sweeping changes they impose. Pro-government corporate-media outlets have been lambasting the protestors for months, and backers of the reforms claim that the laws will affect only the richest farmers, accusing the protestors of ignorance. Regardless, support for the agitation continues to grow.2

Over half of India’s working population are employed in the agricultural sector, of which a few hundred million are (mainly smallholder) farmers.3 However, agriculture only accounts for 16% of the country’s gross domestic product, implying that farming methods are extremely inefficient - particularly when compared with that of the USA, which requires just 2% of the population to produce a yield sufficient to feed two billion people. While it is important to note that much of the USA’s produce is intended for feeding livestock rather than people, a similar contrast can also be observed when comparing Indian agriculture with that of east Asian countries, many of which have just 10% of their workforce in agriculture.

Irrespective of employment figures, India’s government claims that it is committed to upgrading the current agricultural sector, transforming it into a much more sustainable and effective system - one that protects the water table and ecosystem. This enormous task requires not only the implementation of expensive infrastructure in the form of roads, power lines and irrigation, but also the creation of gainful employment for the vast numbers of Indians who will be rendered unemployed, as mechanised farming machinery replaces their manual labour. And yet bizarrely, in the face of these challenges, in 2016 Modi promised India’s farmers that his party’s reforms will double their income - a promise that seems impossible to keep.

Neoliberal reforms began in 1991, and by 2000 the agricultural sector was said to have begun its ‘Rainbow Revolution’, intended to encourage the private sector to invest in and update rural life. These new farm laws carry on in the same direction and intend to bring India’s farming sector up to the more modern standards of some western countries .4Currently, agricultural markets are the responsibility of the state. They are regulated by the Agricultural Produce Marketing Committee (APMC) - a remnant of British rule, originally set up to extract agricultural goods from the former colony.

Yet central government also has a responsibility to ensure free trade within the country. As a result, APMC markets have become a state-supported framework that facilitates procurement from farmers by both the state and private sector. Individual states have their own APMC regulations, which mandate the purchase of certain notified agricultural commodities. It is claimed that the overarching intention is protecting the interests of farmers by providing them with an organised market and guaranteeing a minimum price on certain produce.

The three laws are best viewed together as reforms that have been anticipated since 1991 and are all focused towards removing regulations that prevent private-sector participation. The first and most contentious of them is the APMC ‘bypass bill’, which seeks to limit the jurisdiction of APMC acts to the physical perimeters of its markets. Any transactions made outside these markets will take place in the ‘trade area’ and are not subject to the same regulations. The second, and less controversial, reform is the Essential Commodities Bill, which replaces the existing stocking limits framework with a mechanism triggered by the pricing of commodities. The intention of this bill is to remove restrictions that have prevented big business from operating more freely in the agricultural sector. The third legal change is also known as the ‘Contract Farming Bill’ - the main aim of which is to provide a framework for written agreements between farmers and ‘sponsors’.

With regard to the environment, due to outdated irrigation techniques, water wastage is a big problem across India that impacts heavily on the water table - the current levels of extraction are just not sustainable. Additionally, the state procures cereals in large quantities from APMC markets to distribute to the bottom two thirds of the population via ration shops. The largest suppliers of these cereals are big farmers from the Punjab and Haryana states, but the complaint is that this 6% of Punjab and Haryana farmers will have a monopoly on state procurement of cereals. If this were true, it would require a very loose understanding of the term ‘monopoly’, as AMPC markets are open to all who hold a licence.

Another unsubstantiated claim is that reforms will benefit small and marginal farmers who are currently restricted to the APMC markets.5 But this is simply not true. As Sudha Narayanan - associate professor of economics at Indira Gandhi Institute of Development Research - points out, “Cotton ginners and spinners, solvent extractors, sugar, oil and dal mills have historically been procuring directly from farmers in several states”.6 During 2012-13, only 25% of all transactions were made within the AMPC markets, while 55.9% were made with local private traders. Six states already consider private warehouses to be market places and permit warehouse-based sales, while Kerala, Behar and Mizoram have no APMC Act to speak of. For some farmers, this private trade has reduced costs by avoiding APMC licensing fees and, in some instances, the cost of transporting goods to APMC markets. However, according to Narayanan, these cases are limited, and such benefits are not likely to be felt by smallholder farmers, who do not have the capacity to market their goods effectively outside the APMC markets.

This added competition can lead to further instability for smaller farmers, many of whom may be in debt and stake everything on selling the crops they harvest. Farmers groups have long been calling for an increase in the number of accessible markets, which would in turn reduce the costs of transporting goods and improve the assurance of sales. It appears doubtful that freer trade will meet these demands - the apparent failure of the free market to take advantage of the unrestricted areas, as Narayanan points out, is partly because businesses tend to be very selective of the geographical locations in which they choose to trade, often prioritising areas with “less competition, better infrastructure, skilled farmers and higher productivity”.7 Another good example of this is in the state of Behar, where there is a marked absence of private traders or agribusinesses, despite deregulation. It is assumed that if the state were to invest in the infrastructure, big business would be more likely to take advantage of it.

Harmful

Ten senior economists have written a letter to the Modi government demanding a repeal of these “fundamentally harmful” new farm laws.8 The economists provide five reasons why the laws should be repealed, including their concerns that they will enable big agribusinesses to dominate smallholders, and ruin the livelihoods of an unimaginable number of people. The letter also challenged some government justifications for the laws, which the economists claim to be false.9 These falsehoods have been repeated in inflammatory and misleading articles in some of the country’s biggest newspapers, including The Times of India.

Far too often has it been suggested that the farmers are simply unable to realise that the laws serve their interests, and that they misunderstand the wider goals of the reforms. On the contrary, I would argue that it is the policy-makers who have misunderstood them. Farmers are aware that deregulation of the agricultural sector will create an environment where both smallholders and agribusinesses will have to consolidate in order to survive, as has been the case in many western countries. Indian smallholder farmers are already struggling, and some enter a cycle of debt when they opt to take loans to compensate for poor returns from crops. As farmers receive fewer returns with consecutive harvests, their debts mount. Unable to repay the debts they have accumulated, many of them even resort to suicide. In 2013-17, more than 10,000 farmers per year took their own lives across India, often by drinking pesticides.10

‘Consolidation’ of smallholdings often implies a unifying and fruitful business venture, but the term fails to acknowledge the livelihoods that are lost in this often untidy process. Following India’s independence, consolidation of smallholdings was changed to ‘voluntary’, but states have been expected to meet targets in five-year plans. This programme of consolidation is still ongoing and, ironically, Punjab and Haryana are amongst the few states reaching their targets. But all this clearly contradicts the disingenuous government line that the reforms are in the interests of smallholder and marginal farmers, as it is expected that they will have to consolidate to survive, as opposed to thrive individually.

To illustrate this point, NN Sinha, secretary for the department of rural development, argues that agricultural reforms will not be complete without the implementation of compulsory consolidation. Sinha attributes farmer suicides and debt to an uneven distribution of landholdings and suggests that smallholder farmers lack the capacity to invest in modern farming infrastructure, such as roads, power lines and irrigation channels. Most pertinently his statements prove that the government is aware that the private investment neoliberal reforms bring will not benefit the smallholders who make up the vast majority of India’s farmers.

Britain’s own agricultural revolution began with legislation that guillotined its way through the country, enclosing what was once commonly used land and consolidating it in the concentrated ownership of the landed gentry. Some historians argue that the purpose of the enclosures acts was not only to increase productivity of the land, while distributing the proceeds to a concentrated few, but also to force workers from the land into the cities to fuel the industrial revolution.

India’s situation is more complicated than that of 18th century England, because many of its farmers have legal rights not only as citizens, but as landowners. However, if these new laws are not repealed, the phenomenon of smallholders’ land being consolidated is likely to accelerate. As it stands, smallholders have not been offered schemes to compensate their losses and retrain them for other professions.

The reforms have not promoted cooperatives in place of consolidation. Rather, the laissez faire approach of the Modi government leaves smallholders defenceless in the face of monstrously wealthy competitors, who will be free to abuse their power in a deregulated environment. The irony here is that, had they been compulsory, the farmers would have been slightly better off, as they would have had to be compensated.

In response to the sounding of the death knell that the reforms represent, it is unsurprising that many farmers see this as their last stand. Much like the tax reforms which sparked the gilets jaunes movement in France, the Indian government has attempted to force through neoliberal reforms under the guise of a desperately needed climate policy, while neglecting the needs of the masses they supposedly represent.11

  1. See indianexpress.com/article/opinion/columns/farmers-protest-agri-laws-apmc-mandis-msp-surjit-bhalla-7101406/lite.↩︎

  2. youtu.be/xUSLi8DsMww.↩︎

  3. theindiaforum.in/article/india-s-biggest-challenge-future-farming.↩︎

  4. theindiaforum.in/article/three-farm-bills.↩︎

  5. m.timesofindia.com/india/what-are-new-farm-laws-and-and-why-farmers-are-protesting/amp_articleshow/79609234.cms.↩︎

  6. theindiaforum.in/article/three-farm-bills.↩︎

  7. Ibid.↩︎

  8. theprint.in/india/10-senior-economists-write-to-modi-govt-demand-repeal-of-fundamentally-harmful-farm-laws/569017/%3famp.↩︎

  9. indianexpress.com/article/opinion/columns/rural-land-holdings-economy-rural-investment-farmers-agitation-6588473/lite.↩︎

  10. downtoearth.org.in/news/agriculture/more-than-10-000-farmers-farm-hands-committed-suicide-in-2017-68653.↩︎

  11. jacobinmag.com/2018/12/gilets-jaunes-yellow-vest-macron-capitalism.↩︎