Bouncer from Barbados

Cricket would have been the right subject for some one from Barbados to make noise about. Great cricketers from Barbados - Sobers, Hall, Greenidge, Worrell, Walcott and Weeks would have been proud of that. Perhaps Gavaskar would have appropriately replied detailing how he smashed their great fast bowler Marshall around Firoz Shah Kotla on a cool October morning in 1983 and almost scored a century before lunch! Bouncers, Googlies and Sixers should figure in the conversation between people of Barbados and the Indians. Farmers agitation doesn’t fit there!

An environmental activist from Europe too threw her hat in. Perhaps she did not understand the enormous environmental damage caused by farmers in some of the states by growing water intensive crops with the help of free water, free electricity, subsidized fertilizers and supported by minimum guaranteed prices and benevolent procurement policies of the same government! It was clearly a self goal!!

It is amazing how International celebrities, with no understanding of India or of its farmers, or of the current issues for which some farmers are agitating, jump in to criticize the Indian government. They just don’t know that even many of the Indians, forget Indian celebrities, do not understand the issues fully. One article in the western media said that 250 million farmers were agitating around Delhi! Too many zeros were wrongly used by the writer!

In actual fact the government has been quite soft on the agitators who in turn have been largely peaceful except for what happened on the Republic Day. Multiple negotiations have taken place. Offering to keep the laws on hold for 18 months is a major step backwards by the government which was unfortunately turned down by the farmers organizations, perhaps under the advice of several activists and politicians. A clause by clause discussion and resolution would have been a more constructive approach.

Agreed that the government could have done a better job of the Farm Bills episode with much better planning and communication. But sticking to the unreasonable demand of repealing the laws is not in the interest of 14 crore farmers from rest of the country who need these new laws.

Favoured procurement of rice and wheat from Punjab and Haryana for many decades has already put them in a comfort zone which they would not like to lose. On the other hand farmers from rest of India are placed at a disadvantage. Let us look at this data.

Table 1. Wheat Production and Procurement (Lakh Tons)

Source: Website of Dept of Food & Public distribution, Ministry of Consumer Affairs, Food & Public Distribution

In the above table we can see the worsening of the situation during the last 4 years with increased concentration of wheat procurement in Punjab and Haryana. More than 70% of the wheat produced in Punjab and Haryana is procured by the government against a national average of 33%.

Table 2. Rice Production and Procurement (Lakh Tons)                                    Source: Website of Dept of Food & Public distribution, Ministry of Consumer Affairs, Food & Public Distribution

More than 90% of rice production in Punjab and nearly 90% of rice production in Haryana is procured by the government while the national average is 43%. Is this fair to the other large rice producing states?

There is no weightage for conservation of natural resources, yields and cost efficiencies in this procurement pattern of both wheat and rice. This must change to make states more responsible to such parameters.

Many of the apprehensions of the farmers are not emanating from the new Acts if you read details of the Acts carefully. They are being imagined as possible blocks that government will put in the way of the prosperity of Punjab & Haryana farmers. Why would any government do that and antagonize farmers? In fact these Acts will make Punjab & Haryana farmers more prosperous by making them diversify their agriculture to grow more value added crops.

Government has agreed to address the short comings of the Acts which have been pointed out and demonstrated their willingness to be flexible on that front. The most recent announcement of Agri Infrastructure Fund being made available for upgradation of APMC Mandis is one such example. Assurance on continuation of MSP is also given. Many other points are conceded.

A guaranteed price results in lack of incentive for improving efficiencies or crop rotation or adopting new agronomic practices that conserve natural resources. Making an artificially high MSP mandatory for private purchases will just kill any private participation.  What is the use of a price when there is no buyer at that price? The only real price is the market price based on open competition which drives the producers to be competitive. In that context the formula suggested by the Swaminathan Committee too is not the solution. A 50% mark up on total cost (which equals 33% margin on the selling price) is not a margin enjoyed by any competitive industry on a sustainable basis. Agricultural produce is a commodity and not a value added product which can command high margins. We should help the farmers to add value to their produce at village level and improve their margins. We have to give policy support that improves their competitiveness by reducing costs and increasing yields. Farmers should agitate for access to modern technologies that could reduce their costs instead of agitating for a guaranteed price which will make them uncompetitive in both short and long run.

We have to understand that when government buys at an artificially high MSP and loses money it is the money of the tax payer. Governments earn revenue when private and public corporations run profitable operations. By continuously attacking private sector the activists and some of the politicians are propagating philosophies which have already failed. Our socialistic history still haunts us.

There is an ideological difference between government’s efforts through the reforms and the philosophy of those advising the farmers. Reducing Government’s role in trade and commerce and bringing greater competition among the buyers through the introduction of private trade is the objective of the new laws while the advisors of the farmers believe in larger role for government and operation of guaranteed prices.   These two philosophies will never meet each other.

Government targets 100B$ agricultural exports in next five years from current 40B$ with share of value added exports increasing from 15% to 30% during the same period. This is not possible unless private sector invests in export oriented value chain development. Production clusters and economic corridors for agricultural export promotion have to be set up. Primary processing at village level to add value to farmers produce is to be taken up by private industry and rural entrepreneurs. We have to stop over production of rice and wheat and diversify to oil seeds, nutritious crops, fruits and vegetables to meet domestic and export demands and to reduce imports of edible oils. Consumer demand for nutritious food can be met by farmers through contract farming with private industry which helps them to preserve identity through supply chain. All these points of agenda are critical to improve farmers incomes and their welfare and also to conserve natural resources like soil and water. Majority of the necessary investments have to come from private sector. Governments can not do this alone.

If we don't set right the ecosystem for agriculture in this decade it will be too late to do anything. We need new models to avoid the pitfalls we have been facing because of our policies so far. These reforms are overdue by two decades.

By resisting increased role of private industry in agricultural output markets, the farmers of one region and their advisors are doing great disservice to the nation. Undoubtedly certain safeguards will be required to protect the interests of farmers. A regulatory body to oversee this entire transition will be definitely needed. Repealing the Acts is not the answer. Amending them is.  

These new laws are not about a particular region or religion. They are applicable uniformly across the country. Interests of 14 cr farmers of entire India are of paramount importance.

Our farmers should look for a draw and not a win. We Indians, rather than outsiders, have to sit together and resolve this issue in a constructive fashion. Master blaster has fiercely hooked the bouncer from Barbados for a six!

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