"One of the greatest mistakes is to judge policies and programs by their intentions, rather than their results", said Milton Friedman
The irrepressible 20th century apostle of laissez-faire is bang on ! We can vouchsafe for it. Trumpeted as a masterstroke for eliminating an estimated 3-4 lakh crs of cash hoards of black money, demonetisation ended up laundering all of it white and, to boot, securely lodged in banks. Not what anyone, least of all the policy makers, intended. Therefore polemical exuberances over the new farm bills need a reality check.
Indian agriculture over the years has metamorphosed dramatically, from endemic scarcity, PL-480 dependence to self sufficiency, exportable surplus and extirpation of starvation deaths. Howsoever much one may decry previous regimes of the past seventy years, at least they have not been amiss in boosting agronomy. Green revolution hoisted production so high that food grains supply is no longer an enduring concern. But this abundance did not reflect in proportionate enhancement in well being of the small farmer, tenant farmer and sharecropper. In other words, it failed to ensure an equitable distribution of farm incomes. The pressing need now is to uplift small farm incomes, not just revving up production.
These laws purport to create parallel markets outside the APMC designated mundis. But several states do not have the APMC architecture, and even in APMC states the farmer is free to sell anywhere subject to state levies. Bihar disbanded APMC in 2006 and a friendly BJP partnered government has been ruling the state for the last 15 years. Agriculture and marketing of agri-produce, both, are in the state list. The Contract Farming Act 2007 opened the doors for entry of corporates. Thus law and governance both were facilitative of new markets, new players in virgin territories and for corporatization of some agricultural production ( say, potato and tomato) .Yet the state made no headway.
Now even taxes will not be an impediment as transactions outside APMC physical structures will be tax-free. That's as path breaking as , possibly, APMC breaking. Tax laden APMC mandis competing with tax free markets next to its physical boundaries are destined to suffer an agonizing exsanguination. Will the small farmer gain from demise of APMCs and new markets ? Again take the case of Bihar. In all the APMC-free years the avg price realization from wheat and rice was well below MSP. The Shanta Kumar report which forms the backbone for these laws reveals that only 6% of past sales were effected at MSP. As lately as Sep20 the prevailing price for basmati in Punjab mundis was below last year's MSP. Thus, APMC-free state or not, farmers have consistently failed to get a fair value.
That being so will markets sponsored by corporates cause a paradigm shift and assure small and marginal farmers, who constitute 64% of all farmers, of at least a MSP. They have meagre marketable surpluses, little staying capacity ,and next to nothing bargaining power. For one thing, the small farmer will confront a new breed of suit clad buyers who chant an 'alien' mantra - maximization of shareholder value. The inherent logic of their business model is a double squelch - sqeezing the grower and extorting the consumer. To the remote shareholder the farmer is a mere data point that signals the state of his return on equity. No more, no less.
The chances are such an ecosystem will in due course deliver a double whammy to the rural economy. As the corporates would buy direct from farmers existing market intermediaries would become redundant. And their business credo of profit maximization would prevent them from passing on the savings from commissions payouts and taxes on to sellers. All of it would add up to the sickening morbidities of the organised manufacturing sector-Unemployment and jobless growth- spreading to agri sector as well.
Free market and its concomitant, corporatization, uplift incomes but distribute it most unfairly, accentuating income disparities. Disproportionate numbers move up to be millionaires and disproportionately large numbers slide down to the bottom of the income scale. And more and more of wealth gets concentrated in fewer and fewer hands. Corporatization, on the other hand, nourishes an educated middle class to scaffold corporate aggrandisement, act as its cheerleader and a loyal support base. The class develops a vested interest in perpetuating the skewed model of economic growth and ensures its longevity. Taking a cue from this, one can easily infer that the bulk of the farming community populating the base of the pyramidal landholding have only one way to go, down. Looking at it another way the same prognosis emerges. The sponsored markets would, significantly, have no MSP. Prices would be a function of respective bargaining powers. It's no brainer where the bargaining power would lie. Sponsors would have very very deep pockets. With no bargaining power and no MSP the small farmer wouldn’t stand a chance.
Mr Modi's ideological leanings make him averse to subsidies. If subsidization does become inevitable he plumbs for cash subsidies. Eliminating food subsidies has been on his bucket list for quite some time. If he gets going the guillotine will first fall on PDS. He would pay a cash subsidy to the identified beneficiary rather than issue a Ration Card. Without the PDS why would FCI need to procure grains ? And no procurement makes MSP 'undeployable'. MSP will be finally buried , not quietly but surely ,even if noisily. Fears of its abolition are not entirely unfounded and not easily washed off from public subconsciousness.
India's varied topography and climatic diversity do not conduce to 'one size fits all' solutions in agriculture. That's why the constituent assembly in its wisdom placed agriculture in the state list(entry 14-agr , entry 26-markets and fairs). Parliament's resort to Entry 33 in the Concurrent List ( Trade and commerce in, and the production, supply and distribution of-foodstuffs, including edible oilseeds and oils, cattle fodder, raw cotton, cotton seed, raw jute) therefore violates the 'pith and substance' of the federalist constitution.
APMCs have become sickly victims of regulatory capture- collusive partnership of regulators, intermediaries, and traders manipulating prices to the detriment of growers. Rotten boroughs, indeed. But the imperatives, namely, proximate agri markets, fair price discovery mechanism, safety net in terms of MSP and regulatory oversight, that impelled their creation have not lost relevance. Judged against these imperatives the markets envisaged under these laws stir unease. They will be unregulated, asymmetrically competitive, sans safety nets, and beyond court jurisdiction. Thomas Carlyle's cautionary note on ending slavery is instructive.
"You must empty-out the bathing-tub, but not the baby along with it. Fling-out your dirty water with all zeal, and set it careening down the kennels; but try if you can keep the little child !"
Excoriating the existing structure of its ills, reforming it, and adapting it to local geographies appears more viable. Corporatization may boost production but its gains if are not equitably distributed will only be a case of the remedy being worse than the disease. Fattening corporates and skeletal farmers look ugly even when their total incomes have increased. Bill Gates walking into a bar would increase the avg income of all tipplers in the room. But would that buy them a peg more ?
Finally, discriminating minds would have noticed that Mukesh Ambani created a kitty of ₹43574 cr from sale of stake in Jio Platform and tied up with FB for operating a farm-to-fork supply chain app, Jiokrishi, on WhatsApp just a couple of months ahead of the enabling ordinances. Capital, a crony capitalist, a digital platform , and legal framework all in place. Parliamentary consent was bulldozed through in Sep. With Mr Adani building and maintaining silos ( as of now for FCI ) the road map to corporatization of agriculture is truly laid. Only the grapes remain to be tasted.
कर्मण्येवाधिकारस्ते मा फलेषु कदाचन |
मा कर्मफलहेतुर्भूर्मा ते सङ्गोऽस्त्वकर्मणि ||
(Deed done, its fruits left to destiny)
