Explained Ideas: Why liberalising Indian agriculture is not in sync with what other countries do

In the US, the agriculture sector is expected to receive $46 billion in federal subsidies this year while the European Union’s Common Agricultural Policy spending has averaged €54 billion annually, write Christophe Jaffrelot and Hemal Thakker

The three contentious farm bills, which received the President’s nod on September 27, essentially change the rules around the sale, storage and pricing of farm produce.

The bills have been touted as a watershed moment for Indian agriculture by the Prime Minister, as the government claims that the reforms would remove the shackles from the agriculture sector and free farmers from the stranglehold of middlemen by creating one market.

However, farmers’ unions and groups have concerns about two major issues: First, since the Minimum Support Price (MSP) is not mentioned in the bills, they fear that they will lose the assured option of selling to the APMC mandis and that this will lead to corporate exploitation.

Second, they apprehend a process of corporatisation of agriculture in the absence of regulation, as agribusiness firms might well be able to dictate both the market conditions (including prices) and the terms of contract farming as small farmers do not have the same bargaining power.

Christophe Jaffrelot and Hemal Thakker, both belonging to Sciences Po, Paris, ask: “Why should agriculture be liberalised in the first place when in most countries governments subsidise this sector?”

In the US, the agriculture sector is expected to receive $46 billion in federal subsidies this year. This accounts for about 40 per cent of the total farm income and, if not for those subsidies, the US farm income was poised to decline in 2020, according to a report by The New York Times.

Similarly, the European Union’s Common Agricultural Policy spending has averaged €54 billion annually since 2006.

Without some support from the state, the smallest of Indian peasants would be even more vulnerable. According to provisional numbers from the 10th Agriculture Census 2015–2016, in India, “smallholder and marginal farmers” (those with less than two hectares of land) account for 86.2 per cent of all cultivators — that is, almost 126 million people. For them, it is inconceivable to carry their produce to other states or far- off places to sell. They will not easily resist the deals “proposed” by agribusiness firms.

“Should they disappear in the name of the modernisation of agriculture, which means concentration of land and mechanisation?” ask the authors.

They write that for making farming sustainable, the government should draw inspiration from Andhra Pradesh’s community-managed farming model which promotes agro-ecological principles with the use of locally produced, ecologically sustainable inputs, focusing on soil health, instead of depending on chemical fertilisers. This model is more resilient as well as more biodiverse in nature and provides a safety net to farmers.

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