WHAT HAPPENED TILL NOW
In Punjab, Reliance cell towers were toppled during the height of the farm protests, in which ideologically charged rhetoric claimed that the new farm laws would lead to the corporate takeover of Indian farms. Following that announcement, Reliance issued an official statement stating it has no intention of entering the farm sector. No matter how large or small, private companies are reluctant to jump into the tidal currents of Indian agriculture, which is a cause for concern.
As opposed to the ominous warnings of capitalist takeovers, a market economy assures itself that firms survive by prudently taking risks. The market economy’s size increases primarily because private firms have efficiently managed risk and securing real productivity gains for everyone, unlike the imperial era when the East India Company grew by muscling its way into the country. Our large public sector undertakings have been continuously losing money since political motives, not market ones, have driven the risk-to-return profile of our overextended public sector, depressing productivity gains.
Today, the government is involved in every facet of farmer livelihood. In addition to 13 federal ministries and agencies, dozens of state-level agencies manage agricultural production, production, credit, design, marketing, distribution, public distribution, research, education, and extension services; trade policy; agribusiness; and research.
WHATS THE RISK AND OUTCOME
Both the central government and state governments have intervened arbitrary and inconsistently as a result. We find ourselves trapped in an all-India agricultural landscape, 50 years after the Green Revolution, with relatively low levels of productivity and high levels of regional variation in crop yields due to a lack of or poor provision of public goods, including irrigation. Sadly, food security has been purchased at the cost of an agricultural industry that ensnares all of us – farmers, householders, consumers, businesses, and states – with lower levels of individual welfare and higher levels of overall risk.
A combination of strong inequalities in the provision of common goods across districts -such as irrigation, roads, and power – the absence of well-functioning markets for land, crops, and inputs, a lack of meaningful progress on labour reform, and a poor quality of education have contributed to a reduction in overall resource mobility. Moreover, they have prevented the flow of innovations and technology that could improve productivity and reduce yield variations across districts.
Because of these three reasons, the real promise of a decentralised system – of experimentation, of learning from each other, and of adopting best practices and policies – has not been realized. Agriculture in India has remained extremely fragmented since Independence. Each of the 734 farming districts in the country has a different “agricultural model.”.
If we do not implement fundamental reforms that increase the mobility of our farmers and agricultural resources across the country, our farm households remain trapped, each subject to the failings of their farming district and state. According to a decentralised polity, a farmer in Assam should benefit as much from the “Punjab model” as a farmer in Punjab, and vice versa.
Rather than addressing the above underlying problems, government input subsidies and minimum price guarantee programs have worsened overall levels of productivity and risk in agriculture, generating adverse consequences for all of us, resulting in the degradation of our water resources, soil, health, and climate. At the same time, these policies have tightened the trap in which our farm households find themselves. Therefore, the risk-to-return levels are even higher for maize and cotton outside of rice and wheat, including for Punjab, as shown in the following chart. So it is not surprising that farmers in Punjab and Haryana are afraid of both the loss of state support for rice and wheat and the higher risks associated with switching to other crops.
Last but not least, the three agricultural laws are only a small part of the set of reforms that will be necessary to stabilize Indian agriculture. Creating conditions that allow farm households to maximize their income while minimising the overall level of risk in Indian agriculture must be the guiding principle for these reforms. Farmers should have the freedom to choose their inputs, technologies, land, and organizational forms. The state has too long imposed top-down production, marketing, and distribution schemes on our farm families while enclosing them in a dangerous agricultural landscape. The farmers must be able to enter the agricultural sector on their terms and to contract with whomever they wish, just as any entrepreneur in the non-farm sector. Whenever large or small corporations show a greater willingness to enter the Indian agricultural stream at the same time, the Indian farmer and the rest of us will have moved to a low-risk, high return path of progress. It will take the commitment of all stakeholders to get there, a long-term undertaking. We all stand to lose more if we delay reforms for too long. Without reforms, we will find it increasingly difficult to extract ourselves from these risky farming currents.