Farm Laws 2020
Playbook for Reforming Indian Agriculture
Government and society in India have historically viewed farming merely as a means of achieving food security for the country. Farmers are considered annadatas, instead of legitimate entrepreneurs engaged in the business of agriculture. The liberalisation of 1991 did not touch the agriculture sector.
Despite decades of policy interventions, a majority of Indian farmers have not seen their incomes rise, nor have they been able to increase farm productivity. Farmers with small or marginal holdings, who make up around two-thirds of all farmers, find themselves prey to indebtedness, a lack of choice in inputs, and underdeveloped warehousing and processing facilities. In each agricultural cycle, we witness a host of farmer agitations, leading to further band-aid solutions.
The Union and states provide a host of subsidies for agricultural inputs and offer high prices for outputs by procuring food grains at minimum support prices for multiple crops. Simultaneously, policymakers walk the tightrope of protecting consumers from high prices through inexpensive grains to over two-thirds of the Indian population.
These policies ignore that the distress in the sector largely results from farmers having little or no control over anything in agriculture except perhaps tilling the soil. The government interferes with decisions at every step of the production and sale process. Pulled together, the policy framework has destroyed the signalling role played by prices, and no one is better off for it.
The Finance Minister, in her first budget speech in July 2019, expanded the scope of ease of doing business to include rural enterprises. She also opined that “ease of doing business and ease of living both should apply to farmers too.” Unfortunately, the political and social discourse in India still does not see the farmer as an entrepreneur who takes risks, analyses the market and engages in the production, marketing and selling of agricultural produce.
Against this background, the playbook:
- imagines agriculture as an enterprise, and casts agriculturists as “farmpreneurs”;
- distils key learnings from richer studies and reports; and
- outlines the full-spectrum of reforms needed in the sector.
Much of the policy approach has been hostage to the myth of the “first transaction”, a notion as archaic as it is dangerous. The playbook’s approach has been to sidestep this notion and to treat the sector as any other. Farmers are not isolated actors, but entrepreneurs who engage in the market process, absorbing cues from prices and the actions of their competitors and buyers, making business decisions on what seeds to use and arbitrage potential in storing for later sale. This playbook lists eight distinct reforms needed in the agriculture sector so our farmpreneurs may be free to make and sell. These reforms cut across myopic land regulations, the regressive input subsidy and control regime, and the fetters on spot, futures and credit markets. The playbook largely focusses on bad policies that need repeal or revision, less so on things, the government needs to do more of.
Articles and Op-eds
Does Seeds Bill 2019 undermine farmers’ rights?
The Centre is expected to introduce Seeds Bill 2019. Sudhansu Neema writes on how is the Bill going to impact the farmers, seeds industry and agriculture sector if it becomes a law...
Government of India is expected to introduce the Seeds Bill 2019 in the ongoing winter session of the Parliament. The Bill, expected to replace the Seeds Act 1966, has been pending since 2004. Among other things, it aims to regulate quality, production, distribution, sale, import and export of seeds. It also seeks to provide a mechanism to register every seed variety into a national seed register. In addition, the Bill contains provisions for capping the price of particular seed varieties by the Central and state governments.
The new version of the Seeds Bill reverses the provisions of self-certification and certification of seed varieties by accredited companies as contained in the 2004 version. Instead, it demands that every seed variety is registered with the government directly. Given that India has at least 100,000 varieties of rice alone; no one is sure how the government will register each variety and make rules with respect to the germination and health of the seeds. In all probability, the process for registration is likely to be costly and time-consuming for both farmers, seed-tech firms and the government.
Harmful Bans and Limited State Capacity: An Agricultural Example
On the 14th of May 2020, the Ministry of Agriculture and Farmers Welfare published a draft order called the Banning of Insecticides Order, 2020. The ministry cited various reasons justifying the ban of each pesticide, including a list of other countries that have banned these pesticides.
This ban is based, at least in part, on the advice of the Anupam Verma Committee set up in 2013. However, of the 27 proposed compounds, six are classified as “green triangle” or unlikely to be harmful, and eight as “blue triangle”, or mildly toxic. 11 are classified as highly or extremely toxic.
One reason that the ministry provided for banning the pesticides in the green and the blue triangle is that producers and interested parties have not submitted reports to them. Pesticide associations like the Crop Care Federation of India say the reason for non-submission or partial submission is that while the Registration Committee added new requirements for their review, they decided not to extend the deadline for submitting those studies.