Why Are India’s Farmers Protesting?

Indian farmers have lately made international headlines. Rihanna, Susan Sarandon & Greta Thunberg have taken up their cause. Ozy, a glitzy Silicon Valley publication posed a provocative question: “Will World Step In?” https://www.fairobserver.com/region/central_south_asia/atul-singh-manu-sharma-india-farmers-protests-agriculture-sector-reform-green-revolution-history-15201/

The story playing out in international media appears to be a simple one

Indian farmers are the noble David standing up to an evil Goliath-like government beholden to greedy billionaires

In an era of increasing inequality and decreasing social mobility, this narrative resonates

The fact that elite journalists in New Delhi or New York see ruling Bharatiya Janata Party (BJP) as a Hindu fascist party adds to its appeal.

Publications such as Ozy convey that Indian Prime Minister Modi has brought in agricultural reforms solely to benefit large corporations.

As per this narrative, the government is in thrall to big business and against poor farmers.

Is this narrative true, or is there something more complicated going on?

The Burden of History

Ever since the British Raj, Indian farmers have led tough lives.

The colonial power imposed extortionate taxes on farmers, taking away at least 45% of harvests, often confiscating the whole yield.

British imperialists took Niccolo Machiavelli’s advice to heart and patronized a new feudal class of landlords to act as their middlemen.

They did the dirty work of squeezing farmers, enabling them to escape much of the blame.

British also created an extractive colonial bureaucracy to suck wealth out from India.

Few realize, primary job of now-glamorous district collector — an elite civil servant who does the job elected mayors do in western democracies — was to collect taxes from poor Indian farmers.

In The World Financial Review, Kalim Siddiqui explained in some detail why famine stalked British India. Great Britain industrialized & became a great power partly through ruthless exploitation of farmers in what are now India, Pak & Bangladesh, which then comprised British India

The first priority for independent India was feeding its people. Indian farmers were dirt poor with no access to credit, reliable irrigation or modern agricultural tools and farming methods. They were often in the clutches of predatory moneylenders.

Yet farmers had experience of mass movements. Mahatma Gandhi led his first satyagraha in Champaran against exploitation by British landlords, mobilizing thousands of poor farmers.

In India’s new democracy, farmers might have been poor but, they wielded real political power.

Since 1947, governments have formulated multiple economic policies to overcome India’s colonial-era rural poverty.

India abolished zamindari indigenous form of landlordship, immediately after independence

It overturned centuries of tradition by abolishing income tax for farmers

A key purpose of 1969 bank nationalization was to provide cash-starved farmers access to credit.

Green Revolution
In 1960s, India launched its famous Green Revolution, which subsidized farmers in India’s northwest region, comprising the states of Punjab, Haryana and western UP.

This part of country is a flat fertile plain irrigated by Himalayan snow-fed perennial rivers & with relatively large landholdings. Inspired by American agronomist Norman Borlaug, India’s govt encouraged farmers in this region to grow high-yield varieties of wheat, rice & cotton.

It gave farmers massive subsidies for fertilizers, seeds and equipment, investing large sums of capital to build dams and a network of canals and giving farmers access to easy credit.

As a result, farmers of landholding communities in NW India became most prosperous in country.

Green Revolution ended India’s ship-to-mouth existence.

India’s population had exploded after independence in 1947.

In a poor country, agriculture was inefficient & rain-fed. Bad monsoon meant poor harvests. Demand would outstrip supply and specter of famine was never far off.

Until production took off in India, the US supplied grains to Indian masses under PL–480 or Food for Peace.

Lyndon B. Johnson limited even critical famine aid to India, demanding the country implement agricultural reforms and temper criticism of US intervention in Vietnam.

The Green Revolution provided India with food security after two centuries of rapacious British rule.

Yet like any policy, Green Revolution had unintended consequences.

In 2009, Daniel Zwerdling chronicled how this fabled revolution was “heading for collapse.”

With an emphasis on high-yield varieties, the traditional mix of crops grown in the region for centuries has been abandoned.

Yields increased dramatically but only through an insatiable thirst for water.

Groundwater levels have fallen by 75%-85% over the decade.

In Punjab & Haryana, farmers are boring deeper & deeper for water

In 2018, 61% of wells were dug deeper than 10 meters

In a land crisscrossed by rivers fed by Himalayan snow, such water levels mark historic lows

India might have achieved food security at cost of water security

Parts of India are not just running out of water. The soil itself is turning toxic. Intense use of fertilizers and pesticides over decades has pumped harmful chemicals into the soil.

Villagers spoke about rising cases of cancer, renal failure, stillborn babies and birth defects

These health problems have increased since. Researchers attribute these conditions to the “overuse and misuse of pesticides and herbicides.”

As Pepper reported in 2008, Punjab comprised 1.5% of India’s area but accounted for nearly 20% of the country’s pesticide consumption.

Haryana and western Uttar Pradesh suffer similarly high soil pollution and consequent health problems.

Another consequence of the Green Revolution has been the overproduction of cereals.

So much wheat and rice are produced that a storage crisis has ensued.

India now lacks the capacity to store grains, with millions of tons are stockpiled in poor conditions.

In particular, India lacks cold storage facilities for fruits and vegetables because of restrictions on farmers, the stranglehold of Agricultural Produce Market Committees (APMCs) and a lack of incentives for the private sector to invest in the rural economy.

A Soviet Procurement System

After independence, India opted for the Soviet economic model. Five-year plans set out ambitious targets for a command-and-control economy.

The so-called quota-permit-license raj emerged, with bureaucrats dictating “which company would produce what, but also the amount of production, as well as the price of commodities.”

Agriculture was no different.

In a top-down, command-and-control system, the government set targets that farmers had to meet.

In an indigenous twist to the Soviet system, India created institution of Agricultural Produce Market Committee. APMCs were to run local agricultural markets, known as mandis.

Farmers could only sell to APMC-controlled mandis and only at fixed prices.

Unlike their American or European counterparts, Indian farmers could not sell wheat or rice on the open market.

This prohibition had two reasons.

First, APMCs allowed the government to control both production and price in its planned economy model.

Second, APMCs were meant to protect farmers from the vagaries of the free market and save them from exploitation.

Over time, APMCs become the new oppressors.

Local politicians and special interest groups came to control APMCs.

Since they were the only buyers by law, APMC mandis began to set ceilings on what farmers received for their produce, offering precipitously low prices.

Commission agents started taking greater cuts.

APMCs delayed payments to farmers, forcing them to borrow from “[commission agents], local money lenders and savings for their daily expenses.”

APMCs rarely gave receipts to farmers. his meant that they were denied the option of applying to banks for much cheaper credit.

Instead, they were pushed into India’s infamous informal economy and became prey to exploitative lending.

Tragically, inevitable and unbearable debt burdens have led to thousands of farmer suicides.

Apart from the APMCs, the government instituted a minimum price support mechanism as part of its planned economy model.

New Delhi wanted high and stable production of key crops. Farmers wanted, and still want, stable income.

In a pure market system, too much production leads to falling prices. This is not ideal for farmers. Therefore, they are careful to avoid overproduction.

So, India’s economic planners instituted a system that provided a floor below which prices would not fall, encouraging farmers to grow crops deemed essential for food security and economic interests.

Over time, powerful lobbies in northwestern India, the heartland of the Green Revolution, pressured the government to put the minimum support price well above the price the market would have otherwise set.

What began as limited support to ensure price and production stability eventually morphed into a substantial taxpayer-funded direct subsidy.

Support prices differed widely from one state to another. At the same time, restrictive laws compelled farmers to sell to designated APMCs

Crossing state and even district boundaries to get a better price for their produce was illegal and could land farmers in jail.

For instance, Punjab’s support prices have been higher than those in Bihar.

Therefore, Bihari farmers have been illegally selling paddy to markets in Punjab at a price lower than the minimum support price but higher than what they would get back home.

A flourishing black market and widespread corruption emerged as a result.

New Agricultural Reforms

In December 2019, the parliamentary standing committee on agriculture published a major report. It concluded that APMC markets were not working in the interest of farmers.

Instead, they were reducing competition, causing cartelization of traders and unduly deducting money due to farmers through market fees and commission charges.

Corruption and malpractices in APMCs were rife

The committee observed that “there [was] urgent need for radical reform” and asked the government to inform parliament “about steps taken in this direction within three months.”

It is noteworthy that the opposition and farmers’ unions agreed with the committee’s observations.

Last year, the govt instituted long overdue agricultural reforms.

Several economists and policy wonks welcomed them, arguing that these reforms would “unshackle farmers from the restrictive marketing regime that has managed the marketing of agriculture produce for decades.”