When the Corporates Come Marching into Farms

The broader motives of the three farm laws passed with undue haste by Parliament in September were: demolish Minimum Support Price (MSP), legitimise contract farming, legalise land takeovers, render the small farmer defenceless, and allow the Saints (read the corporates) to come marching in.

Of these, demolishing the very concept of MSP has long been thought as essential to the establishment of a Corporate Rashtra in rural India. In fact, the lobby that views MSP as a pernicious beast to be slayed, fear that if not acted upon, the monster would spread its tentacles beyond the 22 crops that it currently covers.

The argument of the anti-MSP lobby not articulated explicitly and openly, is this: if price protection is not done away with now, then the day is not far when farmers who cultivate fruits and vegetables also demand MSP coverage nationally. If that happens, then the corporate dream of procuring, storing, and retailing every morsel we eat may be short circuited by limited profitability.

In a worst-case scenario, should MSP be incorporated by an Act of Parliament, making it illegal to procure below a price fixed by the government, then manipulating markets at harvest time would be impaired. Those who fear this eventuality will tell you that MSP must deleted from the policy vocabulary altogether.

Indeed, if Corporate India and their reformist friends are agreeable to MSP serving as a cut-off below which procurement would be illegal, then the immediate problem would be solved. The farmers protesting outside Delhi would happily go back home once MSP is mandated by law and not merely verbal assurances which can be easily renegaded upon. All their other issues and demands could be sorted out later.

But the big question is whether corporates and reformers will agree to this formula? One understands that the corporates will not for obvious reasons. The reformers, on their part, will object because any regulation coming in the way of business making enhanced profits goes against the grain of the free market fundamental that they swear by.

But they also paint a rosy future for the farmers. The drift of what we have been hearing from the wise men of reforms is that with the market opening up, farmers will be free to sell anywhere and to whoever is the highest bidder. Thus, once liberated from MSP and the government mandis, higher profitability will be theirs to reap.

In fact, to prove the new order is pro-farmer there is every possibility that initially prices higher than MSP will be offered. In what is now an oft-employed strategy to monopolise a market, big players may even run at a loss and pay handsomely. They may even draw up long term contracts with farmers in which flexible pricing is cleverly factored in.

This flatter-to-deceive policy was used by cab aggregator companies when they entered the Indian market. Initially, stories about drivers acquiring new cars and earning close to Rs.70,000 a month even after paying the EMI for their vehicles, spread like wildfire. Even those otherwise employed were lured to sign up as cabbies. Passengers too benefited with cab fares close to auto fares. At Rs.7 or 8 a kilometre, they paid less while the cabbie earned Rs.18 per km. The free run however soon ended, and cab drivers now complain of being caught in a debt trap with declining income and high EMIs. And fares have simultaneously gone up.

Farmers suspect something similar might happen once the big players enter the farm sector. With no MSP protection, marginal cultivators may be subjected to market manipulation by the corporate sector which believes that buying cheap enhances profits. It will not be a level playing field by any reckoning.

But those who argue against MSP will posit that though minimum support price has been in operation for decades, there has been no let-up in farmer suicides. This, they will say, is proof that government intervention does not work. In the same breath, they tell you that much of the procurement by the government has benefitted large farmers. Allegedly, it is they who are driving the protests against the farm laws.

There is no contesting the fact that MSP has not been effectively administered. The Shanta Kumar Committee concluded in 2015 that only 6% farmers benefitted from the support price scheme. This seems to be an underestimate and the current percentage of beneficiaries stands anywhere between 15-20%.

But are all those who benefitted rich farmers? Take the case of paddy. Seventy per cent of those selling this crop to the government under MSP are all small farmers. The same story is for wheat and other crops. “In Punjab, close to 95 per cent of the wheat produced is procured under MSP. It is false propaganda that MSP is for the rich. It is also untrue that poor farmers support the farm laws. The experts and economists who say this must come and meet the protestors,” says agriculture and trade analyst Devinder Sharma.

According to him, India’s farm laws are nothing but a “cut and paste job” of similar legislation introduced decades ago in the United States and Europe. “These laws have failed the farmers there. So why are we bringing them here?” he asks. The entire script apparently is designed to drastically cut the number of people engaged in agriculture and leave the field open to big farmers and corporates. Notes Sharma: “The ‘move up or move out’ policy which the International Food Policy Research Institute recommended for our farm sector is what is being implemented. The effort is to force farmers to give up farming and move to the cities to provide cheap labour.”

It cannot be denied that whenever the government intervenes on behalf of farmers the reformers see red. Although they see nothing wrong when corporate debts are periodically written off with taxpayer’s money. In that context, the Kerala government’s move to introduce MSP for 16 fruits and vegetables will be viewed with suspicion and as a retrograde step. The scheme applicable to farmers who cultivate below 15 acres of land will ensure that they get 20% above the cost of production.

It is not as if there is something wrong in corporates investing in the farm sector. They are already there. But sacrificing farmers’ interests to further the growth of big businesses is not good for a country where 56% of its working population is dependent on agriculture. The farmer can understand the nuances of the script that has been purportedly written for his/her betterment. That is why he/she is protesting the farm laws, knowing fully well that it is loaded in favour of large corporations with deep pockets.

The writer is a senior journalist and author. The views are personal.