The recent protests by multiple farmers at the borders of Delhi accentuate various concerns in the agricultural sector of India. The demonstration, which is against three farm bills replacing the ordinances issued in June 2020, primarily focuses on the concerns over open-ended procurement of wheat and paddy. This article elaborates on these issues in detail.
The Underlying Issues of the Protests
The new laws signal the potential termination of open-ended procurement of wheat and paddy. It is feared that states successful in creating the procurement structure like Punjab and Haryana may experience a withdrawal of support from the Centre due to these new laws. Additionally, concerns have risen about the stocking of crops by corporate bodies, particularly those involved in modern retail and e-commerce industries.
Impacts on Land Size
Statistical data shows that the area under agriculture has been decreasing, with a reduction from 159.5 million hectares in 2010-11 to 157 million hectares in 2015-16. Simultaneously, due to increasing population, the number of operational holdings has increased, leading to a fall in the average size of landholdings.
Smaller landholdings result in smaller pockets of produce, posing a challenge for transportation even to a nearby Agricultural Produce Market Committee (APMC) mandi or a nearby market. Furthermore, the lack of access to modern technology hampers growth and productivity.
Labor Issues in Agriculture
While 45% of India’s workforce is involved in agriculture, the majority of this comprises agri-labourers who do not enjoy policy support or incentives to invest in farming. Benefits like seed kits, fertilisers, and farm machinery are reserved only for those who can prove land ownership, leaving labourers at a disadvantage.
Falling Investment and Subsidy Concerns
The Gross Capital Formation in agriculture, as a percentage of the total Gross Capital Formation in the economy, has declined from 8.5% in Financial Year 2011-12 to 6.5% in Financial Year 2018-19 due to shrinking private investment. Compounding this problem is that several subsidies meant for agriculture flow to businesses instead, such as grants for food processing units and cold chain projects.
The Minimum Support Price (MSP) Dilemma
The government announces MSP for 23 crops, but only wheat and paddy face large scale procurement since these are required for the Public Distribution System. The issues with MSP include stagnant rates, unequal access to benefits, weak implementation in many regions, and non-scientific practices leading to environmental degradation.
Proposed Action Plans
To remedy these issues, India needs to transition away from procurement-based support and devise an appealing income support scheme. This process should be supplemented by increased investment in agri-infrastructure. States should be incentivized to increase their expenditure on agriculture, while research should be focused on improving seed varieties for low-productivity states. The implementation of democratic norms and processes, including open public debates, stakeholder dialogues, and detailed Parliamentary scrutiny are essential to manage these challenges effectively.
