This article is written by Aditya Singh, from Symbiosis Law School, Noida. This article deals with the roles of domestic policies with respect to the prevailing agrarian distress. The article also tries to cover the measures taken to address the issue and the impact of WTO’s policies.
Table of Contents
Introduction
The agricultural sector has never really been easy because it is very often faced with one challenge or another. The livelihood of the farmers who are mainly reliant on agricultural production was never smooth because several socioeconomic and environmental elements decide their ability to earn a living. The misuse of farmers by vendors, intermediaries, creditors, etc. for their own benefits, the uncertainty of monsoon and the lack of irrigation, plant diseases, expensive farming inputs, unpredictable and non-paying farming resources, small farm holdings, low land yields are the significant problems which the farmers have to face in the field of agriculture. Such situations might be unique with respect to individuals, crops, a particular class, or depending on geographic areas. However, with changing policy and circumstances at regional and international levels, the scope and nature of these challenges have constantly changed over the period. The effects of the agrarian crisis are very wide and are expected to have a variety of consequences for several other sectors and the economy of the country. These have a negative impact on fruit and vegetable supply, food prices, living expenses, health and safety, income, jobs, employment rate, loss of agricultural lands, and especially the foreign exchange revenues.
Background
Agrarian distress is not something that is new in India. It is rather deeply-rooted and is a cumulative product of the last decade or more. There have been several attempts to deal with the problems and to come up with solutions. Though the agricultural issues have been dealt from a farmer’s point of view and numerous legal and paternalistic regulations and policies have been introduced to protect the interests of farmworkers and also to deal with prevailing agrarian distress, however, they do need to reevaluate the effectiveness of these legal policies and safeguards. Farmers associations have often asked for legislation such as the Essential Commodities Act 1955, Land Acquisition Act, Wild Animals Protection Act, Land Ceiling Acts, etc. to be repealed because they abstain the farmers from selling their produce in foreign markets and earning its deserved value and also because they are contrary to their best interest. These laws, as per them, are simply ensuring that the farmers do not get the pay which they rightfully deserve and are further contributing to their hardships.
The increasing frequency of agitations among farmers like in Tamil Nadu, Maharashtra, Madhya Pradesh and in many other states, and the heightened risk of suicides by farmers, are indications of severe restlessness existing in rural regions of the nation. Their expanding growth is the result of the division of lands for decades when the family property is divided and transferred, particularly among male children, from one generation to another. These small pieces of land are no longer able to support the entire families, particularly in the case of rain-fed farming, which estimates for about two-thirds of the total cultivable region.
The second aspect of this crisis is the monetary shortage. Landless or marginal farmers have no means of buying or leasing land or for investing in required agricultural infrastructure like irrigation facilities, power, machines and equipment for farming, etc. to help make up for land scarcity. For agricultural produce including rice and wheat, purchases by the government at minimum support price is intended to benefit the farmers. However, this largely profits the big traders that supply and sell the produce to the government authorities. Marginal farmers generally have insufficient profit from sales which can be used in justifying the cost of transportation of the produce to local government corporations.
Agrarian suicides, according to the NCRB statistics indicate that all over the recent decade more than 3 lakh farmworkers have committed suicide. Breaking down the available data regarding these suicides point towards the following explanations:
- financial crisis or debt (38.7%): higher debt levels are compelling farmers to commit suicide, particularly debts taken from non-institutional channels having high-interest rates (36% of total loans).
- agricultural-related problems (19.5 %): Farmers are often not able to sell their produce at profitable prices to substandard marketing and transportation facilities.
- harvest failures (19.4%): owing to recurrent harsh weather events such as droughts and floods.
- household burden (11.7%): monetary stress related to medical care, education, marriages and other such expenditure on social functions;
India’s rate of output in the agricultural sector is below its original capacity. The factors contributing to this situation include limited use of advanced farming techniques, unpredictable weather conditions, substandard farming support programs, and the absence of market-oriented production. The recurrent phenomenon of natural hazards such as floods, droughts due to lack of rain, storms with heavy downpour, cyclones also plays an important function for the distress among the farmers. While these reasons along with the fall in global market prices may have aggravated Indian agrarian distress, the present desperate situation is mainly due to the negligence shown towards the agricultural economy by consecutive governments in various ways, whether by failing to have a detailed agriculture-focused set of policies or by failing to have proper financial arrangements for farming and other agricultural sectors.
Role of domestic policies
A large majority of India’s agricultural policies are nearsighted and are drawn up with the political interests in mind along with the complete absence of motivation or commitment towards tackling the prevalent agrarian hardships, by developing systemic, long-term agriculture-focused policies. Bigger investments, access to new technologies, reevaluated retail infrastructure, better warehousing, and transportation facilities are really the need of the moment, and the implementation of such policy matters is hardly feasible. It is now the need to reconsider the existing laws and regulations in order to measure their impact and therefore determine the appropriate course of action for the future to deal with the problems for which these very policies were formulated. For instance-
The Act was passed on 1 April 1955 with the intention of securing the convenient availability for buyers with respect to basic goods and saving them from being manipulated by unethical merchants. The legislation helps give the customers safety from unjustified surges in basic commodity prices. This has however often proved to be very troublesome from a farmer’s viewpoint because nearly all the crops are intermittent depending on the season and maintaining their availability throughout the year requires sufficient stock storage in the season. As the law stipulates, when rates are continuously regulated, the farmers would be left with no motivation to continue farming and perhaps even merchants are rarely motivated to invest in improved storage infrastructures.
For small – scale farmers, the cattle and livestock economy constitutes to be a really important element of India’s agricultural economy. It really is a major source of revenue for farmer workers and people living in poverty in rural sectors. Based on data received from the Central Statistical Organization, the animal husbandry sector significantly contributed about 4.07% to India’s GDP and more than 27% to agrarian GDP. However, the latest political movement against the livestock trade is contributing to India’s agricultural economy which is already stressful. In the belt extending from Maharashtra to Uttar Pradesh, according to the livestock census figures of 2019, government initiatives for the safety of such cattles and limitations on their trade has severely impacted the increase in the population of native cattle breeds.
Measures taken to address the issues
Nivesh Bandhu: that is an investment facilitation platform for the exchange of information about investment-friendly programs of central and state governments in the food/agriculture sector. Agriculture Export Policy, 2018: It focuses on doubling the export of agricultural products from currently 30+ billion dollars to 60+ billion dollars by the year 2022 and reaching 100 billion dollars with reliable trade policy in the following years.
The Kisan Credit Card (KCC) Scheme: which was introduced for purchasing agricultural inputs like seeds, fertilizers, pesticides, and so on and drawing funds for their production demands.
Waiving off agricultural loans: Madhya Pradesh and Chattisgarh announced waivers with respect to agricultural loans in 2018. Since 2014 around seven states have also agreed to waive loans with an approximate value of Rs. 1,82,802 crores. The Model Agricultural Produce and Livestock Marketing Act (APLM), 2017, will provide for gradual improvements in agrarian marketing, along with the establishment of private sector markets, permitting direct selling to exporters and consumers, e-commerce, etc. The 2018 Draft Model of Contract Farming Act, is an effort to create a supportive environment for contract farming to flourish.
Impact of WTO’s ‘AoA’
The Agreement on Agriculture was a major element of the final act of the Uruguay Round of multilateral trade negotiations, which was held in Marrakesh Morocco in April 1994, which came into force on 1st January, 1995. The need to decrease the inordinate surplus production in the agrarian sector in the international markets throughout the 1980s and 1990s was perhaps the main factor for the incorporation of the Agreement on Agriculture. Hence, AOA ‘s fundamental goal was to create an equal and market-oriented trade structure to be introduced in developed nations for a span of 6 years and also in developing nations for a span of 9 years.
It was mandated that for access to the markets the tariff rates for agrarian goods imposed by particular nations should be lowered to equal tariffs to facilitate free trading and to promote liberalization through global trade.
Domestic aid was directed to lower the government subsidies provided for agrarian production and associated operations within their nation. The overall domestic assistance provided should be less than the de minimis point. Which was done to bring down price manipulation and unfair rivalry in international trade in the agricultural sector. The goal of this would be to decrease export-related subsidies associated with agrarian goods and to prevent new subsidies from being introduced.
Indian farming is distinguished by a rather large majority of small – scale farmers that own even less than two hectares of farmland and less than 35.7 percent of the land area is under any guaranteed system of irrigation. Which is why farmers need aid in areas such as infrastructure along with advanced technologies and availability of necessary inputs at affordable prices. India has never made any kind of agreement under the Uruguay Round Agreement on Agriculture (AOA) that might restrict it from continuing to pursue its policies related to agricultural development. The promise made by India was to stabilize its tariffs on basic agricultural goods to 100%; packaged foods to 150%; and edible oil to 300%.
India has managed to keep quantitative restrictions (QRs) on the import of specific agricultural goods. All these QRs will also have to be removed when market access is provided. Regrettably, the scope of policy alternatives that the Indian government may use is restricted by the strict requirements of the WTO-Agreement on Agriculture (“AoA”). The AoA restricts the range of monetary aid which India can provide and it only permits some specific types of domestic assistance to be provided.
Suggestions to ease the hardships of domestic farmers
The Indian government is on the correct path to address the challenge of poor productivity and inefficiency in agriculture, however, still much more has to be achieved to prevent the farmers from suiciding. The domestic agrarian sector must be safeguarded from the unpredictable nature of the national as well as international markets, and even from several other negative effects arising out of liberalization. Given the importance of farming in the Indian economy, an autonomous and legislative agricultural development body should indeed be installed.
An immediate implementation, by the states, of the 2017 Model APLM Act would further eliminate the legal barriers for farmers. A revision of the Essential Commodities Act is much needed and in such a way that it helps balance the needs of both farmers as well as consumers. There should be a set of policies with respect to agrarian exports with a time frame of 5 – 10 years, as well as an integrated-in requirement for mid-term analysis and evaluation. The Agricultural Costs & Prices Commission (CACP) should be substituted with an agrarian tribunal, in accordance with the terms of Article 323 B of the Constitution of India.
The coverage of irrigation must be improved by the year 2022-23 to almost 53% of the total cropped area. Increasing coverage with the help of micro-irrigation should be made the priority. The states should be motivated to adopt the Model Agriculture Land Leasing Act, 2016 which aims at legalizing subletting of agricultural land, this model act also provides for a system for tenants to benefit from institutional credits, automatic reinstatement of the property after the end of the lease term and for the setting up of land tribunals. Organizations promoting Farmer Producer or FPOs: Farmer Producer Organizations (FPOs) are very economically feasible, socially progressive, and self-governing which would also help collectivize the producers and small-scale farmers. Which gives them more negotiating power with relation to the market.
Research expenditure must be doubled to at least 1% of the agrarian GDP compared to the current rate of 0.3 percent only. Further research should be promoted with respect to energy-friendly irrigation pumps, the internet of things, micro-irrigation, intelligent weather adaptive technologies and to employ such technologies in the animal husbandry sector to supervise animal behaviour patterns, wellbeing, and output.
Conclusion
Although in the villages both generally as well as in the agricultural sector particularly, an evident and consistent transformation can be seen. However, these improvements are mostly very minimal to make a solid impact on the difficulties of agriculture or they have managed to create even difficult circumstances for the farmers. India’s agrarian sector is the basis for the Indian economy’s development. This is why sustainable growth in agriculture provides a solid foundation for the cumulative growth of the nation. Furthermore, broad and un-fluctuated agricultural growth substantially contributes towards food security, provides job opportunities as well as revenue, increases purchasing power, and consequently reduction in poverty, which leads to the overall development and the expansion of markets. Therefore, the social and economic issues of the rural people can indeed be tackled by agricultural development. If India has to develop its villages will have to develop primarily, for which farming must flourish consistently and so the only means for sustained agricultural growth is to overcome the existing agrarian crisis.
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