Empower our Farmers to Revive the Indian Economy

India is the world’s largest producer of many fresh fruits like banana, mango, papaya, and guava, vegetables like chickpea and okra, milk, major spices like chilli, pepper and ginger, fibrous crops like jute, staples like millets and castor seed. We are the second-largest producer of wheat and paddy. We are one of the world’s largest supplier of rice, cotton, sugar and wheat. Moreover, agriculture employs over 50℅ of the Indian workforce and contributes 17–18% to our country’s GDP. It is the primary source of livelihood for 58% of the population.

This is why Budget 2020 had major reforms for the agricultural sector in India economy. Union Finance Minister announced a 16-point action plan aimed to double the farmers’ income by 2022. It had short- and long-term projects for achieving the target.

These plans looked positive at the start of the year. But things changed when COVID-19 hit the country in March.

Challenges faced by Indian farmers 

A survey on 1,500 farmers in 200 districts across 12 states showed that they suffered 60% yield loss on their harvest. Since the lockdown coincided with the harvest season of rabi crops and the sowing of kharif crops, the losses only increased.

The most important reason for the loss of income was the lack of manpower and machinery. Farming is a highly labour-intensive task. Farm owners often depend on migrant labourers to work in their fields. With the pandemic scare, many migrant workers returned home. High demand and low supply of labour resulted in the doubling of farm wages. Since manufacturing units were not working in full capacity, there was also a shortage in the availability of farm equipment.

Another hurdle faced by the farming community was transportation and storage. The food distribution network was affected due to restriction in movement, low manpower, and closing down of borders. It affects mostly perishable crops like tomato, banana, and leafy vegetables. Non-perishable crops like wheat, mustard, and grams needed storage space, which was limited for many farmers. The harvests lay unsold due to these limitations.

Relaxation in the agricultural sector

Despite the complete lockdown during the initial stages, the government soon exempted farming activities and the movement of agricultural produce from the lockdown. The Indian Council of Agricultural Research (ICAR) issued detailed guidelines specifically for the farming sector to continue operations during the lockdown.

In May 2020, the government announced a Rs 1.5 lakh crore economic stimulus packages for strengthening infrastructure, logistics, and capacity building in agriculture and allied activities. These included:

1. Transfer of Rs 2,000 to 8.69 crore farmers under PM-KISAN scheme
2. New central law for farmers to bypass middlemen and directly sell produce online
3. Framework for e-trading through Electronic-National Agriculture Market (e-NAM)
4. Allowance for barrier-free interstate trading.
5. Amending of Essential Commodities Act to deregulate trade in cereals, edible oils, oilseeds, pulses, onion, and potato. Stocking limits for these only during natural calamity/famine
6. Creation of a facilitative legal framework for pricing and quality assurance
7. Risk mitigation – ensuring assured returns and standardisation of quality
8. Ability for farmers to directly engage with food-processing companies, retailers and exporters

These are significant reforms that will help farmers and consumers in the long run. Farmers would be able to sell their produce at better prices by removing middlemen. Online selling and removing interstate restrictions will help them reach a wider area. They will also be shielded from sudden price fluctuations and stock curbs. The reforms will also encourage private investment in the form of technology and infrastructure support.

One issue with the package is that it didn’t address the immediate concerns in the agricultural sector.

Introducing three bills in the farming 

Recently, the Centre has introduced three bills to replace the existing ordinances in the farming sector. They are The Farmers Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020, and The Essential Commodities (Amendment) Ordinance, 2020.

This has caused the farmers across India to protest. One of the amendments confines the markets run by state-run Agricultural Produce Market Committee (APMC) to their physical boundaries. This gives a free hand to big corporate buyers.

As per the new amendments, any trader (processor, exporter, wholesaler, miller, and retailer) with a PAN card can buy the farmers’ produce in the trade area. In the present system, traders and commission agents require a licence/registration to operate in the APMC mandis. This provides credibility as the trader’s/agent’s financial status is verified before approving the license. However, with the new reform, there may be trust issues between the farmers and traders/agents.

Another proposal in the bill is to remove the fee/cess/levy on trade. Experts believe that this will indirectly incentivise big corporations. They would use the cost difference to offer better deals to the farmers during the initial days and eventually monopolise the sector.

The other objection for farmers is regarding the change in dispute resolution model. As per the proposed reform, dispute arising out of a transaction between the farmer and a trader should be solved by filing an application to the Sub-Divisional Magistrate. The Magistrate shall appoint a Conciliation Board for facilitating the binding settlement of the dispute. The ordinance does not allow the farmers to approach a civil court. This, they fear, can be misused against them.

 Farmers adapting 

Despite the many challenges, farmers across the country are coming up with innovative strategies to sell their supplies.

One trend is the local demand for farm produce. Farmers pack the harvest in a mini truck and ride around in the village/town. The locals can simply step out of their house and buy fruits and vegetables fresh off the farm, at lowered costs. Due to the lack of middlemen, the farmers also get a better price for their harvest.

Another trend you see is farmers, farmer groups, and cooperative societies adopting technology. They are tying up with non-governmental organisations, social enterprises, e-commerce platforms, and new-age home delivery ventures to sell their produce online and deliver them directly to the customers. The orders are usually collected through WhatsApp, app, or website.

Even retail suppliers adapted to the current situation. Some of them actively reached out to farming societies and made their trucks/vans available for home deliveries. Therefore, they are also implementing tech-based shopping for consumers to buy groceries with minimum contact.

The government needs to step in

In my previous article, I had already suggested ways to involve farmers (and MSMEs) in boosting the current economy. Apart from that, the government has to start full-fledged procurement operations as quickly as possible. We should facilitate farmers to sell directly to Food Corporation of India (FCI), rather than through markets run by APMC; corporate buyers must be excluded from this. Even when selling through APMC markets, since the APMC receives free electricity and other subsidies, the government can offer this facility for free to farmers for selling their produce. Priority must be given to setting up the e-trading framework and making e-NAM and existing food storage spaces fully functional. Farmers should have easy access to agro-advisories to maintain good field conditions and plant health.

Monetary compensation was given to farmers. But farmers/labourers who don’t own farmlands and work in others’ land also need to be compensated. They must get a minimum wage. Let’s also not forget the role of women in Indian agriculture. Women farmers should be provided with technological and economic empowerment.

At the current rate, it is likely that the pandemic would restrict movement and hold back our economy until next year. Being quick to adapt and reinvent is the only way we can move forward. This will ensure the economic safety of our farmers and food safety of the rest of the citizens.