Agricultural reforms should start with our land policy

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Agricultural reforms should start with our land policy

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• The author's perspective: She believes that abolishing the APMC monopoly and bringing in reforms for contract farming will help farmers. Add to that greater private sector investments in agriulture, tighter contract enforcement and better transport infra. [APMC - Agricultural Produce Marketing Committees]
• The 2020 protests: Farmers, trapped in low-productivity agriculture, are demanding MSPs as entitlements as they fear the MSP regime may evaporate soon. Data shows that 95% of Punjab and 70% of Haryana farmers got MSP for paddy Kharif crop. But overall, just 12% Indian paddy farmers get MSPs (Bihar - 1.7%, UP - 3.6%). [MSP - Minimum Support Prices]
• Farming in Punjab and Haryana: Clearly, MSP came as a boon due to Green Revolution, as did support in the form of free electricity of low/zero taxation of agri incomes. If these are entitlements and subsidies are taken away, farming may decline sharply. 
• The upper limit: Sadly, Indian agriculture's Green Revolution benefits have reached their upper limit already. There's no way to raise incomes any more, unless productivity goes up. Even ending the monopsony (single buying power) of APMCs and bringing private competition won't help. The biggest villain is "India's land policy".
• Land policy details: India's agri turned socialist in 1950s, to rectify the damage done by centuries of feudalism.

1. Land reforms started, and zamindari was abolished. 
2. Most states passed land ceiling laws, and tried land redistribution with upper limits on how much land a family could hold (10 hectares in Kerala and West Bengal)
3. The result was land fragmentation, and small and marginal holdings rose in number. As per 2015-16 Agricutural Census, 86% of total holdings are small and marginal
4. Net result is that farmers cannot viably invest in tube wells or drip irrigation, or storage, or buy good inputs (Seeds, pesticides) in bulk

• Rules regarding agri-tech: Farmers cannot freely import agricultural technologies to India, and GM crops too are practically banned. Bangladesh benefited a lot from GM Brinjal (higher incomes).

1. Many incentives like subsidies and hand-outs were given to farmers over the years - cheaper water, electricity, fertilizers.
2. But land policy remained unchanged. Farmers wanting to exit agriculture and engage elsewhere are unable to, as they cannot sell their lands easily.

• Restrictions on land: Laws restricted farmland sales to businesses, and only farmers and not-for-profits could buy farmland. Then came State laws that imposed income restrictions on land buyers' non-agri incomes. Why? To prevent richer farmers (with diverse income sources) from exploiting poor farmers. Net result has been lack of exit for poor farmers, and lack of scale for rich farmers, both!
• Change the land laws: Thus, first all land laws need to be changed. Repeal land ceiling limits, and make sale-purchase easier. Land titles must be clear and transparent. Subsidies won't help any more. India needs fewer farmers with larger holdings, and better technologies. Land consolidation will unleash prosperity. Till then, all farm laws will be resisted.

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