Sequence Vital, As Reform

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Sequence Vital, As Reform

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• Action needed, not statements: The massive farmer protests against new laws need actual action on the ground to resolve, not statements alone. The government will have to ensure that right infrastructure is set up, and FPOs actually come into being. [FPO - Farmer Producer Organisations]
• In the meanwhile: Since all this will take time, best is to put all three laws in abeyance for a year, and let infrastructure come up. The amendment to move dispute resolution from bureaucracy to courts must be done immediately.
• Status quo unsustainable: Although farmers oppose the new laws in entirety, but present situation is untenable. India is stocking 3.5 times the food stocks in its buffer, thereby wasting funds and allowing rotting grains. Farmers' prosperity too is being hurt.
• Facts and figures: From 2002-03 to 2015-16, farming households saw a CAGR in real incomes of 3.7%, while rest of Indians saw a higher rate. Surveys also show that many farmers wish to leave farming, but can not as other options are missing.
• So why oppose: The 2020 protests are because the new laws, in one shot, are trying to integrate farming into the market economy, with little or no safety net (as presently available). 

1. Today, there is a guaranteed procurement of grains (and some crops) at the MSP, giving farmers some certainty of incomes as they prepare their crop
2. This open-ended procurement at MSP is working well at least in some states, for at least some farmers
3. Once this ends, total uncertainty of income will rule, and it is foolish to assume that large agri-business corporates will rescue the farmers! They won't.
4. So all farmers would be overnight turned into entrepreneurs, with no firm orders for their firms. Is that what most Indians would prefer - give up their firm jobs and plunge into entrepreneurship?
5. Single farmers have zero power against large firms. But cooperatives of farmers have substantial power indeed.

• The Amul example: It is a confederation of cooperative societies of small farmers in Gujarat, competing with the biggest businesses of the world. That's also the case in Europe, Oceania, and US. The world's biggest dairy producer Fonterra of New Zealand is an example.
• Other formats: Other than cooperatives as collectives, farmers can come together in companies, and employ professionals. Sugar mills ideally should be owned by cane farmers, to finally end the dispute over cane prices and farmer share from sugar profits.
• FPO assistance: The government wants to spend Rs.1 trillion on farmgate infrastructure for FPOs. Once this is done, perhaps farmers may realise the use of integrating with the market, but not till then.
• Do not ban exports: Govt. must also allow commodity markets to work seamlessly, without any abrupt end to exports from time to time (when local prices shoot up).
• Power supply: Govt. must supply power smoothly in rural areas, ending the rampant power theft. That can help food processing businesses, with higher margins, to come up. In Gujarat, cotton farmers get a good price as ginning happens before their eyes, and prices are known to all. (ginning separates the cotton fibre from seed in bolls sold by farmers)
• The right sequence: So if right ground-level action is taken first, and then the laws are brought, farmers may be willing to accept change. Changes in subsidy regime too may be possible then. Today, food subsidy is mixing up both producer as well as consumption subsidy. That creates a trouble at the WTO. Let consumption subsidy be separate, and let there be direct income support for farmers (outside WTO norms).

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