by Straight-Bat for the Saker Blog
India is being rocked by the farmers’ movement since last week of November’2020 when farmer contingents from northern states like Punjab, Haryana, and Uttar Pradesh came in hundreds of thousands to the outskirts of New Delhi, India’s capital. By December’2020 more and more farmer and farmworker groups from other states like Rajasthan, Madhya Pradesh, and Maharastra joined the agitation around Delhi. Farmers unions want complete withdrawal of new 3 farm bills and BJP government denies. After some unruly incidents inside Delhi on the Republic Day (26th January 2021), to restrict movements of farmers and their tractors inside the capital, the government constructed permanent barricades on the highways that connect Delhi with neighbouring states. Farmers refuse to budge, and has been spreading their struggle to every nook and corner of the country.
Commentators from all sorts of background have written extensively within India and outside India on the farmers’ movement. However, I found most of them ignored presentation of reliable statistical data which could substantiate their hypothesis on the ongoing movement. This article attempts to bridge the gap convincingly.
Spanning across a total area of 328.73 million hectares (including entire Jammu and Kashmir territory as claimed by India) independent India witnessed a population explosion from 361 million in 1951 to 1210 million in 2011. Agriculture ministry of the government considered 166.23 million hectares of land as ‘arable land’ in 2015-16, which produced 260 million ton of food-grains among other types of produces.
In India, food-grains are produced in three cropping seasons:
- Rabi: Rabi crops (wheat, barley, gram, mustard, banana, grape, orange, lentil, moong, bean, potato, tomato etc.) are sown during winter season from October to November, and crops are harvested during summer from March to May. Northern region of India produces Rabi crops significantly.
- Kharif: Kharif crops (rice, jowar, sugarcane, groundnut, soybean, arhar, moong, brinjal, chilli, cotton etc.) are sown with the onset of monsoon from May to June and are harvested during September to October. Significant quantities of Kharif crops are produced in most of the regions of India.
- Zaid: Zaid crop season (watermelon, cucumber, bitter gourd, fodder crops etc.) comes between the Rabi and Kharif crop seasons spanning from March to June.
Although the agriculture and allied sector comprises of (a) agriculture farming, (b) livestock farming, (c) fishing, and (d) forestry, for the sake of simplicity only agriculture and livestock farming have been considered for this analysis. The widely circulated narrative on the role of agriculture in Indian economy encompass the following points:
- Statistical data on GDP at factor cost (at constant 2004-05 prices) and share of sectors of GDP reveals that, the share of agriculture and allied activities declined from 54% in 1950-51 to 33% in 1990-91 and further to around 15% in 2010-11
- As per 1991 census, 210 million working people (66.9%) were involved in agriculture out of a total of 314 million working population. 2011 census found that, out of 482 million working population, 263 million were engaged In agriculture (54.5%)
- Agriculture and allied activities sector is the primary source of food supply for about 1.35 billion population of India by the end of 2010s
- Supply of raw materials to various agro-based industries is another key role of agriculture in India. Jute, cotton, sugar, edible oil, tea, coffee, tobacco etc. draw their raw material from agriculture
In a country like India, where majority of population live in rural regions, and rural economy is largely driven by agriculture and allied activities, well-being of the largest section of entire population depends on effective and efficient coordination of agriculture and related activities. Unfortunately, one of the most neglected sector of Indian economy has always been the sector of agriculture and allied activities. For the first time in history, the Census 2011 reported a decline in the population growth rate of rural India. Between Census 2001 and Census 2011, the number of (census towns increased from 1,362 to 3,894) which indicates that rural people are quitting farming and joining non-farm livelihoods. The current generation of rural people are moving away from the agriculture and allied sector. This trend temporarily got reversed during the covid-19 lockdown period when there was exodus of migrant people from industrial belts back their origin in rural regions. However, the overall decay of the agriculture and allied sector calls for immediate and appropriate attention by the government. The government wanted to ‘corporatize’ this sector as a magic potion to remove all ills at once! Hence the ruling party passed three farm bills, which are being staunchly opposed by the farming and allied community. This paper aims at the following:
- Dispelling the well-established myth that, the ‘agriculture and allied activities’ sector has a limited role in the economy because it contributes only 15% of India’s gross value added economic output (GVA)
- Establishing how most of the Indian rural population, in general, and agriculturists, in particular have been living in abject poverty for many decades
- Validating the fact that, the corporatisation of agriculture being implemented through the ‘three farm bills’ introduced recently by the government will push the agriculturists into further misery, while the corporates will enjoy tremendous growth in profit
2. TRUE SIGNIFICANCE OF AGRICULTURE & ALLIED SECTOR IN INDIAN GDP
2.1 Indian economy – key facts and figures
Two decades of liberalisation-privatisation-globalization initiated by the Congress party in 1991, witnessed high GDP growth (‘GDP at factor cost at constant 2004-05 price’ in 1990-91 was Rupees 13478.89 billion which increased to Rupees 49185.33 billion in 2010-11) and sectorial GDP share of agriculture and allied sector went down from 29.52% in 1990-91 to 14.59% in 2010-11.
2012 onwards, national accounting policy was changed, and ‘GVA at basic price at 2011-12 constant price’ was introduced by the government. Key data of the GDP on the basis of domestic product for 2014-15 and 2017-18 along with the percentage share of key sectors of economy is shown below:
|Sector of economy and sub-sector||2014-15||2017-18|
|GVA in Billion Rupees
[% share of total GVA]
|GVA at Basic Prices (I)||97121.33||121041.65|
|1. Agriculture, forestry and fishing||16057.15
|Forestry and logging*||1346.09||1417.85|
|Fishing and aquaculture*||822.32||1110.18|
|2. Mining and quarrying||2886.85
|Food, Beverages, Tobacco*||1577.14||2117.34|
|Textiles, Apparel, Leather products*||2165.69||2613.25|
|Metals and metal products||2607.54||2905.41|
|Machinery and Equipment*||3640.96||5093.11|
|Coke, Petroleum, Rubber, Plastic, Pharmaceutical, Chemical, and related products*||4711.63||6206.76|
|Other Manufactured Goods||2136.38||2833.36|
|4. Electricity, gas, water supply, & other utility services||2140.47
|Remediation & other utility services||153.34||220.91|
|6. Trade, repair, hotels and restaurants||11358.41
|Trade and repair services*||10376.40||14002.65|
|Hotels and Restaurants*||982.01||1281.56|
|7. Transport, storage, communication, & broadcasting services||6718.48
|Services incidental to transport*||755.96||933.54|
|Communication and broadcasting services||1760.47||1934.18|
|8. Financial services||6272.55
|9. Real estate, ownership of dwelling, & professional services||14464.60
|10. Public Administration, Defence, other services||5438.53
|11. Other services||6592.62
|Net taxes on products including import duty in Billion Rupees (II)||10924.30||13563.01|
|Subsidies on Products in Billion Rupees (III)||2768.89||2806.09|
|Consumption of Fixed Capital in Billion Rupees (IV)||11786.44||15029.62|
|GDP in Billion Rupees ( I+II-III )||105276.74||131798.57|
|NDP in Billion Rupees ( GDP-IV )||93490.29||116768.96|
|Per Capita GDP in Rupee||83091||100151|
* Data directly or indirectly related to ‘economic value chain’ centred on agriculture and allied sector as detailed in section 2.2, 2.3.
Key data of the ‘GDP on the basis of final expenditure’ for 2014-15 and 2017-18 is shown below:
|Sector and sub-sector||2014-15||2017-18|
|Expenditure in Billion Rupees|
|GDP in Billion Rupees||105276.74||131798.57|
|Per Capita PFCE in Rupee||46667||56364|
2.2 Economic value chain centred on agriculture and livestock farming
More often than not, while discussing the importance of the agriculture and allied sector, people tend to ignore the economic value chain centred on it. Let’s explore how the economic value chain works for agricultural crops and livestock products. There are two distinct parts of it – (a) farming process up to production, (b) distribution and consumption of the products.
2.2.1 Agricultural farming process up to production
Key inputs for the agriculture farming process apart from land and labour are seed, water, electricity, diesel oil, machinery like tractor, tiller, harvester, fertilisers and nutrients, and pesticides etc. The main agricultural produces are:
- Food crops for human consumption, e.g., cereals, pulses, vegetables, fruits
- Feed crops for livestock consumption, e.g., corn, fodder
- Fibre crops for textiles, e.g., cotton, hemp
- Oilseed crops for oils, e.g., groundnut, sunflower
- Plantation crops for human consumption, e.g., tobacco, tea
- Plantation crops for industrial use, e.g., rubber
Eight major categories of the inputs and the key activities in the value chain of agriculture farming process leading to agricultural outputs are presented in a schematic diagram as given below:
There are 28 states and 8 union territories in the federal union of India. Except 3 union territories, compilation of GDP-related data is done for each of the remaining 33 administrative entities, and the data is summed up to reflect GDP of India. Collection of data related to all economic activities carried out by the ‘economic actors’ viz. household, corporate (private owned, state owned), and government (departmental enterprises, non-departmental enterprises, general government) is a key challenge. As per the ‘value addition’ approach of GDP estimation, the value of outputs and inputs used in the process of production are measured and the value of GVA is calculated mathematically as:
GVA = Sum of (value of output of each crop) – Sum of (value of all inputs for production of each crop)
The value of output of each crop is obtained by different approaches for different category of crop:
- a product of ‘production amount’ and ‘current/base year price’ for major crops and commercial crops
- a product of ‘production amount’ and a ‘calculated price’, where calculated price for small millets is 75% of weighted average current/base year price of jowar-bajra-barley-maize-ragi, for other fruits and vegetables equals to 100% of all fruits and vegetable crops for which data is available
- a product of ‘area’ and ‘value per hectare’, where value per hectare for minor cereals, minor pulses, other fibres, other condiments and spices equals to 80% to 90% of weighted average current/base year value per hectare of abundantly cultivated cereals, pulses, fibres, spices
- a product of ‘area’ and ‘current/base year value per hectare’ for mulberry and by-products like straw of various crops, cotton sticks, jute sticks, sugarcane trash, poppy seed
- a product of ‘production amount’ and ‘current/base year price’ for fodder, where production amount equals to (irrigated area under fodder crops multiplied by 50 metric ton plus un-irrigated area under fodder crops multiplied by 25 metric ton)
- a product of ‘production amount’ and ‘current/base year price’, where production amount for jaggery equals to 10% of quantity of sugarcane used for jaggery making, for bagasse equals to 35% of quantity of sugarcane used for jaggery making
- a product of ‘0.21% of net sown area’ and ‘current/base year value of output per hectare of other fruits and vegetables’ for kitchen garden
The value of each input that goes into production of agricultural crop is attained through different approaches for different type of input:
- Seed – a product of ‘seed rate’, ‘area’, and ‘current/base year price’ for most of the food crops (like cereals, pulses, oilseeds, potato, other vegetables, dry chillies, dry ginger, sugarcane, black pepper, turmeric), and non-food crops (like tapioca, fodder, guar seed, cotton)
- Seed – a product of ‘area’, ‘value of seed inputs per hectare of base year estimate’, and ‘relevant WPI’ for other cereals, other condiments and spices, coconut, miscellaneous food crops
- Chemical fertilizers, organic manures – total ‘quantity of despatched’ at ‘current/base year price’
- Pesticides and insecticides – total ‘quantity of despatched’ at ‘current/base year price’
- Diesel Oil – a product of ‘no. of diesel engines/tractors’ and ‘consumption in value terms per diesel engine/tractor in the current/base year’
- Operational costs for agriculture – current repairs, maintenance of fixed assets and other operational costs
- Irrigation charges – compiled from budget documents
- Electricity charges – a product of ‘electricity consumption’ and ‘current/base year price’
- Marketing charges – 2.38% of output at current/base year prices (which is derived from the survey)
- Financial charges – The imputed bank charges or financial intermediary services indirectly measured for the agriculture sector are taken in proportion to the state-specific GDP of this sector
Irrigation system is considered to provide a gross value addition that, for current year estimates equals to summation of compensation of employees, operating surplus, and consumption of fixed capital, and for base year estimates equals to benchmark with index of area irrigated.
The ‘GVA at basic price at 2011-12 constant price’ for Agriculture farming sub-sector for the FY2017-18:
GVA = Sum of (value of output of each crop) –Sum of (value of all inputs for each crop) +Irrigation GVA
= 13219.41 – 3015.84 + 362.02
= 10565.59 billion Rupees (… as noted in table 2.1)
2.2.2 Livestock farming process up to production
Key inputs for the livestock farming process apart from land and labour are feed, medicines, machinery for slaughtering, wool shearing, packaging etc. The main livestock farming products are:
- Silk worm cocoons
Four major categories of the inputs and the key activities in the value chain of livestock farming process that lead to livestock products are presented in the following schematic diagram:
The value of output of each livestock product is obtained by following different approaches for different livestock products, significant ones being:
- a product of ‘production amount’ and ‘current/base year price’ for cow milk, poultry eggs, meat, and wool
- a product of ‘annual yield per animal’, ‘population’ and ‘current/base year price’ for goat milk, buffalo milk, camel milk, and duck eggs
- a product of ‘yield rate’, ‘no. of animals slaughtered/fallen’ and ‘current/base year price’ for fats
- current/base year value based on count of poultry meat in terms of (a) chicken and ducklings killed, (b) adult hens and cocks killed, (c) adult ducks and drakes killed and (d) other poultry killed
- a product of ‘quantity’ and ‘current/base year price’ for silk, tassar, muga, honey and bee wax
- increment in livestock population
The value of each input that goes into production of livestock products is obtained through different approaches for different types of input as noted below:
- Feed of livestock – value of roughages is sum of ‘value of output of fodder, grass, cane trash’ and ‘95% of value of output of straw and stalks’ at current/base year prices
- Feed of livestock – value of concentrates is sum of ‘concentrate item’-wise ‘animal category’-wise product of ‘consumption rates’, ‘population of different category of animals’, and ‘weighted average current/base year price of different concentrate items’
- Operational costs for livestock – 25% of ‘value of summation of output of poultry meat, silk, wool, hides and increment in livestock’ at current/base year price
- Marketing charges – 2.38% of output at current prices (which is derived from the survey)
- Financial charges – The imputed bank charges or financial intermediary services indirectly measured for the agriculture sector are taken in proportion to the state-specific GDP of this sector
The ‘GVA at basic price at 2011-12 constant price’ for Livestock farming sub-sector for the FY2017-18:
GVA = Sum of (value of output of each livestock product) – Sum of (value of all inputs for each item)
= 6779.60 – 1842.84
= 4936.76 billion Rupees (… as noted in table 2.1)
2.2.3 Process from farm-gate up to consumption
There exist four layers of processes and activities therein, between the farm-gate to consumers of each item: collection of farm produces, food processing and packaging, storage and distribution, retailing within India and export. There exist multiple links in the chain of economic actors located across the country for each of the process layers. In order to provide an easy and lucid explanation, the block diagram provided below has been prepared assuming just one representative actor in each of these process layers. The block diagram has three key features:
- The boxes built using firm lines represent traditional and old economic actors, e.g. ‘farm owned by farmers’, ‘collection by private traders’, ‘food processing by corporates’, ‘storage-distribution by private traders’, ‘private small business of retailing’ etc. The arrows built with firm lines denote flow of goods between traditional economic actors
- The boxes built using dotted lines represent relatively new economic actors (during last two decades), e.g. ‘farm owned by corporates’, ‘collection by corporates’, ‘storage-distribution by corporates’, ‘corporate business of supermarkets’ etc. The arrows built with dotted lines denote flow of goods related to new economic actors
- The arrows (showing flow of goods, and hence, monetary transaction) with thick lines denote flow of heavy quantity, and thin lines indicate flow of minor quantity till 2020
The key economic actors and key activities of the farm-gate to consumption process cycle are given below:
|Process||Key Economic Actors||Key Activities|
|Agriculture and livestock farming||1. In India, during 2015-16 agriculture census, 146 million farmers were identified:
(a) Large farmers with plot size more than 4 hectare – total 46.12 million hectare agricultural land distributed among 6,399,000 holdings
(b) Small and medium farmers with plots sized 1 to 4 hectare land – total 73.77 million hectare spread across 39,802,000 holdings
(c) Marginal farmers with plots sized less than 1 hectare land – total 37.92 million hectare distributed among 100,251,000 holdings.
2. Companies that can have only farm producers as shareholders have been slowly gaining acceptance after FY2003-04. Currently about 7,374 Farmer Producer Organisations (FPO) are active.
3. In 2016-17 around 177, 300 dairy and 4,200 poultry cooperative organisations have been active.
4. ‘Corporate farming’ started to gain ground during 2010s in India. Around hundred such entities exist – tea, grape, and coconut plantations have been favourite.
|As per the ‘National Accounts Statistics: Manual on Estimation of State and District Income’ published by the government, the ‘economic activities’ are:
“ 1. growing of field crops, fruits, nuts, seeds, vegetables
2. management of tea-coffee-rubber plantation
3. agricultural and horticultural services on a fee or on contract basis such as harvesting, baling and thrashing, preparation of tobacco for marketing, pest control, spraying, pruning, picking and packing
4. ancillary activities of cultivators such as jaggery making, transportation of own produce to primary markets, activities yielding rental income from farm building and farm machinery
5. Livestock products include breeding and rearing of animals and poultry besides veterinary services, production of milk, slaughtering, preparation and dressing of meat, production of raw hides, eggs, dung, raw wool, honey and silk worm cocoons etc.”
|Collection of Farm produces||1. Agriculture marketing is mainly administered by the State governments as per their agricultural marketing regulations. The market areas in each state (except Bihar and Kerala) are independently administered by separate market committees which imposes its own marketing regulations including the fees. The marketed surplus (produces except fruits and vegetables, after consumption by the farmers) is traded through such regulated entities called as Agricultural Produce Market Committee (APMC) Yard and Regulated Market Committees (RMC) Yard. The yards include structure, enclosure, open space locality, street including storage (warehouse/silos), police station, post office, farmer amenity centres, soil testing laboratory. As on March’2017, no. of regulated markets (mandi) were:
2. As on March’2017 apart from the regulated markets, 22,932 nos. of Rural Periodical Market (RPM) have been found as actively functioning. These follow traditional concept of buyer-seller meets once or twice per week in an open space in village.
3. Initiated in 2016, National Agriculture Market (eNAM) is a pan-India electronic trading portal which networks the existing yards operated by regulated market committees to create a unified national market for agricultural commodities. 1000 wholesale regulated markets (mandi) across 16 states have been so far integrated with the eNAM platform where more than 16 million farmers and 131,000 traders got registered before May’2020.
4. Two types of private player are involved in this process: (a) commission agents (arthiya) who provides basic services of physically bringing the agricultural produces up to the auction platform – total number exceeds 50,000; (b) private traders who purchase farm produces directly from the farmers – across India, few hundred thousands of traders are active
|1. In the APMC and RMC yards, the main activities are weighing, physical storage, cleaning, sorting, grading, packaging, primary processing, testing, auction etc.
2. In the eNAM-enabled APMC, RMC yards, the following activities are being carried out:
3. Following activities will be carried out in e-enabled RPM to convert RPM into Primary Rural Agri-Market (PRAM) centre:
|food processing and packaging||1. As per the 73rd round Survey of NSSO 2015-16, the number of small scale unincorporated units engaged in manufacturing of food and beverage was 2,459,929.
2. According to the Annual Survey of Industries 2016-17, there were 39,748 registered industries active in manufacturing of food and beverage. Entities belong to mostly corporates with presence of cooperatives also.
3. 42 numbers of Mega Food Park projects have been approved since 2008 by the government – project site would be developed and infrastructure would be constructed by either corporate or state government or cooperative, and manufacturers would be allotted either land for factory or space under shade. As on March’2019, status of those projects are:
|Food processing activities include primary processing (activities like shelling-hulling-milling-polishing-crushing-packing) and value-added processing (activities like flour milling-baking-oil refining-pulp processing):
|storage and distribution||85% of warehouses are used for storage of food-grains. As per the All India Cold-chain Infrastructure Capacity Assessment of Status & Gap report published by the Ministry of Agriculture in August’2015, the status of cold storage and refrigerated transport is:
||There are at least 4 stages of cold storage and transportation activities:
|Retailing||Food and grocery retailing is the most prominent type of retail business in India. Number of retail outlets during 2017-2018 have been estimated as noted below:
While overall penetration of modern retail is around 10%, for food and grocery the penetration remains low at 3%.
|Mainly two types of customers buy food and grocery for different purposes:
2.3 How does the economic value chain impact the economy?
2.3.1 With reference to diagram 2.1, 2.2, and 2.3, let’s now list out the significant ways through which the economic value chain built around the agriculture and allied sector impacted the Indian economy during FY2017-18:
2.3.2 Rupees 18,030.39 billion worth of GVA in the agriculture and allied sector recorded in FY2017-18 was 14.9% of total GVA in the Indian economy. This represented only the value addition (output value minus input value) carried out by all the economic actors across India in the agriculture and allied sector
Demand for machinery for the agriculture farming sub-sector activities like seedbed preparation, sowing and planting, weeding and plant protection, harvesting, threshing, post-harvest, etc. has been a key driver for growth in the GDP of ‘Machinery and Equipment’ sub-sector (appearing under the manufacturing sector). In FY2017-18 India’s farm equipment market was around Rupees 600 billion – 797,000 tractors and 52,000 power tillers were sold, which contributed about 82% of farm equipment sales during FY2017-18. With average mechanisation of farming hovering around 40-50%, the farm equipment market will continue to grow between 7-9% CAGR
2.3.3 Consumption of various inputs like chemical fertiliser (a total of 26.59 million ton Nitrogenous-Phosphatic-Potassic chemical fertilisers were consumed on average 127.88 kg/hectare compared to 340 kg/hectare used in China), agrochemicals (a total of 62.18 thousand ton of insecticide-herbicide-fungicide got consumed on average less than 1 kg/hectare as against 2.6 kg/hectare world average), diesel (81.1 million ton of diesel was consumed in India during FY2017-18, out of which more than 13% by the agriculture sector) were a significant motive force for the ‘Coke, Petroleum, Pharmaceutical, Chemical, and related products’ sub-sector of the manufacturing sector:
- Sale of diesel worth about Rupees 900 billion. As the farm mechanisation grows, demand for diesel will continue to grow during the present decade
- Fertilizers valued at Rupees 523 billion were consumed, while Rupees 180 billion of agrochemicals were sold. In future, fertilizers and agrochemicals market is expected to witness a CAGR of 8-10%
- The Indian seeds market crossed Rupees 180 billion in 2017-18. The Indian seed market is projected to grow at a CAGR of 6.6% during the present decade
- The Indian animal feed market was worth Rupees 348 Billion in 2017. The market will continue to grow at more than current rate of CAGR of 8% during this decade
2.3.4 Consumption of 199,247 GWh electricity (20.47% of total consumption of electricity in India) generated revenue more than Rupees 1200 billion for the ‘Electricity, gas, water supply, & other utility services’ sector
2.3.5 Agricultural products produced within Indian landmass are the major source of food supply for the people of India. Consumption of food items in the domestic market happens either directly or after further processing. Agriculture and allied activities sector has been the source of:
- all raw materials to Food Processing industry (‘Food, Beverages, Tobacco’ sub-sector of the Manufacturing sector) – total output of food processing facilities in organised and unorganised facilities is estimated to be Rupees 16,458 billion in 2017-18 as per the national accounting data
- most of the raw materials to the ‘Hotels and Restaurants’ sub-sector of the ‘Trade, repair, hotels and restaurants’ sector – total output of organised and unorganised food-serving eateries is estimated at Rupees 4,478 billion in 2017-18 as per the national accounting data
THUS, FOOD ITEMS CONTRIBUTE ABOUT 32% – 34% OF THE ‘PRIVATE FINAL CONSUMPTION EXPENDITURE’ COMPONENT OF INDIAN GDP AT CURRENT PRICE
2.3.6 Agriculture and allied activities sector has been the source of raw materials like cotton, silk, jute, and leather to ‘Textiles, Apparel, Leather products’ sub-sector of the manufacturing sector. Considering that, the artificially manufactured fibre and yarn together constitute only 15 – 17% of total production of fibre and yarn in India in 2017-18, at least 80% of Rupees 11,255 billion textiles-apparel-leather products market is dominated by commodities originated at agriculture and livestock farming.
THUS, NON-FOOD ITEMS FROM AGRICULTURE AND LIVESTOCK SECTOR CONTRIBUTE ABOUT 8-10% OF THE ‘PRIVATE FINAL CONSUMPTION EXPENDITURE’ OF INDIAN GDP AT CURRENT PRICE
2.3.7 Input materials to and output materials from Agriculture and allied activities need railways and roadways for transportation across logistics points – (a) seeds-fertilizers-insecticides from factory to warehouses as well as from warehouse to retailers, (b) agricultural produces from farm to mandi-warehouse as well as warehouse to food processing factories, (c) processed food from factory to warehouses as well as warehouse to retailers.
Out of Rupees 1170 billion freight revenue earned by Indian Railways during 2017-18, about 13% – 15% was on account of transportation of fertiliser-agrochemicals, food-grains, cotton etc. that are part of economic value chain built around agriculture and allied sector
2.3.8 Organised food and beverage sector companies developed extensive distribution networks comprising stockists and distributors that extend till retail outlets (both in organised and unorganised sector). The retail market in India is expected to grow from US$ 795 billion in 2017 to US$ 1.2 trillion by 2021. It is estimated that, the food and grocery segment accounts for around 65% of overall retail sales
2.3.9 Total goods export from India was worth USD 303.37 billion during 2017-18. Food and non-food category COMMODITIES AND PROCESSED ITEMS TRACING THEIR ORIGIN TO AGRICULTURE AND ALLIED SECTOR ACCOUNTED FOR ABOUT 22% OF TOTAL EXPORTS FROM INDIA
Could any sane person still believe the trash of limited role of the agriculture and allied sector pedalled by the mainstream media and academia beholden to the Zionist capitalist interests?
3. ACTUAL SOCIO-ECONOMIC STATUS OF RURAL POPULATION IN INDIA
3.1 What is NOT highlighted about agriculture & allied sector in GDP Data?
Having probed into the facts and figures that are demonstrable in GDP calculation, let’s turn our attention to the ‘unknowns’. Exploring deep beyond the GDP figures helps insofar as it supports us to focus on the Indian farmers’ disgruntlement.
3.1.1 Majority of the population depend on agriculture & allied sector
The sources of livelihood for majority of the Indian population can be traced directly and indirectly to the agriculture-livestock-fishing-forestry sector. Even though the contribution in GDP of this sector steadily declined from about 52% in 1950-51 to 14.5% in 2010-11, agriculture and allied sector employed 54.58% of the country’s total working population.
As per the ‘India KLEMS database 2019’ published by Reserve Bank of India, number of persons employed in various sectors and sub-sectors each of which is either completely or partially associated with agriculture and allied sector, during 2017-18 are given below:
|Sectors and Sub-sectors||Employment associated with Agriculture & Other sectors in 2017-18|
in million [A]
|Percentage of Total Employed||Employment associated with Agriculture & Other sectors|
|1. Agriculture-Hunting-Forestry-Fishing||196.598||42.31||100% of A|
|2. Food-Beverage-Tobacco products||9.454||2.03||100% of A|
|3. Textiles-Leather-Footwear products||13,380||2.88||75% of A|
|4. Wood and products of wood||3,056||0.66||100% of A|
|5. Trade||50,696||10.91||50% of A|
|6. Hotels and Restaurants||9,076||1.95||100% of A|
|7. Transport and Storage||23,152||4.98||50% of A|
As per the Periodic Labour Force Survey (PLFS) report for July’2018 – June’2019 published by the National Statistical Office, 67.6% of households in India are located in rural regions with 69.6% of population of India. 63% of the rural population belong to working age (26.9% among the 15-29 years and 36.1% among the 30-59 years age group). Among the rural households, 36.6% identified ‘cultivation in own land’ as major source of income while 11.7% identified ‘casual labour for others’ farming’ as major source of income. The worker population ratio (WPR i.e. percentage of persons employed among the population) in rural India was only 35.8% while the labour force participation rate (LFPR i.e. percentage of persons among the population who are working or available for work) in rural India was 37.7%.
The KLEMS data mentioned above in table 3.1 was cross-checked with more rudimentary data provided in the PLFS report for July’18 – June’19. It was found that, the aggregate of “Percentage of Total Employed” figure in row1 to row4 of table 3.1 is comparable to the summation of “Percentage of Rural+Urban” figure in row1 to row4 of table 3.2. The percentage distribution of workers by occupation, as per the PLFS report is given below:
|Occupation||Percentage of Rural Worker||Percentage of Urban Worker||Percentage of Rural+Urban|
|1. Skilled agricultural and fishery workers
[directly in agriculture-livestock-fishing-forestry]
|2. Elementary services (labourers)
[directly in agriculture-livestock-fishing-forestry]
|3. Craft and related trades workers
[unorganised food-beverage-tobacco processing, handicrafts, wood-leather-textile products]
|4. Plant and machine operators and assemblers
[organised food-beverage-tobacco processing,
organised leather-textile-wood products]
The following inferences are drawn about how agriculture and allied sector plays a stellar role in providing employment in India till very recently:
- In India, 57.35% of rural working population are directly involved in the agriculture and allied sector
- 5.59% of urban working population are directly and indirectly involved in the agriculture and allied sector
- 42.3% of working population in India are directly engaged in agriculture and allied activities, while 14.7% of working population are engaged in occupations that deal with outputs from that sector
- Assuming uniform distribution of working people across the Indian households, it can be prudently stated that, OUT OF A TOTAL OF 1316 MILLION POPULATION IN 2017-18, 57% i.e. 750 MILLION PEOPLE ARE DEPENDENT ON THE ECONOMIC VALUE CHAIN BUILT AROUND AGRICULTURE AND ALLIED ACTIVITIES FOR THEIR LIVELIHOOD
3.1.2 Multi-dimensional background of distress among the farming communities
There are many sources of distress among the rural population engaged in the agriculture-livestock-fishing-forestry sector. Let’s take a look at the major dynamics that have been continuously playing in the background of farm distress.
A. Grossly inadequate expenditures on gross fixed capital formation in agriculture and allied sector over past few decades resulted in slow growth in productivity as well as rising cost of production that never matched high expectations.
Private capital formation in agriculture includes primarily the investment in physical assets like:
i. Reclamation and development of land
ii. Bund and other land improvements
iii. Orchards and plantations
iv. Groundwater irrigation like new wells, broadening and deepening of existing wells
v. Other irrigation structures like rainwater conservation and harvesting
vi. Farm mechanization like cultivator, harvester machinery, tools, tractors etc.
vii. Farm building, barns, animal sheds etc.
Public capital formation in agriculture has been mainly driven by public investment in:
i. Agricultural infrastructure like power, irrigation
ii. Development of storage and marketing facilities
- iii. Building of institutions for research and development
Ramesh Golait and S. M. Lokare compiled a status report on capital formation in agriculture sector ‘Capital Adequacy in Indian Agriculture: A Riposte’ in which they have painstakingly showed how share of agriculture and allied sector in total investments have been sliding downward after 1980s. (Link: https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=1911)
|Decade/ Year||Average Annual Investment in Agriculture (Billion Rupees)||Average Annual Investment in Economy (Billion Rupees)||Share of Agriculture in Total Investment|
As the data provided in table 3.3 reveals, during the initial decades after independence until 1990, share of average annual investment in the agriculture and allied sector used to vary between 11% (in 1980s) to 18% (in 1950s) of the total investments in Indian economy – however, during this period, share of agriculture and allied sector in the country’s GDP at factor cost (at 2004-05 constant price) varied between 52% (in 1950-51) to 29.5% (in 1990-91). Clearly, successive governments at centre didn’t do justice to the farmers and farming economy when it came to total investments in that sector till 1990. Perhaps. The ruling party at centre was too happy to pass the buck onto the state governments (agriculture being a ‘state’ subject in the Indian constitution). Now let’s look into the following Gross Capital Formation (GCF) data that represents the decade of 2010s, a decade during which contribution of agriculture and allied sector remained around 15% of GDP:
|GCF in Agriculture & Allied sector at
constant 2011-12 Prices (Billion Rupees)
|GCF in Agriculture & Allied sector – Public||356.96||371.72||461.85|
|GCF in Agriculture & Allied sector – Private||2381.75||2354.91||2377.37|
|GCF in Agriculture & Allied sector – Total||2738.70||2726.63||2839.22|
|GCF in overall Economy – Public||6583.58||7743.88||9810.21|
|GCF in overall Economy – Private||25473.58||27784.59||32959.69|
|GCF in overall Economy – Total||32057.16||35528.47||42769.90|
|GCF in Agriculture & Allied sector as share of GCF in overall Economy – Total||8.5%||7.7%||6.6%|
Since 1991, when the liberalisation-privatisation-globalisation era was kicked off in India, two parallel processes took place:
i) There has been a steady decline in the share of investments that would be channelized into creation of fixed capital in the agriculture and allied sector, and
ii) The share of public sector’s GCF in agriculture nosedived steeply so much so that by the 2010s, private investments accounted for more than 80% of total investments
Lack of suitable storage facilities across every producing state is one of the outcomes of such inadequate investment in this sector. Even after 70 years of independence, more than 5% of food-grains and 5-10% of fruits and vegetables are lost due to inadequate post-harvest treatment and storage infrastructure, irrigated area remained only 49% of net sown area.
One can’t fail to grasp the crux of the matter – since 1991, successive governments in India didn’t even bother to address the most important issue of agriculture and allied sector: creation of adequate fixed capital through robust investment.
B. Continuous growth in the population and resultant split of arable land resulted in a horrendous scenario for the rural population who are into agriculture and allied activities. Given the inadequately built infrastructure and mediocre productivity in Indian agriculture, farming in plot holdings below 2 hectare land doesn’t generate enough marketable surplus (i.e. crop available to be sold after meeting most of the expenses and consumption by farmer household) after deducting the following:
i. Consumption by the farmer family members including permanent labour
ii. Consumption by the temporary labour occasionally employed on the farm
iii. Quantity retained for seed
iv. Quantity retained as feed for livestock
v. Payments in kind: own (permanent) labour, temporary labour, rent to land owners, share of produce to land owners etc.
vi. Quantity retained for barter of food items for consumption by the farmer family
vii. Physical losses in threshing, in storage at producer’s store
Other expenses for inputs like fertilizer, pesticide, electricity, irrigation, diesel, maintenance of farm machinery etc. would be in cash, and most of the farmer households depend on loan from either private moneylenders or government-owned banks.
Percentage of plot holdings with less than 2 hectares land rose from 70% in 1970-71 to 86% in 2015-16, during the same 45 year period, percentage of area covered by plots less than 2 hectares increased from 21% to 47%. More and more members of households who own holdings with less than 2 hectares land, are being forced to (a) explore new avenues for income in non-agricultural sector while maintaining farming as primary source of income, or (b) leave the occupation of a cultivator either to work as farm labourer in agricultural farm of someone else or to migrate to towns and cities in search of any work as labourer in industry and service sectors. Hence, even if the number of workers involved in Agriculture and allied activities increased from 125.7 million in 1970-71 to 263.1 million in 2010-11, percentage of cultivators among agriculture workers went down from 62.2% in 1970-71 to 45.1% in 2010-11. It can be sensibly concluded from the data given below that, profusion of small sized farms has been one of the main culprits.
|Parameters of Agriculture Economy||1970-71||1990-91||2010-11||2015-16|
|Total population in million||548.2||846.4||1210.9||1283.0|
|Rural population in million
[percent of total population]
|Workers involved in Agriculture million*||125.7||210.7||263.1||—|
|Cultivators in million
[percent of total Agriculture workers]
|Agriculture workers as a percentage of total workers (as per India KLEMS database 2019)||—||64.59%||49.27%||44.19%|
|Net Area Sown in million hectare||135.8||140.4||141.3||140.0|
|Net Irrigated Area in million hectare||31.10||48.0||64.5||68.2|
|Number of plot holdings (Less than 1 hectare) million||36.200||63.389||92.826||100.251|
|Number of plot holdings (1 to 2 hectare) million||13.432||20.092||24.779||25.809|
|Number of plot holdings (2 to 4 hectare) million||10.681||13.923||13.896||13.993|
|Number of plot holdings (More than 4 hectare) million||10.698||9.234||6.848||6.399|
|Percentage of plots less than 2 hectares||69.89%||78.28%||85.01%||86.07%|
|Total Area of plots (Less than 1 hectare) million hectare||14.599||24.894||35.908||37.923|
|Total Area of plots (1 to 2 hectare) million hectare||19.282||28.827||35.244||36.151|
|Total Area of plots (2 to 4 hectare) million hectare||29.999||38.375||37.705||37.619|
|Total Area of plots (More than 4 hectare) million hectare||98.298||73.411||50.735||46.124|
|Percentage of area covered by plots less than 2 hectares||20.89%||32.46%||44.58%||46.94%|
* Data suitably assumed.
The average size of farm holdings has been reducing consistently from 2.28 hectares in 1970-71 to 1.15 hectares in 2010-11, and 1.08 in 2015-16. The relationship between farm size and productivity has been intensely debated in India. On that subject, Rudra (1968) concluded that “there is no scope for propounding a general law regarding farm size and productivity relationship”. But, the direct correlation between plot size and total revenue overrides all other relationships. Even if the owners of small holding put more efforts and inputs to clock more productivity (as compared to the owners of large holding), the limitation of farmland remains a bane for revenue realisation. In reality, the marketed surplus had always been more than the marketable surplus. The farmers needed to get hard cash (from sale of produces) for loan repayment, hence 86% of all farmers (i.e. who own up to 2 hectares) were forced to sale most of the produces without keeping stock that would go for self-consumption and barterable expenses. As a result, hunger and malnutrition obstinately refuse to go away from rural India.
C. Lack of concerted approach on policy formulation, exhaustive planning and effective implementation failed to make overall positive impact towards agriculture and rural development. More so after 1991, when emphasis on the industrial sector eclipsed other sectors. After 1991, piecemeal efforts and inadequate expenditures shattered the crucial lifeline provided by the government to the agriculture and allied sector.
For over two decades after independence from 1947 to 1965, structural reforms were undertaken for transforming the agrarian relations through which titles of substantial area of land were transferred from zamindar (large land owners who never cultivated on their own) to the actual cultivators, infrastructures like major dams and irrigation projects were constructed, and cooperative credit institutions were strengthened. However, none of these activities were taken to its logical end, mainly due to the well-entrenched lobby of the zamindar and other aristocrats in the ruling party (Congress party) and the bureaucracy. Coupled with that, lack of modern technology in agriculture and allied sector actually crippled the productivity. India remained dependent upon imports and food aid to feed the continuously rising population.
During 1966 to 1990 period, agricultural policies were put in place with food security as the primary goal. While this set of laws allowed India to achieve advances in basic food production by the 1980s, the farm sector has suffered a lack of marketing alternatives, and stagnant rural incomes. Data provided in table 3.6 shows that productivity of rice, wheat, sugarcane, oilseeds and livestock animal experienced maximum growth during this period. ‘Green Revolution’ was formulated by government to apply science and technology for increasing yield of crops. Factors like increased use of chemical fertilizers and pesticides, increased use of high yielding varieties of grains, crop rotation, increased area under cultivation, irrigation were the main drivers. During this period, diversification into cultivation of vegetables-fruits, and livestock farming helped increasing food production as well as rural employment and income.
|Rice||Production (mil. ton)||20.58||30.59||53.63||76.98||95.98||112.76|
|Wheat||Production (mil. ton)||6.46||10.40||36.31||62.10||86.87||99.87|
|Coarse Cereals||Production (mil. ton)||15.38||21.42||29.02||29.03||43.40||46.97|
|Pulses||Production (mil. ton)||8.41||9.94||10.63||12.31||18.24||25.42|
|Oilseeds||Production (mil. ton)||5.16||6.40||9.37||22.11||32.48||31.46|
|Sugarcane||Production (mil. ton)||57.05||123.99||154.25||281.10||342.38||379.90|
|Fruits||Production (mil. ton)||—||—||—||41.507||74.878||97.358|
|Vegetables||Production (mil. ton)||—||—||—||71.594||146.554||184.394|
|Milk||Production (mil. ton)||17.0||—||31.6||66.2||121.8||176.3|
|Eggs||Production (bil. no.)||1.83||—||10.06||27.2||63.0||95.2|
Livestock related data is collected by the authority in charge of livestock census only at fixed interval.
‘*’ marked data relates to 1982, ‘♦’ marked data relates to 1997, ‘**’ marked data relates to 2012, ‘♦♦’ marked data relates to 2019.
After 1991, domestic market was opened to international trade, and WTO affected agriculture sector. A new agricultural policy was launched in July 2000 which set an objective of 4% growth in output per year. In the early 2000s, the government encouraged Indian states to design and implement reforms, however the states adopted policies which were not favourable to long-term rejuvenation of agriculture and allied sector. Results of poor strategy and implementation are:
- Over-dependence on cereals on the platter has not been a choice of rural Indian population, it has been a compulsion. Availability of total food-grains in India per capita per day during 1951 was total cereals 334.2 gram and total pulses 60.7 gram, which increased to total cereals 417.3 gram and total pulses 37.5 gram during 1981, subsequently increased to total cereals 410.6 gram and total pulses 43.0 gram during 2011 – thus, it is clear that due to lack of adequate planning over seven decades, food-grain production became lopsided in favour of cereals! Such pattern of food production and poor level of income compelled the rural population to consume carbohydrate-rich diet which in turn resulted in abundance of malnutrition in rural India.
- Warehouses owned by the government has been consistently facing the problem of huge stock of food-grain (as a result of procurement of food-grains from few states). In a way, this issue is a by-product of the first one – without pre-planning on food consumption and hence, food production, the country is saddled with too much of food-grains (large portion of which is not export-grade) The cost and efficiency of the warehouses have also been under scrutiny for long time. Wastage is rampant.
- There are broadly three categories of institutions which deliver credit to rural areas – commercial banks mainly government-owned, regional rural ranks, and cooperative banks. The problem of adequate and timely credit refuses to fade away. Even if the successive governments at centre deliberated on this issue and devised mechanisms and institutions, the transparency and efficiency could never be achieved.
- Excessive, and in many cases, inappropriate use of ‘green revolution’ techniques – fertilizers, pesticides – polluted arable land and waterways. Over-use of soil accompanied depletion of nutrients. Rampant irrigation led to soil degradation as well as falling ground water-table.
Pesticides are sprayed on crops by untrained farm labourers who seldom follow instructions and precautions, and fertilizers are applied without appropriate mix of nitrogenous-phosphatic-potassic nitrogenous fertilizers taking the lion’s share (because of availability and price). There are significant effects of using pesticides like Phosphamidon, Phorate, Triazophos and Monocrotophos on people’s health. This also causes more harm than good to crops and soil – in the long run productivity decreases and pollution increases.
5. Untrammelled use of high yield variety seeds in agriculture resulted in substantially reduced biodiversity in the rural regions of India. In the long run, India will certainly lose the rich biodiversity that blessed this land for thousands of years.
3.1.3 Extremely Unfavourable Revenue Margin of Agriculture & Allied Sector
(a) Cost of Production:-
In the context of India, there are two government sources that track agricultural costs. Cost of different ‘input’ (as aggregate figures for 130+ crops) that went into agricultural activities are provided in the ‘National Accounts Statistics’ (NAS) published every year by National Statistical Office under the government. It includes estimated ‘input cost’ of seed, organic manure, chemical fertilisers, repair-maintenance of fixed assets-other operational costs, irrigation charges, electricity charges, pesticides-insecticides, diesel oil, market charges, financial intermediary services indirectly measured (FISIM), but EXCLUDES in-house and outsourced labour. For all practical purposes, the concept of ‘cost of production’ followed by the Directorate of Economics & Statistics (DES), Ministry of Agriculture under the government is the benchmark data calculated for a specific crop cultivated in a specific state. Widely used cost concepts are:
- Cost A2: expenses in cash and kind on account of (i) hired human labour, (ii) hired bullock labour, (iii) owned bullock labour, (iv) hired machine labour, (v) owned machine labour, (vi) seed, (vii) fertilizers & manure, (viii) insecticides & pesticides, (ix) irrigation charges, (x) miscellaneous expenses, (xi) depreciation on implements & farm buildings, (xii) interest on working capital, (xiii) Land revenue-cess-tax, and (xiv) rent paid for leased-in land
- Cost C2: includes A2 plus (i) interest on owned fixed capital excluding land, (ii) rental value of owned land, and (iii) imputed value of family labour
Let’s explore state-wise cost of production of most important crops of India during 2017-18 – paddy, wheat, maize, gram, pigeon peas, ground nut, soybean, sugarcane, cotton etc. which are procured at minimum support price (MSP) by the government, and chillies, potato, onion (which are not supported by MSP and government procurement) in key producer states of India. Data related to state-wise production, marketed surplus ratio (MSR) as percentage of crop production of 2014-15 (assumed to be same as 2017-18), and MSP as declared by government. 80% of average local wholesale price of a crop has also been added in table (which represents the price at which farmer off loads his produces at farm-gate to primary traders who would put it under auction at local market (mandi).
|State||2017-18 Cost of Production (Rupees/Qntl.)||Production (million Ton)||2014-15 MSR (percent)|
|1. Rice (common) – total output 112.76 million ton|
|2. Wheat – total output 99.87 million ton|
|3. Maize – total output 28.75 million ton|
|4. Gram – total output 11.38 million ton|
|5. Pigeon Peas/Arhar/Tur – total output 4.29 million ton|
|6. Ground nut – total output 9.25 million ton|
|7. Soybean – total output 10.93 million ton|
|8. Sugarcane – total output 379.90 million ton|
|9. Cotton – total output 5.58 million ton|
|10. Potato – total output 51.31 million ton|
|11. Onion – total output 23.26 million ton|
|12. Chillies (dry) – 2.15 million ton|
* Data for state-wise crop-wise costing of vegetables and fruits not available. Hence, an estimated figure used here
** Data for 2010.
From the data mentioned in the above table 3.7, we can draw the following inferences:
- Costing carried out by DES has an inherent problem – data regarding ‘input’ costs considered to calculate cost of production lag behind the year of implementation by at least a year. Hence the process of cost estimation and MSP declaration becomes ineffective to a large extent
- The cost of production of almost every crop is different in different state. Depending on soil, irrigation method, and weather, the input costs vary for the same crop in different states in the same year. Hence, any central government policy like uniform MSP across all states is intrinsically wrong
- While C2 represent the complete cost analysis, due to the debatable issue of whether or not the ‘rental value of owned land’ should be included in the production costing, ‘A2 + family labour’ cost is more widely accepted as the actual production costing
(b) Subsidy and Related Issues:-
The government has been providing a plethora of subsidies in the agriculture and allied sector, most significant ones being fertilizer, electricity, irrigation, and seed. However, the amount of such subsidy pale in comparison to what countries like China and USA provide to their agriculture sector. The effectiveness of the subsidy process gets marginalised due to the overall deficit of basic infrastructure for warehouses, cold storages, transportation etc.
An often forgotten matter has been the fact that, a number of subsidies meant for agriculture and allied sector has increasingly been flowing to the corporates who have been in the business of agriculture inputs, food processing, and infrastructure construction.
(c) Revenue and Margin:–
The government introduced price interventions in food grain market beginning in the mid-1960s. Since then, agricultural price policy has aimed to offer remunerative prices to producers through a system of minimum support prices (MSP) backed by procurement of grain, to minimize year to year price fluctuations through open market operations, and to distribute food grains at subsidized prices to economically weaker section of the society through public distribution system (PDS). However, there has been a consistent lack of honesty on part of successive governments after 1990, to improvise the old system and to create an effective administrative policy framework backed by adequate physical infrastructure, for marketing of at least 50% amount of the marketed surplus of all types of crops from every farming household located at every corner of the country at a price that cover 150% of A2 + family labour cost and ensure a decent income to the farming households. Instead of that, half-baked government policies on fair prices at farm-gate have been implemented that lacked effectiveness, and which was confined to five-six food-grain and commercial crops in a narrow geographical footprint covering mainly five-six states (out of 28 states of India).
Let’s again go back to the NAS document published every year by National Statistical Office. In the equation:
GVA = Sum of (value of output of crop) – Sum of (value of all inputs that went into production of crop)
The ‘value of output of crops’ have been estimated in the ‘National Accounts Statistics 2019’. There are total 130+ crops out of which:
- 9 items grouped as ‘cereals’,
- 15 items grouped as ‘pulses’,
- 12 items grouped as ‘oilseeds’,
- 3 items categorised as ‘sugars’,
- 5 items categorised as ‘fibres’,
- Indigo, dyes & tanning material grouped as one,
- 9 items categorised as ‘drugs & narcotics’,
- 16 items categorised as ‘condiments & spices’,
- 52 items categorised as ‘fruits & vegetables’,
- 8 items grouped as ‘other crops’, by products, and
The 12 major crops which have been listed in table 3.7 along with other data of 2017-18 make up about 60% of the total crop valuation (excluding by-products and miscellaneous produces like fodder, straw etc.). Hence, if we analyse the production costing, marketed surplus, actual procurement at MSP by government agency, and selling by farmers to primary traders, we would be able to estimate revenue and margin earned by Indian farmers. During 2017-18, following crops and quantities were procured by government at MSP:
|Crop||MSR of Total Production
in million Ton
|Key state-wise purchase by government at MSP (million Ton)||80% of average price at local wholesale market (Rupees/ Quintal)
|Difference between MSP and A2+FL
|Difference between WLSL and A2+FL
|1. Rice (common)||84.35% of 112.76||1550 *||38.18|
|2. Wheat||73.78% of 99.87||1735||30.82|
|3. Maize||88.06% of 28.75||1425||0.05|
|4. Gram||91.10% of 11.38||4400||0.06|
|5. Pigeon Peas/Arhar||88.21% of 4.29||5450||1.13|
|6. Ground nut||91.63% of 9.25||4450||1.04|
|7. Soybean||97.60% of 10.93||3050||0.07|
|8. Sugarcane||85.37% of 379.90||255||296|
|325 -310 **
330 -253 **
305 -230 **
|9. Cotton||98.79% of 5.58||4020||0.18|
|10. Potato||89.54% of 51.31||—||Not Applicable|
|11. Onion||91.29% of 23.26||—||Not Applicable|
|12. Chillies (dry)||More than 90% of 2.15||—||Not Applicable|
♦ 3 months average price: September-October-November for Kharif crops and March-April-May for Rabi crops.
* Paddy i.e. pre-milling produce.
** Sugarcane is directly procured by Sugar mills at state advised price (SAP) / (fair and remunerative price (FRP) rate declared by different state governments.
From the data mentioned in the above table 3.8, we can draw the following inferences all of which prove that, for more than four decades, most of the farmer households are not able to earn a decent revenue beyond recovery of the basic cost of cultivation from farms:
2. CURRENTLY THERE EXIST POLICY AND SYSTEM FOR PROCUREMENT OF MAINLY 3 CROPS AT MSP OR SAP FROM A SMALL MINORITY OF FARMING HOUSEHOLDS IN INDIA:
- As per the ‘Price Policy for Kharif Crops 2019-20’ report published by Commission for Agricultural Costs and Prices (CACP), only 7.232 million paddy farmers (out of total 69.097 million holdings under crop paddy) i.e. little over 10% paddy farmer households from primarily Punjab, Haryana, Andhra Pradesh, Telangana, Odisha, Chattisgarh benefitted from procurement by government at MSP during 2017-18 (quantity-wise, 40% of marketed produces were sold at MSP)
- As per the ‘Price Policy for Rabi Crops 2019-20’ report published by CACP, only 3.187 million wheat farmers (out of total 44.110 million holdings under crop wheat) i.e. little over 7% wheat farmer households from primarily Punjab, Haryana, Madhya Pradesh, Uttar Pradesh benefitted from procurement by government at MSP during 2017-18 (quantity-wise, 42% of marketed produces were sold by the farmers at MSP)
- Sugarcane farmer households from Uttar Pradesh, Maharashtra, and Karnataka sold more than 85% of cane produced by them to the sugar mills at price fixed by government. And, most of the sugarcane farmers get benefitted from government policy. However, problem of sugarcane farmers is even bigger than paddy or wheat farmers – cane farmers don’t get their full payment from sugar mill owners even after a year since delivery of cane to the nearest sugar mill
- Except sugarcane, MSP declared by government for other crops remain uniform across India, which indicate that the regional variations are ignored to the detriment of the local farmers’ interest
- Even the MSP scheme declared by the government lack serious analysis for ensuring a fair margin over all expenditures carried out by the farmers. Let’s get down into further details for the largest state of India, Uttar Pradesh, during 2017-18 season. A2+FL cost of production for paddy was Rs.1121.75/quintal, yield was 22.83 quintal/hectare, hence cost of paddy production in 1 hectare holding was Rs.25610:
A. Paddy farmer benefitted from MSP – Since declared MSP was Rs.1550/quintal, total revenue from paddy produced in 1 hectare farm was Rs.35386. THUS, THE PADDY FARMER WHO GOT THE BENEFITS OF GOVERNMENT SCHEME OF MSP, EARNED ONLY A PALTRY AMOUNT OF RS.9,776 BY CULTIVATING ONE HECTARE HOLDING
B. Paddy farmer who didn’t get benefitted from MSP – Farmers usually transfer their produces to the primary traders at about 80% of average wholesale price (prevailing at the local market) who take it to the local wholesale market and put the produces into auction at wholesale market – that auction price gets recorded in the government controlled databases as ‘local wholesale price’. Past statistical records show 80% of local wholesale price (average of 3 months) was Rs.1444/Quintal, total revenue from paddy in 1 hectare farm was Rs.32966. THUS, THE PADDY FARMER WHO DIDN’T GET THE BENEFITS OF GOVERNMENT SCHEME OF MSP, EARNED A MISERABLE AMOUNT OF RS.7,356 BY CULTIVATING ONE HECTARE HOLDING
3. CURRENTLY THERE EXIST POLICY AND SYSTEM FOR PROCUREMENT OF ANOTHER 20 CROPS AT MSP, QUANTITY OF WHICH GENERALLY REMAIN INSIGNIFICANT FOR ALL PRACTICAL PURPOSES:
- MSP norms for five cereals (maize, sorghum, pearl millet, barley and ragi), five pulses (gram, Pigeon Peas/Arhar/Tur, yellow gram/moong, black gram/urad, lentil/masoor), seven oilseeds (groundnut, rapeseed-mustard, soyabean, sesamum, sunflower, safflower, nigerseed) exist. However, quantity of procurement by the government at MSP were so small that it failed to make any difference to the agricultural farmers’ plight
- Even if the MSP scheme ensured a fair margin over all expenditures carried out by the farmers in few states, insignificant procurement doesn’t allow substantial revenue for the farmers. Let’s get down into further details for the state of Madhya Pradesh, during 2017-18 season. A2+FL cost of production for pigeon peas/arhar was Rs.3023.85/quintal, yield was 7.49 quintal/hectare, and hence cost of pigeon peas/arhar production in 1 hectare holding was Rs.22,649:
- Pigeon peas/arhar farmer benefitted from MSP – Since declared MSP was Rs.5450/quintal, total revenue from arhar produced in 1 hectare farm was Rs.40820. THUS, THE ARHAR FARMER WHO GOT THE BENEFITS OF GOVERNMENT SCHEME OF MSP EARNED AN AMOUNT OF RS.18,171 BY CULTIVATING ONE HECTARE HOLDING
- Pigeon peas/arhar farmer who didn’t get benefitted from MSP – Farmers usually transfer their produces to the primary traders at about 80% of average wholesale price (prevailing at the local market) who take it to the local wholesale market and put the produces into auction at wholesale market. Past statistical records show 80% of local wholesale price (average of 3 months) was Rs.2880/Quintal, total revenue from arhar in 1 hectare farm was Rs.21,571. THUS, THE ARHAR FARMER WHO DIDN’T GET THE BENEFITS OF GOVERNMENT SCHEME OF MSP LOST ABOUT RS.1078 BY CULTIVATING ONE HECTARE HOLDING
- Three commercial crops namely copra (coconut), cotton and raw jute are also protected by MSP. All three are grown in very restricted geographical regions of India. Procurement of small quantities by the government at MSP, didn’t make much of an impact on the farmers’ income during 2017-18 except a few from 5 – 6 states.
- CURRENTLY THERE IS NO ROBUST POLICY AND SYSTEM FOR ENSURING RATIONAL MSP CONSIDERING THE REGIONAL DIFFERENCES IN COST OF PRODUCTION FOR OVERWHELMING MAJORITY OF FARMING HOUSEHOLDS IN INDIA WHO PRODUCE:
- 20 major crops in every producer state (for which MSP scheme exist, but nothing happen)
- 100+ other crops including vegetables and fruits NOT supported by MSP in any producer state
Sometimes different state governments may declare scheme to procure some of the crops (apart from 23 major crops) grown in those states at a special price – such gestures, invariably, are outcome of political discourse, and lack serious socio-economic analysis.
Let’s get down into further details for largest vegetable-producing state of India, West Bengal during 2017-18 season. A2+FL cost of production for potato was Rs.405.40/quintal, yield was 293.27 quintal/hectare, and hence cost of potato production in 1 hectare holding was Rs.118,892.
Potato farmers aren’t covered through MSP scheme. Farmers usually transfer their produces to the primary traders at about 80% of average wholesale price (prevailing at the local market) who take it to the local wholesale market and put the produces into auction. Past statistical records show 80% of local wholesale price (average of 3 months) was Rs.539/Quintal, total revenue from paddy in 1 hectare farm was Rs.158,072. THUS, THE POTATO FARMER WHO DIDN’T GET THE BENEFITS OF GOVERNMENT SCHEME OF MSP EARNED A RELATIVELY SUBSTANTIAL AMOUNT OF RS.39,180 FROM ONE HECTARE HOLDING.
3.2 Occupation, Earning, and Poverty in Rural India
3.2.1 Occupation and Earning in Rural India
The census data related to occupation and employment status conclusively points out to the fact that, more than 13% of the (self) cultivators left their occupation between 1991 and 2011, and during the same time-period number of agricultural labourers increased by 5 times because cultivation, as a profession, has become uneconomical for most of the marginal-small plot-holders.
As per the PLFS report of National Statistical Office for 2018 – 2019, 69.6% of population of India lives in rural India. The worker population ratio in rural India was only 35.8% (male – 52.1% and female – 19.0%) while the labour force participation rate in rural India was 37.7%.
As per the same PLFS report:
(a) On the basis of the source of major income, rural households were categorised into the following socio-economic types:
- self-employment in agriculture 36.6%
- self-employment in non-agriculture 15.1%
- regular wage/salary earnings 13.1%
- casual labour in agriculture 11.7%
- casual labour in non-agriculture 13.4%
- others 10.1%
(b) Worker population ratio in usual status for all ages in the rural India:
- male 52.1%
- female 19.0%
- person 35.8%
In PLFS 2018 – 2019, information on earnings from employment was collected for all the categories of rural workers, viz., self-employed (in agriculture, non-agriculture) persons, regular wage/salaried employees, casual labour (in agriculture, non-agriculture).
|Survey period||Average wage/ salary earnings (in Rupees) during the survey period 2018-19|
|Rural Male||Rural Female||Rural Person||Urban Person||Urban+Rural Person|
|Monthly Earnings by regular wage/salaried employees|
|July – September 2018||13,245||8,077||12,192||17,942||15,598|
|October – December 2018||13,632||9,439||12,749||18,106||15,918|
|January – March 2019||13,524||8,804||12,532||18,057||15,827|
|April – June 2019||13,794||8,578||12,667||18,657||16,196|
|Daily average wage earnings by casual labour (in agriculture, non-agriculture)*|
|July – September 2018||277||170||254||319||264|
|October – December 2018||287||186||265||331||276|
|January – March 2019||287||190||267||339||279|
|April – June 2019||297||199||279||352||291|
|Monthly average gross earnings from self-employment work (in agriculture, non-agriculture)|
|July – September 2018||9,140||3,794||8,520||14,573||9,945|
|October – December 2018||9,392||4,381||8,802||14,944||10,262|
|January – March 2019||9,606||4,353||8,905||15,183||10,438|
|April – June 2019||9,543||4,335||8,743||16,353||10,648|
* Any work other than (government controlled) public works
The significant inferences drawn from table 3.1, 3.2, 3.9 are:
- Out of every 100 people living in rural India, only 35.8 were employed in 2018-2019 period, and this number may vary 1.0-1.5% at the most; even if we omit 32 persons who were either below 15 years of age or above 65 years of age, 32 people remained unemployed – the standard calculation of unemployment rate carried out by the government has always been a sham
- While 52% of the males in rural India were employed, only 19% of the females found employment
- Rural people who carried out agricultural work in own land or were involved in non-agriculture activities earned average 8,743 Rupees per month; however, gender disparity is too glaring to be ignored – female citizens earn about half of what male citizens earn
- Rural people who worked as casual labour in agriculture and allied sector or in non-agriculture sector earned average 266 Rupees per day (considering 25 days, Rupees 6,650 monthly income)
3.2.2 Consumer Expenditure and Poverty in Rural India
Consumer Expenditure Survey conducted by the National Sample Survey Office (under the National Statistical Office) collects data during the sampling rounds on two categories: food and non-food expenditures by Indian households. Food is further sub-categorised into cereals, milk and milk products, egg-fish-meat, vegetables, other food items, while non-food is further sub-categorised as betel-tobacco-intoxicants, fuel and light, clothing and bedding, education, medical, conveyance, other consumer services, other non-food items. The all-India estimates for rural regions as per NSS round 68 on Average Monthly Per Capita Consumer Expenditure (MPCE) in 2011-12 is given below:
|Socio-economic Category||Social Group-wise average MPCE data for Rural India in 2011-12 (Rupees)|
|Scheduled Tribe (ST)||Scheduled Caste (SC)||Other Backward Caste (OBC)||Other Community||All|
|Self-employed in agriculture||1108||1218||1395||1761||1436|
|Self-employed in non-agriculture||1260||1314||1506||1694||1509|
|Regular wage/salary earning||1735||1803||1984||2240||2002|
|Casual labour in agriculture||964||1131||1241||1179||1159|
|Casual labour in non-agriculture||1010||1181||1303||1366||1238|
|Expenditure Items||Social Group-wise expenditure data for Rural India in 2011-12 (Percentage)|
|Scheduled Tribe (ST)||Scheduled Caste (SC)||Other Backward Caste (OBC)||Other Community||All|
|Average MPCE (Rupees)||1122||1252||1439||1719||1430|
|milk & milk products||5%||7%||8%||9%||8%|
|egg, fish & meat||6%||5%||4%||5%||5%|
|other food items||24%||24%||23%||21%||23%|
|pan, tobacco & intoxicants||5%||4%||3%||3%||3%|
|fuel and light||9%||9%||8%||7%||8%|
|clothing & bedding||6%||6%||6%||6%||6%|
|other cons. services||4%||4%||4%||4%||4%|
|other non-food items||10%||10%||12%||12%||12%|
The data on MPCE in 2011-12 given in table 3.10 indicates the following:
- Even after two decades (1991 to 2011) of economic reforms, household consumption has not increased substantially – average MPCE of Rupees 1430 in rural area is symbolic of the debilitating poverty in India. The average income earned by the rural households has always been disgraceful. The fact which all mainstream politicians, bureaucrats, businessmen and professionals continue to hide is that, the revenue share of the economic growth during 1991 to 2011 never ‘trickled down’ to the ‘poor’ and ‘lower middle’ classes who jointly made up 70% of the total population
- If we look from the social group point of view, the average MPCE of all backward castes (ST, SC, and OBC) were lagging behind the other castes and communities. This is because of lower income earned by the backward caste households compared to other rural households. It would be fair to state that more than 90% of the population from three categories of backward castes are in the ‘poor’ class, while less than 10% of backward caste people are in the ‘lower middle’ class
- On the other hand, if we look from the socio-economic category point of view, the average MPCE was lowest for the ‘casual labour’ category of profession, while highest was recorded for ‘regular wage/salary earner’. Incidentally, casual labour profession is most prevalent among the backward castes like ST, SC, and OBC
- For 2011-12, ‘Rural Poverty Line’ as defined by the government was MPCE of Rupees 816. Indian bureaucrats, since 1950s, have been habitually constructing imaginary “poverty line” which in reality would always be at least 70 – 80% underestimated. The World Bank sets the international poverty line at periodic intervals as the cost of living for food, clothing, and shelter around the world changes. In 2015, the ‘lower middle’ class poverty line was set to consumption of goods (and services) worth $3.2 (2011 PPP) per pay per capita. The Purchasing Power Parities of Rupees per US$ was 15.5 in 2011 – so, $3.2 (2011 PPP) means Rupees 50 per pay per capita. Hence, in 2011-12, poverty line per capita expenditure should have been Rupees 1500 instead of Rupees 816 – that would signify that, most of the people belonging to the ‘casual labour’ profession and most of the people from the ‘ST’ and ‘SC’ social groups have been living a wretched life below a realistic poverty line
The results of the Consumer Expenditure Survey conducted by the National Sample Survey Office during 2017-18 were suppressed by the BJP government. ACCORDING TO A LEAKED VERSION OF THE 2017-18 SURVEY, THE COUNTRY EXPERIENCED FIRST DROP IN MPCE SINCE 1972-73.
Analysis of Consumer expenditure and poverty
“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable”, was Adam Smith’s sincere sermon. But educated, elite, and aristocrat Indians (1% of population) who enthusiastically fill the roles of politicians, bureaucrats, and businessmen must be thinking otherwise, especially after 1991 economic liberalisation. Hence, an Indian commentator stated, “the worker is becoming impoverished absolutely, i.e. he is actually becoming poorer than before; he is compelled to live worse, to eat worse, to suffer hunger more, and to live in basements and attics.” Indian subcontinent witnessed such injustice and cruelty during the British imperialist era in the 19th century and in the first half of the 20th century. However, the exploitation by the local Zionist-Capitalist oligarchy (who controls the economy, business, three wings of state power, media, academia in India) after independence might have actually surpassed the feat ‘achieved’ by their Anglo masters hundred and fifty years back!
Case study (based on PLFS 2018 – 2019):
Let’s consider a 5-member family with 2 children and 1 old parent. The male member was self-employed in agriculture activities (from table 3.9, average income is found to be Rs.9,420 per month) for 10 months in a year AND the female member was working as casual labour in non-agricultural work (from table 3.9, average income is noted as Rs.4,650 per month) for 8 months in a year, AVERAGE MONTHLY INCOME WAS CALCULATED AS RUPEES 10,950.
Regular Expenditures: So, monthly per capita income of the family was Rupees 2,190, which was sufficient to cover spending of Rs.1,500 to stay above the real poverty line. For A 5-member family, minimum regular monthly expenditure comes out as Rs.7,500, resulting in a saving of Rs.3,450 per month. Thus, annual saving was Rs.41,400 for the family.
The food habit is unhealthy and nutrition deficiency is rampant in rural India. It is assumed that, in 2018-19, the food consumption basket in rural India remained same as it was in 2011-12:
- all cereals – 11.22 kg
- all pulses – 0.78 kg
- all edible oil – 0.67 kg
- common vegetables – 4.33 kg
- milk – 4.33 litre
- eggs – 1.94 no.
- fish – 0.27 kg
- chicken – 0.18 kg
The per capita per day energy consumption was 2,099 Kcal and the average protein intake per capita per day was only 56.5 grams.
Occasional Expenditures: Due to lack of balanced diet, safe drinking water, and polluted environment, malnutrition and disease become regular companion of rural Indians from childhood. In case of any untoward incident of a member falling ill or meeting an accident, the (annual) saving of Rs.41,000 gets consumed at once. If more than one member fall ill in a year, loan is the only recourse. Government controlled healthcare system is so ineffective that, people are forced to seek refuge in private-owned healthcare system.
When any one child in the family passes matriculate examination and wish to continue education, parents have to get money for such higher education. The only way is to seek loan (at a high interest) from wealthy relative or private lender or bank.
When a girl child reaches adulthood, marriage ceremony as per local custom and tradition needs to be arranged. Again the poor parents have to reach out for loan at quite high interest.
Expenditures for cultivation: Most of farmers who possess less than 2 hectares of land need credit for meeting the expenses for cultivation. Again there is no internal savings to fall back on. Loan remains the only viable option.
Asset Acquisition: How would a farming household acquire assets like tractor and other farming machinery which are necessary for agriculture and livestock farming? The only way is to go for loan from private lenders or bank.
As the above case study shows, every three out of five rural households in India has been heavily indebted (especially after 1991 economic liberalisation). People don’t have enough surplus earning from which they can repay the loan in regular instalments. Thus, suicide of the family head is one of the most common cause of death in rural regions across India. National Crime Records Bureau publish the ‘accidental deaths and suicides in India’ report which shows, between 1995 and 2016, 333,407 farmers have died by suicide in India – THAT MEANS EVERY DAY ABOUT 42 INDIAN FARMERS TOOK THEIR OWN LIVES. Activists offered a number of reasons for farmer suicides, such as anti-farmer laws, high debt burdens, poor government policies, corruption in subsidies, crop failure, personal issues and family problems – irrespective of the immediate reason that triggered the suicide, almost all such cases happened after the family head found himself in a tight corner on repayment of loans taken from money lenders and banks.
By no stretch of imagination, one could still think that, the living standards in rural India continues to improve, thus providing the peasants a happy and prosperous life. But, that is exactly what the ruling party, BJP wants to convey through Goebbelsian propaganda in the media!
4. IMPLICATIONS OF PROPOSED THREE FARM BILLS IN INDIAN ECONOMY
4.1 Introduction to ‘Three Farm Bills’
The three farm bills that the Lok Sabha (house of commons at centre) passed last year during the covid lockdown period are the ‘Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and Essential Commodities (Amendment) Bill. The key features, and the objections from farmers are being noted below:
The bill allows intra-state and inter-state trade in the agricultural produce of farmers, outside of market yards controlled by the market committees constituted under the APMC act of the respective States as well as other markets notified under the APMC act. Such trade may take place in places other than regulated trade areas, like farm-gates, warehouses, cold storages, processing factory etc.
To facilitate the direct and online sale of farm produces through the internet, an electronic trading and transaction platform may be set up. Such electronic platforms may be set up and operated by private companies, partnership companies or corporates as well as a farmer’s producer organisation or an agricultural cooperative.
The bill prohibits state governments from levying market tax (to operate APMC facilities), farmers won’t have to pay any cess for sale of their produce. Similarly, traders won’t have to pay levy or cess.
Main concern of farmers, and traders:
- Procurement by the central government agency at MSP will stop
- Mandi’s supported by state governments will not exist
- e-NAM electronic trading portal operated by the central government will cease to function
The bill supports ‘contract farming’ between a farmer and a buyer prior to any farming activity being carried out by the farmer. The farmers would be able to engage with primary traders (aggregators), wholesalers, food processing companies, retailers, exporters etc. even before the sowing of crops, with an assurance of price of produces. The price of additional quantity would be documented in the contract.
All disputes must first be referred to the conciliation Board for resolution. If, after thirty days, the dispute remains unresolved by the Board, the parties will approach the Sub-divisional Magistrate for a resolution.
Main concern of farmers, and traders:
- Under contract farming, the agreement will be prepared with heavy bias in favour of the corporates and private capital dictated by dominated by
- The marginal-small-medium farmers don’t have wherewithal to negotiate remunerative price with private capital
- After existing Mandi cease to function, and the farmers started contract farming with the corporate, the corporate will modify the contract to drive down the price of produces after 2-3 cropping seasons
- The marginal-small-medium farmers don’t have financial muscle to settle disputes in their favour while the corporates will gleefully manage the corrupt bureaucracy and judiciary to resolve any dispute in favour of capital
The Essential Commodities Act (1955) classified commodities like food products, and petroleum products as essential commodities – production, distribution, and commerce of such essential commodities may be regulated by the central government. The act provides authority to the central government to control the supply of certain food produces (including cereals, pulses, edible oils, potato, onion etc.) under specific circumstances like famine, war, extraordinary price rise etc. The newly introduced bill takes away cereals, pulses, edible oils, onion and potato from the list of essential commodities, and these commodities become deregulated.
Main concern of poor and lower middle class people:
- Essential food items will be stocked in huge quantities by the corporates to restrict ‘supply’ in the market; as a result retail price will shoot up enabling the corporates to earn windfall profits
- The traditional PDS that provides basic food-grains at cheap subsidized price to at least 800 million poor and middle class population will stop functioning
4.2 Final objectives of ‘Three Farm Bills’
Before introducing the three farm bills last year for legislation, for a long time there was intense (and subtle) campign in the media and academia to spread disinformation about existing APMC system. Needless to say, such sustained disinformation campaign was directly and indirectly funded by the corporates of India and the MNCs (predominantly from the agriculture and livestock farming and retail sectors). Most notable disinformation is:
- Private-owned businesses don’t exist currently in the agriculture value chain ‘from-farm-to-fork’, and the APMC mandi is the only (monopolistic) entity that controls the food item distribution
- The APMC system is the only barrier that separates farmers and ‘double income’ from farming occupation, and in absence of the APMC law, the reference price of agriculture produces will see new heights
It is worthwhile to note that, there was a simultaneous campaign in the media on the so-called benefits of ‘contract farming’ (introduced in India since the beginning of this century), and the ‘necessity’ of spreading the model across the country at a fast pace. The ‘painstaking research’ and ‘sympathetic advices’ on ‘contract farming’ would force any discerning reader to get confused about the Indian media – whether it has been hell-bent on enhancing the revenue of the farming community or it has been serving its’ capitalist masters to create public opinion on the benefits of open up of the farming sector!
As against such media and academia campaigns, truth is: the APMC act and system has created a wide ecosystem that includes private traders, wholesalers, logistics service providers, and food retailers apart from the government-owned facilities. As per the Ministry of Agriculture by July’2019, about 20 states had amended their APMC acts to allow private-owned mandis (markets), e-trading, and e-NAM, with all of them functioning under the state governments. There were/are serious flaws in the act and there exist vested interests, but those can be resolved and the APMC law can be amended to create a more genuine farmer-friendly system. The MSP concept could be further modified and implemented for procurement of substantial quantity of all 23 crops (coming under MSP regime) instead of significant quantity of 3 crops being procured currently. Instead of modifying the system for betterment, the central government run by the BJP decided to introduce the three farm bills that would, in the long run, corporatize the entire agriculture and allied sector. In the near future, for the Indian farmers who are already debt ridden, and denied of assured price mechanism, the three legislations if taken together, would only accentuate their existing crisis many times.
For pseudo-religious autocratic Zionist entities like RSS and BJP, anything that got a touch of Jewish and Anglo society/culture/economy becomes “global experience”. BJP and its ideological parent, RSS take cue from the Anglo-Jewish countries (like USA, UK, Australia, Israel) where corporatized agriculture and food markets are all about monopolies and duopolies or rarely, oligopolies. Indian monopoly capital as well as global MNCs are eyeing the food-grain and fruits-vegetables market. With near about 90 million tonnes of food-grain in warehouses, there is a massive stock to grab and with 1350 million population, there is a huge market to play around with! The covid-19 pandemic has caused massive disruption of industrial productivity and jobs which negatively impacted the capital investment plans. But agriculture and livestock farming sector suffered insignificantly because these are basic items for human survival. . Hence, both national and international capital is trying to move into the agriculture and livestock farming sector for a safe harbour, based on which much bigger profits would be earned in near future.
Within 5 years of implementation of three farm bills, the application of standard concepts and theories of business economics and business management in corporatized agriculture would necessitate the following:
- Backward and forward integration of the value-chain – the corporate will buy out 100s of hectares of land for agriculture and livestock farming as backward integration simultaneously with opening up of 1000s of food retail stores as forward integration. The entire activities like tilling, sowing, harvesting, aggregating, food processing, storage, distribution would be covered by corporates with astronomical sum of investment
- Economics of scale – in order to minimise the total cost per item being sold, corporates would like to increase the size of operations which will bring down the overhead costs significantly. With limited levers for controlling the direct cost of production, reduction of overhead costs are always sought after. Thus, 50 – 100 hectare agriculture farms, stadium-sized cold storages, 1000-truck fleets would become the new norm
- Pursuit of endless accumulation of surplus – The entire business operation of agriculture farming and livestock farming will be driven by ‘profit’ through the accumulation of surplus. The cost of operation will be minimised through minimum pay to farm-workers, rationalisation of supply chain for procurement of inputs, long-term contracts with supplier of inputs and service providers. The revenue would be maximised by opening up tens of thousands of retail outlets to displace the millions of mom and pop stores, fruit and vegetable hawkers through whom majority of grocery, agriculture produces are sold to end customers currently
- Most of the existing entities in the value-chain would be redundant except their assets like land, buildings, factories, farm machineries, transport vehicles etc. There would be a steady transfer of assets at an abnormally low price from the current owners to the new owners i.e. corporates – this would be the largest ‘accumulation of capital by dispossession’ the world witnessed till date
Earlier in this write-up, in the sub-section ‘2.2.3 Farm-gate up to consumption’, I presented a block diagram 2.3 to show a simplified version of how different entities of the value-chain are inter-related as it stands till 2020. Through the implementation of the ‘three farm bills’, the BJP government wants to drastically transform the entire value-chain so much so that, after 6 – 8 years, the entire value-chain of agriculture and livestock farm produces-to-consumption would ONLY consist of entities owned by the Indian and MNC corporates. The new value-chain would become something like the block diagram 4.1 as given below. The block diagram has three key features:
- The boxes built using thin lines represent the traditional and old economic actors, e.g. ‘farm owned by farmers’, ‘collection by private traders’, ‘food processing by corporates’, ‘storage-distribution by private traders’, ‘private small business of retailing’. The arrows built with thin lines denote the flow of goods between traditional actors
- The boxes built using thick lines represent relatively new economic actors (during last two decades), e.g. ‘farm owned by corporates’, ‘collection by corporates’, ‘storage-distribution by corporates’, ‘corporate business of supermarkets’. The arrows built with thick lines denote flow of goods in relation with the new economic actors
- The arrows with thick lines denote high volume flow of goods, and thin lines indicate minor volume
Nowhere in the future scheme of things, would have the peasants, farm labourers, and small traders of rural India had a place. In future, some 20% of them could be working in the corporate farms as ‘daily wage’ labourers and around 2% as supervisors, while the rest would swell the ranks of the unemployed! THE ROAD THAT LEADS THE FARMER COMMUNITIES FROM EXPLOITATION TOWARDS EXTERMINATION PASSES THROUGH ‘THREE FARM BILLS’!
4.3 Farmers movement against Three Farm Bills
In June 2017, ‘All India Kisan Sangharsh Coordination Committee’ (AIKSCC) was formed with coming together of about 140 farmers union across the country to fight against the central government policies that have been increasingly pushing the peasants and farm workers to extreme poverty.
‘Samyukt Kisan Morcha’ (SKM) has been formed in November 2020 specifically to coordinate the farmers’ peaceful movement against the three farm bills introduced by the Modi government last year. AIKSCC acts as the backbone of SKM while there are another 3 dozens of other farmers’ and farm workers’ unions actively involved in this movement against the three farm bills.
After 11th round of discussions between the government and the leaders of farmers’ movement on 22nd January 2021, the negotiations broke down. Government ministry won’t withdraw the three farm bills while the farmers’ leaders won’t accept those three farm bills. Farmer union leaders across the country are very confident that, in the long run the BJP government must withdraw these bills. They, in fact, are campaigning in every state of India and appealing to the common citizens to defeat BJP in every election – whether it is an election for state government or an election for a city council, the farmer leadership is vocal that, the political base of BJP should be crushed.
The mass participation in rural India, that the farmers’ movement achieved within past 4 months, across all regions of India, is unprecedented in the history of this subcontinent during past five centuries! Some intellectuals would like to point out that, the ongoing farmers’ agitation could be compared with the First War of Independence in 1857 or M K Gandhi’s movement in 1920. However, judging all historical facts and records, it can be stated that, the ongoing struggle is truly unmatched. The significant achievements of this movement are:
- Not only farmers and farm workers joined this movement, but the other entities of the agriculture produces value-chain like the primary traders (aggregators), APMC commission agents, wholesale traders (who are part of the agricultural produces value-chain) are also fully involved in this movement. Everyone understands that each of them stands to lose every asset they have, and each of them knows unity is the only strength they have
- Even if the ruling party at centre pulled out all the stops to derail the movement by creating division among the agitating people on the basis of religion-language-caste-race etc. the people not only ignored such tactics, they forcefully declared that such chasm don’t exist in rural India
- Leaders of four-five unions were working as ‘controlled opposition’ during initial months. BJP utilised these agents to foment trouble which would then be used by the central government to enforce legal restrictions on the agitators. However the core committee leaders identified such agents and expelled such unions from SKM-led movement
There are few glaring weaknesses:
- There is no ideological framework of this farmers’ movement. The unions which form the SKM and AIKSCC profess to follow a wide range of ideologies – ‘Gandhian’, ‘Social Democrat’, ‘National Capitalist’, ‘Socialist’, ‘Communist’, etc. In the long run it is untenable that union leaders who believe in national capitalist system of political economy could continue to work jointly with union leaders who believe in communist system of political economy. The farmers’ union leadership need to put efforts to forge a new ideological identity that must be categorically against political economy dominated by ‘large capital’ (say, a corporate entity with annual sales more than 5 billion Rupee, and a cooperative entity with per capita annual earning of shareholders more than 10 million Rupees would qualify as ‘large capital)
- The movement is mainly restricted to the rural regions of states in northern, western, and central India. The peasantry of couple of states in eastern India and southern India are yet to gear up – they have a serious limitation though, unlike the northern/central/western states, these peasants couldn’t cross the physical distance of more than 1200 – 1300 kilometres with their tractors to join the protest around Delhi
- Urban population lack enthusiasm to support the movement wholeheartedly. Urban people are yet to understand that, those 3 farm bills would change urban lifestyle much more than it would change the rural lifestyle – the expenditure on account of food consumption in urban areas stand to increase 2 – 3 times due to the corporatisation of agriculture and allied sector!
The biggest strength of this movement is that, the most prominent fifty leaders of the farmers’ and farmworkers’ unions belong to peasant families. Sincerity of purpose and honesty bind them together in their single-minded pursuit of establishing farmers’ right to lead a decent life! They are convinced that, instead of the shrewd skulduggery of three farm bills, what Indian farmers require is a system that enables higher productivity and better margin for the produces and their involvement in the value-chain through cooperatives and FPOs.
Asia houses 87% of global smallholding farms, China-India-Indonesia being the most affected ones. However, during past 6 decades, China and Indonesia invested much more than what India did, in creating and enhancing a robust (fixed) capital formation in agriculture and allied sector. China’s experience conclusively shows that there are ways to eliminate poverty even with predominance of marginal holdings and high concentration of workforce in agriculture. Following table provides data to compare India with China, Indonesia, and USA on various facets of agriculture and allied sector:
|Comparison of Agriculture and Economy in 2017||India*||China||Indonesia||USA|
|Population, total (million)||1316.0||1459.4||267.7||327.1|
|Rural population, total (million)||889.2||583.2||119.2||58.0|
|Per capita GDP (constant 2011 international $, PPP)||6,516||15,506||11,161||54,471|
|Agriculture and allied sector, value added (% GDP)||14.9%||8.2%||13.1%||0.9%|
|Gross Area harvested, crops (million hectare)||197.0||186.7||47.2||102.5|
|Cropping intensity ratio||1.37||1.4||0.9||0.6|
|Land area equipped for irrigation (million hectare)||70.4||73.68||6.7||26.9|
|Employment in agriculture (%)||42.3%||26.5%||30.8%||1.4%|
|Use of fertilizers – Nitrogen::P2O5::K2O (million ton)||16.9::6.8::2.8||29.7::12.4::10.7||2.9::0.8::2.1||11.6::4.1::4.7|
|Average dietary energy supply (kcal/person/day)||2,510||3,224||2,875||3,778|
|Gross value of food production (2004-06 billion International $)||273.4||616.9||67.9||248.6|
|Average size of farm holding (hectare)||1.08♦||0.96♦♦||—||178.5|
|Yield (ton per hectare) – paddy||2.576||6.912||5.180||8.414|
|Yield (ton per hectare) – wheat||3.368||5.483||—||3.117|
|Yield (ton per hectare) – maize||3.065||6.110||5.227||11.083|
|Yield (ton per hectare) – total pulses||0.853||2.724||0.613||—|
|Yield (ton per hectare) – groundnut||1.893||3.705||1.085||4.491|
|Yield (ton per hectare) – soybean||1.058||1.853||1.514||3.313|
|Yield (ton per hectare) – sugarcane||80.198||76.040||66.643||82.412|
|Yield (ton per hectare) – cotton||0.443||—||—||—|
|Net trade in Cereals & preparations** (billion USD)||6.6||(-) 12.5||(-) 3.5||12.6|
|Net trade in Fruit & vegetables (billion USD)||(-) 3.9||10.9||(-) 0.8||(-) 12.4|
|Net trade in Meat & preparations (billion USD)||4.3||(-) 12.5||(-) 0.5||9.0|
|Net trade in Dairy products (billion USD)||0.1||(-) 6.5||(-) 0.8||1.9|
* Data on India is sourced from publications of the government. Remaining data from ‘World Food and Agriculture Statistical Pocketbook 2019’ published by FAO
** Net trade represents the value of exports minus imports
♦ Data as per 2015-16 agriculture census in India
♦♦ Data as per China Agricultural Development Report 2016
Based on two most significant parameters namely ‘population’ and ‘gross area harvested’ (both of which are very similar in case of India and China), India can ONLY be compared with China. And, the conclusion – China is way ahead of India in terms of crop yield per hectare of farm holding. In 2017, Chinese farmers produced on average 2.6 times more paddy, 1.6 times more wheat, 3.2 times more pulses, 1.9 times more groundnut, and 1.7 times more soybean crop in one hectare of farmland compared to India. Among major crops, only sugarcane yield is slightly higher in India than in China. No wonder, per capita income of rural China was about twice compared to rural India in terms of PPP in 2017 – the disparity of rural income only worsened during past 3 years.
Is the government ignorant about the predicament in the agriculture & allied sector?
Apart from five year planning, annual budget exercise also keep the bureaucrats and politicians abreast of the overall situation in agriculture and allied sector. Additionally during past two decades, the government of India constituted expert committees which submitted detail status reports. Two such committees which wanted to maintain and extend the policies of ‘welfare state’ extolled in the constitution through enhanced participation of government in ensuring larger capital formation as well as all-round improvement of income and livelihood in agriculture and allied sector, were:
- B. B. Bhattacharya committee which submitted report in 2004
- M. S. Swaminathan committee which submitted its fifth and final report in October 2006
Instead of implementing the plan of action as detailed in those reports, successive ruling parties in the centre decided to take a right conservative turn towards establishment of corporate-state in India and hand-over all sectors of economy to the private capitalist families. Handing over the agriculture and allied sector to the private monopoly capital is actually, the culmination of 30-year old Liberalisation-Privatisation-Globalisation policy initiated by the liberal corporatist wing of Congress party in 1991, and since then overzealously promoted by the other national party, BJP.
Endgame for the farmers’ movement
There is a growing chorus among the so-called ‘intellectuals’ in India about how the farmers’ movement should end as soon as possible with some patchwork amendment in the ‘three Farm Bills’ along with the inclusion of MSP as a clause in one of the bills. But Farmer leaders need to guard their thought process against such nonsense. Those bills open up the farming sector for monopoly capital at both ends – production through contract farming and sale through deregulated market. Any mention of MSP in any of the bills will act only as a ‘guiding principle’ which won’t be protected by law. Such cosmetic modifications will be thrown into dustbin when local and comprador corporate interests enter in a big way in agriculture and allied sector as soon as the farmers’ movement is called off.
Already about 250 farmers died during the 4-month old agitation and demonstration. The farmers’ movement could have three possible ends with three different outcomes:
(a) The widely expected endgame is a series of actions by the government that would at least include:
- annulment of the ‘3 Farm Bills’
- enactment of ‘MSP’ bill taking into account the regional variations of cost of production
- enactment of ‘Farmer Credit’ bill that ensure adequate and timely availability of credit for farming
All of the above actions, if carried out by the current or future government, would mean that the government finally realised that the urbanisation (carried out in India till 2019) didn’t provide enough employment and basic livelihood to the people who migrated from rural areas, hence the rural regions must be transformed for a better standard of life for the rural population.
(b) The second possibility points out to a much larger scheme of things. In case, the government doesn’t opt for the easiest route of resolution as mentioned above (the first option), the leadership of farmers’ movement need to increase the scope and depth of the movement. The following actions would be expected from the leadership of the farmers’ movement:
- expand the movement horizontally – bring other professional communities (state-owned mining, state-owned industries, state-owned banking and insurance, state-owned services etc.) who are threatened due to BJP’s policy of handing over all business entities and institutions to the crony capitalists of India, under an enlarged banner
- expand the movement vertically – bring the backward castes-communities (ST, SC, OBC castes among all religions: Hindu, Muslim, Sikh) who are threatened due to BJP’s policy of withdrawal of special reservation in educational institutions and jobs in state-owned institutions, under the SKM banner
- participate in next Loksabha election in 2024 directly or indirectly in order to rout BJP in the election, and more importantly, establish control over the policies of mainstream and regional political parties
- force the new government in 2024 to formulate and implement new policies for creation of people’s cooperative in agriculture and allied sector, mining sector, industrial sector, banking and insurance sector, and services sector which would greatly contribute to the upliftment of the standard of living in rural and urban India positively impacting at least the following:
- food and nutrition,
- medicine and healthcare,
And, if SKM achieve their objectives in the 2024 Lok Sabha election, then it can also be stated that, the quest of turning India into a corporate-state based on monopoly capitalist political economy backed by a pseudo-religious autocratic party has finally been put to rest.
(c) The third and last option entails the leadership of the movement to accept the ‘three Farm Bills’ as a fait accompli and more importantly, as the final step of steering the country towards a corporate-state. The result of such acceptance would be withering away of the final resistance to the creation of the corporate-state in India, which would permit the super-wealthy corporate families (of India, USA, west Europe) and their politician-bureaucrat lackeys in India to continue their exploitation at a greater rate than ever. Top 10% of population consisting of ‘upper middle’ and ‘opulent’ classes will reap the benefits of purportedly “good karma of past life” and balance 90% of population will be placed on the altar as sacrificial lamb due to allegedly “bad karma of past life”!
If the third option turns out to be the final outcome of the farmers’ movement, then it would be just a matter of time before the constitution of India gets amended to finally drop the semblance of a democratic secular welfare state.
1. India National Accounts Statistics, CSO, 2019
2. Indian National Accounts Manual on Estimation of SDP
3. India KLEMS database 2019, published in collaboration with RBI
4. Indian Economy-Handbook of Statistics, RBI, 2020
5. Economic Survey 2019-20, Ministry of Finance
6. Agricultural Statistics at a Glance, 2019
7. Horticulture Statistics at a Glance, 2018
8. Agricultural census report, 2015-16
9. Rabi crops pricing policy, 2018-19
10. Kharif crops pricing policy, 2018-19
11. NABARD_Rural Financial survey, 2016
12. NSS round 68_Household Consumer Expenditure, 2011-12
13. NSS round 70_Agricultural Households survey, 2013
14. NSO Periodic Labour Force Survey, 2018 – 2019
15. World Food and Agriculture Statistical Pocketbook 2019 published by FAO
- All India Kisan Sangharsh Coordination Committee – AIKSCC
- Agricultural Produce Market Committee – APMC
- Compound Annual Growth Rate – CAGR
- Commission for Agricultural Costs and Prices – CACP
- Directorate of Economics & Statistics – DES
- Farmer Producer Organisations – FPO
- Gross Domestic Product – GDP
- Gross Value Added – GVA
- Gross Capital Formation – GCF
- Labour Force Participation Rate – LFPR
- Minimum Support Price – MSP
- Marketed Surplus Ratio – MSR
- Monthly Per Capita Consumer Expenditure – MPCE
- Net Domestic Product – NDP
- National Accounts Statistics – NAS
- National Sample Survey Office – NSSO
- National Agriculture Market – eNAM
- Other Backward Caste – OBC
- Primary Rural Agri-Market – PRAM
- Periodic Labour Force Survey – PLFS
- Private Final Consumption Expenditure – PFCE
- Public Distribution System – PDS
- Reserve Bank of India – RBI
- Rural Periodical Market – RPM
- Regulated Market Committees – RMC
- State Advised Price – SAP
- Samyukt Kisan Morcha – SKM
- Scheduled Caste – SC
- Scheduled Tribe – ST
- Wholesale Price Index – WPI
- Worker Population Ratio – WPR
By profession, I’m an Engineer and Consultant, but my first love was and is History and Political Science. In retired life, I’m pursuing higher study in Economics.
I’m one of the few decade-old members of The Saker blog-site. Hope that this website will continue to focus on truth and justice in public life and will support the struggle of common people across the world.
A nature-lover since childhood, I’m an Indian by nationality with firm belief in humanity.