Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

In agri-reforms, go back to the drawing board

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : Farmers agitation and the fuss

The intended beneficiaries often understand the realities of the systems better; policymakers need to build trust.

Practice Question: The farmers protest against the new farm laws rises the serious concerns about the policymaking and involvement of citizen in the process by experts. What can be done to improve the trust of the public and how the challenge of agricultural income be solved?

Reassessment is needed

  • The purpose of agriculture reforms is to increase farmers’ incomes. Farmers want the laws repealed.
  • The Supreme Court of India has called for discussions between the government and farmers around the country.
  • It is time to go back to the drawing board about the purpose and the process of agriculture reforms.
  • According to economists, fewer people must work on farms for farm productivity and incomes to be improved. Which begs the question of how the millions displaced from farms will earn incomes.
  • Indian industry is not growing much. There too, according to economists, humans should be replaced by technology for improving productivity.

Flipside of productivity

  • Landholdings are too small for mechanization to improve farm productivity. Their solution is to ‘scale-up’ farms.
  • Mechanization requires standardization of work, hence mechanized farming on scale requires monocropping.
  • Large-scale specialization upsets the ecological balance. Reduced diversity of flora enables pests to spread more easily; soil quality is reduced; water resources get depleted.
  • Solutions to these new problems require more industrial inputs, with more costs for farmers.
  • The harmful side-effects of this approach to improve agriculture productivity are very visible in Punjab nowhere farm incomes have grown at the cost of water resources.

Nature’s self-adaptive system

  • The ecological imbalance out of monocropping made the trees more vulnerable to pests.
  • Nature is a complex ‘self-adaptive’ system. It knows how to take care of itself.
  • When Man tries to overpower Nature with his science and industry, without understanding how Nature functions, he harms Nature — and ultimately himself.
  • Challenges of environmental degradation and increasing inequalities require that the economic calculus shifts from ‘economies of scale with standardization’ to ‘economies of scope for sustainability’.
  • This will make large-scale mechanization more difficult. It will require the use of more ‘flexible’ human labour.
  • In the long run, not only will this be good for the ecology, but it will also increase employment and incomes for people in the lower half of the economic pyramid.

Market access

  • Farm incomes can increase with access to wider markets for farm produce, which is an objective of the agricultural reforms.
  • Indian farmers fear that they will not have adequate pricing power when pushed into large supply systems and less regulated markets.
  • Connections into global supply chains can increase volumes of sales which always favour the larger players in the supply chains who have easier access to capital.
  • Studies show that farmers in developed countries formed collectives which enable their voice to be heard by politicians and they could set the rules of global trade.

Strengthen cooperatives

  • Institutions for cooperative ownership and collective bargaining must be strengthened to give power to small farmers before opening markets to large corporations.
  • A very good example is the Indian dairy sector. It’s ‘per person productivity is much lower than in New Zealand and Australian dairy producers’.
  • Still, it provides millions of tiny producers with reasonable incomes which large-scale industrial dairy producers do not.
  • Moreover, with its cooperative aggregation, the Indian dairy sector has also acquired political clout.
  • It has compelled the Indian government not to join the Regional Comprehensive Economic Partnership to connect the Indian economy with larger supply chains.

Low agriculture income

  • The problem of low incomes in India’s agriculture sector is a complex systems problem which cannot be solved by agriculture experts alone.
  • Experts from many disciplines must collaborate to find systemic solutions.
  • The intended beneficiaries of the new policies must be included in the designing of the new policies right at the beginning as they understand the realities of systems better than experts.
  • When policymakers say ‘the people don’t get it’ after the policy is announced and the intended beneficiaries protest, it is an indication that the experts didn’t get it.

The reforms of the 1990s

  • The stand-off in agriculture reforms has caused a flurry of discussions about democracy, consultation, and processes for economic reforms.
  • The immediate beneficiaries of the 1991 reforms were all Indian consumers, rich and poor, who would benefit from access to better quality products from around the world.
  • The principal opponents of the reforms were a few large industrialists whose products citizens were not satisfied with.
  • Governments have more power over a few industrialists than they have over the masses.
  • The 1991 reforms changed industrial licensing and trade policies — both subjects of the Union government.
  • ‘Factor market’ reforms, inland, agriculture, and labour regulations, which are necessary to realize the full benefits of the 1991 reforms are State subjects.
  • They affect the lives of people on the ground, and differently, around the country. Therefore, the central government, no matter how strong it is, must not force these reforms onto the States.

Conclusion:

Silo experts cannot help

  • India’s policymakers must improve their expertise in solving complex, multi-disciplinary problems.
  • They must apply the discipline of systems thinking, and not rely on siloed domain experts.
  • Citizens around the country must be involved in the policymaking throughout the evolution of policies.
  • The policies of the government should create public value and it satisfies the desire of citizens for a well-ordered society, in which fair, efficient, and accountable public institutions exist.
  • Trust is essential for a well-governed society. The lesson for India’s leaders is- good processes for making public policies build trust between citizens and their governments.
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