Agriculture

The New Farm Laws May Facilitate a Shift in India's Agricultural Export Policy

Increasing agricultural exports from $40 to $100 billion is deemed a ‘national imperative’ to double farmers’ incomes by 2022-23. But it is part of a global agri-business agenda.

The July 2020 report of the high-level expert group (HLEG) on agricultural exports, appointed in 2019, by the 15th Finance Commission, confirms the fulcrum role of the three farm laws to facilitate a shift in India’s agricultural export policy, from the previous framework of meeting domestic demands and exporting surplus to targeted exports prioritising the demands of overseas markets.

The mechanism elaborated in the report details the massive structural changes envisioned for farming, use of resources, land control, public procurement and food. Increasing agricultural exports from $40 to $100 billion is deemed a ‘national imperative’ to double farmers’ incomes by 2022-23. This grand plan is by all accounts not merely a ‘national plan’, but intrinsically part of a larger global agri-business agenda. 

The devastation set to be unleashed impacts every food consumer and puts at risk the already precarious food security rights of 90% of India’s citizens, particularly landless, small and marginal farmers and those working in the informal sector. Having assumed that our food production is now ‘surplus’, in relation to domestic demand, the Indian government is gearing up to facilitate ‘Made in India’ corporate profit, to feed an additional two billion people worldwide by 2050.

The HLEG, populated by agribusiness corporate representatives, and their government cohorts, cites global experience, in support of its blueprint for a ‘single crop value chain cluster‘, competitive within a state. They lobby for a network of producers, farmer producer organisations (FPOs), agribusinesses, financiers, corporates, commodity boards, state and central governments, and country-level interventions in destination markets, to support a cluster chain. They seek to build vertical relationships, amongst input suppliers, processors, exporters and buyers and horizontal relationships between producers and facilitating organisations providing technology, training and research.

What it outlines is how stakeholders have to join together across this value chain, to reduce the costs of doing business across all steps of production, processing, logistics and markets to benefit agribusiness (and farmers as an afterthought). The role of FPOs is clarified too: it is to link the small and marginal farmers to serve agribusiness via bulk procurement of inputs, aggregation of the produce, value addition and markets. These value chain clusters must be anchored by private sector players and could spread across multiple states for reasons of ‘economies of scales’, facilitated by government commodity boards for ‘end-to-end’ execution in the specific crop.

A section of the report termed “Farmers’ concerns” flags employing MGNREGA workers for agricultural operations to ensure labour availability. So the corporates actually propose placing MGNREGA public funds at their disposal as a wage-saving mechanism to balloon their profits.

To cement this export plan, the report affirms how the farm law ordinances of 2020, together with funds allocated by the government for post-harvest infrastructure, are core to facilitating direct contact between farmers and the private sector. The central government must play a role in pursuing policies that support “ease of doing business, fast resolution of commercial disputes and any impediments to investments, export incentives, common infrastructure and required trade negotiations with destination markets “.

Kashmiri farmers harvest paddy crops on the outskirts of Srinagar September 14, 2015. Credit: Reuters/Danish Ismail

Kashmiri farmers harvest paddy crops on the outskirts of Srinagar September 14, 2015. Credit: Reuters/Danish Ismail

They also clearly state the need to minimise distortions in the markets to realise the competitiveness of the crops and illustrate this by emphasising “a pressing need for the state to restructure input subsidies as ‘direct benefit transfers’ to farmers, and restructure the government procurement at minimum support price (MSP) into a price deficiency payment scheme’.

Seven crop-value export ‘must-win’ chains, including rice, shrimps, buffaloes, spices, vegetables, fruits and mangoes, along with vegetable oils and wood as import substitution crops, are flagged. Medicinal and aromatic plants and organic produce are marked as the other big money spinners.

Also read: ‘Happened in US 40 Years Ago’: 87 Us Farmers’ Unions Speak Out for Indian Farmers’ Protest

The crops that spill the beans: rice, palm oil and wood 

“Local procurement and high rice MSP are the main blocks for export markets, as the aggressive FCI’s (Food Corporation of India) procurement beyond the buffer stock norms for food security, is leading to diminishing surplus stock meant for export. This distorts the markets thereby making Indian prices uncompetitive for exports,” states the report. The primary recommendation is to alter FCI’s procurement, which beyond buffer stock requirements, should be structured on a price-differential scheme, wherein the difference between MSP and open market price, gets credited into farmers accounts as a direct benefit transfer.

This, they argue, will increase exportable surplus and the excess over buffer stock should be sold for export in the open markets at market prices. It is argued that to enhance the cost competitiveness of the exports, an interest subvention of 3-5%, which currently only exists for MSMEs (micro, small and medium enterprises), should be extended to large export houses, along with additional subsidies for brand building.

The proposed plan reinforces the irrevocably changed position of the current regime as compared to all previous governments’ agriculture and food security policies.

To quote a recent report, “The consistent position that successive governments had taken, wherein agricultural policies were focused on promoting food security and rural livelihood, has served India well in terms of protecting the vulnerabilities in this sector. In international trade negotiations, both in the WTO and in the bilateral FTAs, India has been able to argue convincingly that given the preponderance of small and marginal farm holdings, constituting over 86% of total farm holdings, agricultural policies pursued by the government were primarily oriented towards protecting food security and rural livelihood. This allowed the government not only to provide effective tariff protection to small producers from facing unfair competition from global agri-business, but it was also able to provide adequate levels of subsidies to make farming a viable occupation.”

However, today Indian and global agri-business have a shared interest, which aligns with the government’s interest too. Hence, for the first time we have an official Indian government report asserting that India must not procure rice over and above its buffer stock norms, and make the same available for exports.

Which returns us to the original point of adequacy of the ‘buffer stock’ to meet public distribution system (PDS) targets. Food rights activists and academics have consistently argued that the buffer stock, which is misleadingly termed as ‘surplus’, should be distributed through a universal PDS. They reiterate the criticality of universalising the PDS, more so in the current COVID context, which has witnessed massive increase in destroyed livelihoods, unemployment, and hunger.

Also read: How Could the New Farm Laws Bring Agricultural Income Under the Tax Net?

Palm oil plantations for oil self-sufficiency a cover for shameless land grab

“Move rice away from Punjab, with critically low water tables, to Chhattisgarh, Bihar and Jharkhand which are more agro-climatically suited to rice,” states the report. Ironically, the experts’ recommendation to aggressively expand palm oil plantations to make India self-sufficient in edible oil, whilst acknowledging in the same breath that palm oil  is a ‘water guzzling crop requiring 300 litres/tree/day,’ promises to be an ecological disaster, in water stressed India.

At the outset, it is criminal how successive governments allowed India to move from being oil self-sufficient in the early 1990s, to import 60% of our oil, of which 50% is palm oil in 2020. Moreover, to shift farmers to growing palm oil requires governments to pay MSP to farmers and a subsidy for the first six years until the palm starts fruiting. Hence, to avoid direct support to farmers, they recommend palm oil to be declared a plantation crop from its current horticulture crop status, so as to attract private investment.

The report recommends that the government must craft focused strategies to increase area under palm oil cultivation by converting nearly two million ‘wastelands’ and irrigated lands from other crops, particularly paddy and sugarcane in agro-climatically suitable zones, and encourage industry to invest in privately owned and managed plantations. Land lease norms should be relaxed allowing lease for 30 years, ostensibly so that the private players can buy land from the farmers. This, it is argued, would bring economies of scale along with rapid increase in cultivation, and thereby reduce the import bill of palm oil from $15.3 billion to $10.9 billion in 2024-25.

In short, this will result in massive corporate land grab via land-lease arrangements, (hence the urgency of digitalising land records across the country, a prerequisite noted in the report too), as also the capture of lands which are far from ‘waste’, as it  supports vital community livelihoods from grazing animals, to collecting uncultivated foods and firewood.

Also read: Many MPs Are ‘Agriculturalists’, but Why the Disconnect Between Parliament and Farmers?

Violation of Adivasi rights

The third mechanism of resource grab is via blatant grab of forest lands that predominantly lie in the Schedule V and VI territories of Adivasi communities, garbed in the argument of how India can reduce its wood imports from $9.5  to $6.5 billion and increase forest cover by 1.5% in 2025, via enhancing forest plantations.

The forest opportunities identified for timber plantations include (i) improving productivity of Forest Development Corporation land which should be leased out to industry (0.5 million ha), under industry linked concessions and wood plantation models and (ii) degraded forests (3.0 million ha) under collaborative industry lease models, on the lines of South East Asian countries such as Malaysia.

The states identified for this intervention include those with the largest Adivasi populations in Schedule V areas, such as Madhya Pradesh, Maharashtra, Odisha, Chhattisgarh, Andhra Pradesh and Telangana. To facilitate all of this, they recommend that the Ministry of Environment, Forest and Climate Change (MoEF) should issue guidelines for private sector involvement under the Forest Conservation Act, 1980 and plantation funds to be sourced from Compensatory Afforestation Funds (CAMPA) and the Green India Mission.

This reveals their intent to profit not only from timber but also via the exploitative global carbon trade markets. They appear supremely confident that contract farming for industry linked agro-forestry plantations, with land-title owners, will nail the deal. They conveniently bypass the constitutional pre-requisite of gram sabha consent for any development, market or forest interventions in Schedule V areas.

Agri-business and government have unambiguously laid out the manner in which Adivasi constitutional protections will be additionally up-ended, to serve corporate pockets.

Vietnam’s ‘miracle’ transformation from a subsistence rice producing nation feeding its people, to being one of the top three rice exporting countries of the world today, is the ‘shining’ example highlighted by the HLEG, to build food-security and incomes. However, this supposed ‘success-story’, as some of us at the Food Sovereignty Alliance discovered, is ruining small farmer livelihoods in South-East Asia.

Small farmers in Indonesia, sell their organic homegrown nutritious rice and purchase cheaper priced chemically cultivated Vietnamese rice from the market to eat. Indonesian farmers frequently receive Vietnamese rice as part of their country’s food security programme! Cheap rice from Vietnam, is making it non-viable for small farmers in Cambodia to grow their own rice, a vital source of food and livelihood security, and Vietnamese small peasants are indebted to global agribusiness companies, who control the entire value-chain ‘end to end’.

We are headed for a similar disaster, under this new export-driven model, for which the three new  farm laws are key. The farmers movement against the farm laws, is therefore an assertion to protect our food security, sovereignty and our fundamental right to life.

Sagari R. Ramdas and Charanya R. work at Food Sovereignty Alliance, India.