Why India Keeps Protesting Against Agriculture Reforms

Since late November, India has seen large protests in the capital New Delhi as well as nationwide strikes. The controversy is over reforms in farming policies, which aim to significantly liberalize the agricultural sector. Decades of restrictive and monopolistic legislation had created a cartelized industry with entrenched interests, where reforms, modernization, or progress are nigh impossible. This has resulted in an unsustainable situation where the farming sector is extremely antiquated. Amid such circumstances, changes will be difficult but unavoidable.

At the very least, thousands of people have been protesting in New Delhi against the reforms introduced in September 2020. On Tuesday, December 8th, a general strike was held, in which reportedly upwards of 250 million people participated, making it the largest recorded collective action in world history. Clashes with police have occurred, where highways were blocked and protesters coming from other Indian states were prevented from entering the capital on multiple occasions. CNN reports that tear gas and water cannons were used.

India’s Agricultural Sector and Legislation

India has an enormous population working in the farming and agricultural sector. With 43% of the workforce employed in agriculture, India sits significantly above the world average of 26.5% (which is already significantly pushed up by many countries in Sub-Saharan Africa). By comparison, in developed countries, the share of the workforce employed in agriculture is typically comfortably below 5%. What is more, in India, 58% of the population of 1.3 billion rely on agriculture as their primary source of livelihood.

Nevertheless, the agricultural sector only represents 15% of India’s GDP. This means that per-person productivity of farming in India is, in monetary terms, more than four times lower than an average of the remaining industries.

Since the ‘green revolution’ in the 1960s, India’s farming industry has been subject to extensive restrictions. In most states, farmers cannot sell their produce directly to retailers or customers. Instead, all trade must take place within designated market yards set up and operated by the Agricultural Produce Market Committee (APMC). The APMC enjoys a monopoly position of a being a mandatory middleman, which it can use for its own benefit at the expense of the farmers/sellers. According to Himanshu, most farmers would agree that the system is ‘inefficient, opaque, politicized and often controlled by cartels.’

Under former long-standing legislation, farmers were not permitted to trade their produce using electronic devices or the internet. The purchase of agricultural land beyond the scope of family businesses was also illegal, preventing modern agricultural methods from being put into practice, as they often only make sense when applied on a larger scale. Meanwhile, the average plot of farmland in India is smaller than 3 acres. Producers and processors of foods were also exposed to stock limits. For many basic crops and products, these limits were established to ‘prevent hoarding’ of vital resources. 

For a long time, the Indian government has also set guaranteed minimum prices for which selected products would be bought, although this supposedly universal program was in practice seldom available and accessible to farmers. According to the national president of the Swaraj India political party Yogendra Yadav, 80% of farmers never receive the promised payments.

The Reforms of 2020

Amid the circumstances described above, reforms were introduced to overhaul this legal environment. Indian Prime Minister Narendra Modi and his government promised “freedom to the farmers from the ‘villainous and exploitative’ APMC”. Modi has said that the “reforms have not only broken the shackles of farmers but have also given new rights and opportunities to them.”

The change comes in the form of three laws introduced or changed:

The Farmer’s Product Trade and Commerce (Promotion and Facilitation) Act, 2020 permits intra-state and inter-state trade of farmers’ produce outside of the confines of the APMC market yards. It also legalizes the electronic trading of farmers’ produce.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 provides for contract farming, allowing the buying of produce in advance. For these contracts, it sets up a 3-level dispute settlement mechanism.

Lastly, the Essential Commodities (Amendment) Act, 2020 introduces changes to the stock limits legislation. Now, stock limits will only be imposed in cases such as war, famine, ‘extraordinary price rises’, or natural calamities, rather than present permanently and without a stated reason. Stock limits for processors and supply chains are also being removed.

It is hoped that these reforms will alleviate the pressures and obstacles created by the previous monopoly trade system as well as allow for more flexibility in the industry when it comes to innovation and modernization.

Serious criticisms of the reforms are raised, however. Many are unhappy with the central government mandating far-reaching changes from the top-level central government when many governments of individual states have already introduced reforms to their systems. Regulation of agricultural markets is also supposedly a ‘state subject’, where the central government should not be able to intervene. The lack of consultation with farmers or farmer representatives regarding these reforms is also being decried.

Dubious Protests

Alongside these legitimate criticisms, the protests are organized and promoted globally on other grounds as well. It has been widely reported that it is primarily farmers and producers opposing the reforms amid fears that their introduction will result in the opposite of what is promised. Rather than raising the earnings and living standards of the farmers who now make an average of $140 per month, the protesters claim the legal changes will make the situation worse.

The reforms do end the monopoly of the APMC. However, they don’t abolish the APMC altogether. They offer farmers more choice in selling their produce. If they prefer the APMC over independent markets or venues, they will still have access to it. It is alleged that the existence of independent markets will adversely affect the AMPC, where the position of the farmers will deteriorate. The opposite could be true as well, however. More options available to the farmers could put the AMPC under pressure instead, forcing it to improve and tackle the internal issues such as cartelization. 

Under the new legislation, guaranteed minimum prices are preserved and will remain in place. But some protesters are worried that ending the APMC monopoly will eventually lead to their abolishing as well. However, not only have such policies been very poorly enforced (as mentioned above), they might very well be counter-productive. It is further reported that procurement based on such guaranteed minimum pricing did not benefit the majority of farmers in any case, but rather only a few in selected states. Even if the concerns were legitimate and the present reforms would lead to the end of these policies as well, the effect and fallout would be very limited.

The primary opposition to the changes seems to be coming from India’s agriculture unions and union representatives. These are also the main organizers of the current protests. It is possible that rather than embodying the interests of the farmers, these organizations represent the middlemen entrenched in the AMPC structure who benefit at the expense of the farmers instead.

According to CNN, the All India Kisan Sangharsh Committee is the top organizer of the protests in New Delhi. This Committee is an umbrella organization unifying some 250 ‘farmers’ organizations’. Its major constituents include: multiple regional branches of All India Kisan Sabha - a peasant front of the Communist Party of India; the APVVU - part of the socialist National Alliance of People’s Movements; or the All India Khet Majdoor Sangathan - a peasant and agrarian labour movement, politically aligned with the Socialist Unity Centre of India (Communist).

With such a background, it seems that rather than coming from a place of sincere interest for the wellbeing of Indian farmers, the protests are primarily ideologically motivated. Considering the unfortunate worldwide history of communist policies and their impact on peasants and farmers, adopting the positions promoted by people of a similar stripe could hardly be considered advisable.

The Indian government can undoubtedly satisfy legitimate concerns of the public and the farmers by adopting policies to alleviate the negative impacts of fast-changing legislation on those adversely affected, even when such changes are beneficial as a whole. Backing down from reforming an extraordinarily antiquated and inadequate system of laws governing an entire industry is not an option. If the situation is unsustainable now, it can only become outright calamitous in the future.