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BW Businessworld

In A Continental Country Like India, One Size Fits All Farm Laws Will Not work--Y.K Alagh

Agriculture in India has traditionally been the playground of politics. What was required-- a few clean policies that empower Indian farmers, open the scope and take the fruits of Indian farmer to the global market. Instead, it became the de-facto sector for MSP- subsidy-only-policy that harmed the sector. And the alarming fact that India’s wastage of major agricultural produce was about INR 92,651 crore in 2016, called for reforms and measures. What is then three Bills offer? A reform, finally, is opposed by a section of farmers in India. Where is agri-technology and last-mile chain of cold storage? BW Businessworld's Manish Kumar Jha raises such issues with Y. K Alagh, a former union minster who laid down fundamentals in setting policies as the chairman of Agricultural Prices Commission.

Photo Credit :

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Three bills that government maintains, are resolving longstanding agrarian crisis, offering farmers more choice in what they grow and who they sell to, and helping attract much-needed private investment into the sector. But critics say that the government flouted parliamentary procedure by passing the bills hurriedly, with minimal discussion, in the middle of the COVID-19 pandemic.  According to you, what is not debated then? What is missing?

The Supreme Court had taken a practical stand on the Farm Trade Laws: implement them after Consultation and with a well-defined Framework being spelt out. They had also appointed expert amicus curae. These were not acceptable to the agitating farmer organizations, in view of the stated views the experts had. It is possible that experts can reexamine their position as the Court said; but not highly probable, with persons of academic integrity. 

So going back to direct negotiations led to the stand the government has taken of holding the laws in abeyance for a year or a year and a half. This will provide the time for discussion of the details of agricultural reform, which was needed since the laws were passed in a hurry on a single day. 

To begin with it has to be understood that in a continental country, one size fits all will not work 


Very few understood that why only the group of selected farmers from rich states like Punjab and Haryana opposed the farm bill. Was it not aimed to weed out the often talked put “middlemen” out of the ecosystem? Could you simplify as what it meant to you?

The main thrust of the trade reform was possible only after the Covid transport restraints were over. However in Punjab, Haryana and Western UP, the MSP based agriculture has a logic. 

It was surprising to read a well-known agricultural economist, say that the region must get out of the rice/wheat rotation. Not all regions must diversify. If you have great alluvial soil, good irrigation and almost a century long tradition of the application of science to agriculture, then there is nothing that says don’t grow the highest yielding paddy and wheat in the world. This is the wrong advice on diversification. It's like telling Gujarat and Maharashtra to get out of Dairy or Cotton. In South Punjab, with less irrigation and parts of Harayana not covered by the Indira gandhi Canal, perhaps some diversification to pulses, cotton etc could work but the solid specialization in this region remains. My teacher GS Bhalla and Gurmail Singh in the successor study he did to the original one with me, show this.


A Govt. data estimates, in 2016, the harvest and post-harvest loss of India’s major agricultural produce was around at INR 92,651 crore ($13 billion) which is almost a size of agri budget. Bills were aimed to addressed that missing supply chain and make agri- business more tradable. How do you look at such critical anomalies in the sector?

The argument that private trade is there anyways is misleading. To know that “Arhtias” (middlemen) are important in Indian agricultural markets is sensible. To know that they are a part of the supply chain in the North West is also so, but here they are not like the middlemen elsewhere. They function simply as agents of the procurement agencies.This was done by a previous Manmohan Singh Government to reduce overhead costs of procurement. 

A lot of the theorization on private trade in the North West takes place by babus in Krishi Bhawan. The middleman in the North West, wouldn’t dare to take on the FCI and “mai baap Sarkar”.


Those who pushed the Farm Laws on the last day of Parliament are from other regions, where procurement doesn’t work and the spread of markets must be encouraged in normal times. MSPs there are like Ghost Money: something which worked at some other time or place, but to ignore it in the North West is just not kosher. 

To say that e-markets, forwards and farmer managed companies, (the last as designed by a committee I chaired at the beginning of this century) are all wonderful is to be with the angel's.  To think they are the dominant mode of rural organisations even today two decades later is just childish.


Agriculture is the one good sector in this hellish year. So we need to strengthen it, not feed off on its glory, even outside the North West. 

We have the largest spread of Agricultural markets in the World according to Spatial maps. But they are not APMCs. With thin markets outside grains and without first stage processing and other infrastructure the farmer knows he is at the mercy of the trader and comes out on the Road when that is not understood. 

Lalji Desai started this when good Agricultural land was to be given to Suzuki in the Chuvhal(land of 44 villages in central gujarat,) and brought a thousand tractors with the ladies and children on the road. Sanat Mehta and me joined them and spoke to them in Gandhinagar. But refused to join the negotiations,  which must be direct. It's happening again.

The trader is the traditional exploiter and the animus between the “Lala” and the “Jat” is the stuff of folklore. No wonder s/he is out on the road in the Punjab. 

Policy can do a lot, but some caution in a bad non-agricultural year won’t hurt anybody. In a normal year one would have suggested that if the market is there, the State should use its leverage, but in this year the State will fight stagnation after the pandemic and will not have the time to intervene with that selective touch. No wonder the Finance Commission Chief has lectured Mihir Sharma without naming him, to the effect that lives are important and Fiscal Responsibility and Budget Management Act (FRBM) will wait. It will be good to make a few more FMC’s, but even being their grand-daddy, I wouldn't think they will become the dominant form of rural organisation this year.


What is the merit of a legal guarantee for the MSP that farmers demand? 

That relic of the past which sits on our shoulders and won’t leave us. 

MSP, now a slogan, was in its glory when the Marxist Dada economist Ashok Mitra was APC (later CACP) Chief and then the late Dharam Narain, in the days of compulsory procurement and zonal restrictions. Each crop had its own report. I took charge from them and said, prices play an allocation role, so declared there will only be two reports, one for Kharif and another one for Rabi, apart from one for sugarcane (an annual crop).

The 1982 Rabi report, I wrote, gave the role of relative prices and in that context MSPs as an intervention mechanism when markets failed, outside the compulsory procurement area. This was heresy then and the Agriculture Secretary told me so! 

Paddy procurement rises by 24 98 pc compared to last year

Ahem, but my Commission is autonomous I said and to his chagrin he found out that was indeed true. The idea was to be gradually developed by my successors, my teacher GS Bhalla, DS Tyagi, GK Chaddha and Abhijit Sen. The concept of transport costs and managerial cost then became important and a conceptual report I was commissioned to write was classified. The last time I argued for a 'fair' MSP to States like Rajasthan and Gujarat was as an Advisor to the then Finance Minister, Jaswant Singh together with Shri Ram Niwas Mirdha, former Deputy speaker of the Rajasthan Assembly and a champion of dry land Agriculture. Sharad Pawar, a kisan at heart, summarised my conceptual Report and released it in a Parliament question, knowing full well that compulsory procurement MSPs were a ghost concept outside the North West. Today, when the farmer agitates on MSP’s, he/she says, don’t be unfair to me. No amount of diversions by climbing up Lal Kila tops will help.


Let’s talks about the solutions. Major challenge is how to improve productivity and efficiency with technology as vital missing link for Indian farmers? 

The Essential Commodities Act should be ditched together with the medical waste of the Virus! And next year, we will use all these lovely laws we have always wanted and start the slow walk to the land of perennial sunshine. 

Good laws are good, because progress starts with them. Those who disagree should make their case. If they do it without sloganeering, we may actually progress. But not in the North West. Not all laws are good everywhere. 

And first let's wait out the COVID with its curfews and lock downs. From Mahesana to Navssri and Nashik to Mumbai, the milk train must run again. The modified version with a road map will be on the agenda. Not everywhere, but most places outside the lands of the five rivers. The Kisan may then be with us and many times she is a lady, who not only serves the langar, but also does Agriculture.