The next presentation was by this columnist who spoke on the ‘political economy of agriculture ‘. The six sections into which this presentation was divided were : ‘agriculture and agribusiness’, the ‘untapped potential’, ‘global challenges’ , ‘equity considerations’, ‘agricultural outsourcing’ and the ‘way ahead’. Some elaboration on each of these is necessary. At the outset, it was mentioned that settled agriculture was the condition precedent for a territorial state to exist. A hunting-gathering society could not ensure regular revenues to sustain a hierarchical organization – in which priesthood, bureaucracy and army had an important role to play. From the times of settled agriculture to the advent of the Industrial Age : a span of over two thousand years , the state was interested in agriculture as it was one of the main sources of revenue , and maintaining and establishing granaries – for emergencies, relief measures, payments etcetera was the accepted practice. In fact Kautilya, in the Artha Shastra mentions that it was legitimate for the king to take one sixth of the produce as ‘revenue’. This had become one third by the times of Akbar’s reign, and is reflected in Todar Mal’s treatise on revenue administration. What are also shows is that as Empires grew, and needed funds for armies and expeditions, it was the peasantry they had to fall back upon.
However with the advent of mercantile capitalism, epitomized by the East India Company, the terms of discourse on agriculture changed. EIC as the revenue administrator converted land revenue into ‘rent –seeking ‘, and also compelled the farmer to grow ‘commercial crops’, at exploitative terms and conditions – and even took away his freedom to not undertake the cultivation. This is what led to the first peasant movements in the country. With the dawn of Independence, the state abolished the Zamindari, gave rights to tillers and tenants, and supported voluntary distribution of land and offered credit and marketing support to the farmers. Later in the sixties and seventies, the Green Revolution saw a successful partnership of the government, research institutions and the farmers. However, even as agriculture grew, agribusiness could not because of the economy of extreme shortages : the space that may have been left for the organic growth of agri-intermediaries to develop capacities in aggregation , processing and warehousing was taken up state monopolies like the FCI , CWC, Nafed and state marketing organizations. These organizations played a very salient role in the initial years, but the long term impact of creating these monopolies has been to reduce efficiencies in the sector, which in turn affects farmers’ incomes.
This columnist then spoke about the untapped potential in protected cultivation, fertigation, seeds, nutrients, soil management, farm mechanization, agricultural credit and insurance. Extension services, cold chain management, warehouse receipts, terminal markets, mega food parks and GAP certification were some of the other areas in which interventions could lead to a positive spiral.
What were the global challenges to agriculture? First and foremost, in post modern societies there were fewer people in agriculture, and the consumption basket was changing very rapidly. Even within our country, the share of horticulture, dairy, meat and poultry products was becoming more prominent. Even as the world was opening up the services sector, agriculture was getting more and more restrictive on account of stringent health regulations, many of which were driven by ‘lobbies’ , pushing their own agendas : ranging from the sale of testing equipment to keeping low cost producers at bay to chemical companies keeping out biotechnology interventions and vice versa.
Then there were consideration of equity. Does agribusiness help increase farmers’ incomes? If so, how, and when, and whether this increase is sustainable in the long run as well. Do large co-operatives, brand leaders in their own right, like Amul, deserve tax breaks? Do farm subsidies go to farmers of fertilizer companies? Can we have a mechanism for direct transfer of funds to the farmers? These questions often raise intense discussion, which is positive and good.
India has to take a call on Agricultural Outsourcing – and a decision cannot be wished away or postponed indefinitely, especially in the light of China’s ambitious and clear plans in this sector. Even it India decides against it, this must be the result of a conscious policy, rather than a default position.
The presentation ended with six key recommendations, all of which need to be shared with the readers. Our effort should be to understand the farmer’s household economy, rather than his crop. This is what will also help integrated farming systems and ensure optimal resource utilization. Secondly, information asymmetry which was a function of weak and closely guarded information can now be addressed through the ubiquitous mobile. Also with regard to critical infrastructure , as for example , cold chain and terminal markets, which are being established in PPP mode with substantial involvement of public resources’, a regulatory authority was required to decide the ‘user charges’ such that it led to resource optimization. A serious discussion was required to discuss the issue of transfer payments for farmers directly, and allow the agri-input companies to market their goods and services professionally. This would also give a fair chance to those who practiced conservation agriculture, organic farming, zero tillage and other innovative practices. The introduction of negotiable instruments by cold stirages, warehouses and aggregators could also play an important role in improving the liquidity of the farmers, and preventing distress sales. And last but not the least, strengthening and supporting FPOs, co-operatives and other farmer organizations in which decision making was based on transactions would surely lead to a greater equity in agricultural transactions.