Watershed moment

On November 19, the Prime Minister of India has announced the repeal of the three farm laws — the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, and the Essential Commodities (Amendment) Act 2020.

These farm laws violate the basic principles of democracy and justice. Apart from questioning the laws' economic motives, the protesting farmers and their allies have also flagged the issues of federalism and democracy at the core of their ongoing protests.

The Prime Minister has also announced that a committee comprising representatives from the Central government, state governments, farmers, agricultural scientists, and agricultural economists would be formed to ensure decisions on various issues related to agriculture, including the minimum support price (MSP).

While the protesting farmers' umbrella organisation, Sanyukt Kisan Morcha (SKM), has welcomed the announcement, they have also taken a vow to use this movement to end agrarian distress and continue their agitation for a legal guarantee on MSP. Interestingly, a farmer leader from Shetkari Sangathan and a member of the panel set up by the Supreme Court to study the three farm laws, has said that the demand to extend minimum support price to 23 crops, if agreed to, will drive the country to bankruptcy, reported Economic Times.

Unfortunately, these developments have taken place at a time when the long-pending demand of India, China and a large number of developing and least developed countries to cut down the farm subsidies — called Aggregate Measurement of Support (AMS) or Amber Box support — is expected to be deliberated upon in the forthcoming 12th Ministerial Conference (MC12) of WTO, scheduled to be held in Geneva, during November 30-December 3, 2021.

Thus, the next week is very crucial for India's farm sector because deliberations on agriculture in the Indian Parliament, and in WTO Ministerial Conference (MC12), will determine the future of Indian agriculture.

Here we discuss, in brief, a few issues that need to be addressed on an urgent basis while framing a new agricultural policy for India.

(i) India always argued that its farm and food subsidy programmes were aimed at ensuring food security to the hungry millions of the country. India has notified WTO that 99.43 per cent of its farmers are 'low-income and resource poor' (with a landholding of 10 hectares or less). Consequently, in 2018-19, India's subsidy bill has remained at around three per cent of the value of agricultural production. This was much below the 10 per cent threshold stipulated by Agreement on Agriculture (B Dhar, R Kishore, EPW, April 17, 2021).

In addition to the quantum of subsidies given to farmers, the developed countries have repeatedly raised objections to government procurement of foodgrains (public stockholding programme) at a minimum support price (MSP) which, according to them, distorts the market. Hence, it is put under the category of Amber Box Subsidy.

Members of G33 (actually a group of 48 developing and least developed countries including India and China) have initiated a draft proposal on July 28, 2021, aiming for a permanent solution for allowing public stockholding subsidies without limits at the WTO. Unfortunately, India did not endorse the first draft, maybe because of the three new farm laws it enacted, aimed at making the country a major agri-export hub. The provision of 'not exporting from stocks', as proposed in the G33 draft, might have created a problem for the Indian negotiator. However, after months of deliberations, India has finally endorsed the G33 proposal on September 16, 2021. The decision to repeal the three farm laws, which talked more about food export than food security, will strengthen the bargaining power of Indian negotiators.

India should also prepare a plan to move away from the Amber Box Subsidy (those subsidies which distort international trade – subsidies on inputs like electricity, seeds, fertilisers, irrigation, and MSP) regime to Green box (subsidies which do not distort trade — research funding, environment protection, domestic food aid, disaster relief, farmer training programme, pest and disease control programme, etc.) subsidies. The defeat of China to the US at WTO on the 'Domestic Support for Agricultural Producers' issue (DS511) should be an eye-opener.

On September 13, 2016, the United States requested consultations with China regarding certain measures through which China appeared to provide domestic support in favour of agricultural producers, in particular, to those producing wheat, Indicia rice, Japonica rice, and corn. The United States claimed that the measures appeared to be inconsistent with Articles 3.2, 6.3, and 7.2(b) of the Agreement on Agriculture. This dispute concerned China's provision of domestic support, in the form of market price support (MPS), for producers of wheat, Indicia rice, Japonica rice, and corn in 2012, 2013, 2014, and 2015.

The WTO panel found that because China's level of support exceeded the de minimis level, and was also in excess of China's commitment level of 'nil', it concluded that China acted inconsistently with its obligations under Articles 3.2 and 6.3 of the AoA.

(ii) To reduce Amber Box Subsidy, the best option is to phase out chemical-based agricultural practices (use of fertiliser, pesticides, hormones, etc) in a phased manner. Corporate involvement in agriculture began with the initiation of the Green Revolution package in the 1960s. Though the Green Revolution has failed to address the large-scale poverty and malnutrition problem of India, government policies on subsidy and MSP, to promote the new farming process, have rendered Indian agriculture inefficient. The productivity of major crops is among the lowest in the world. Due to low effective demand in the domestic market, there is a supply-demand gap and analysts call it a 'problem of plenty'. Actually, it is the problem of low demand due to the lack of purchasing power of the millions of Indians — both rural and urban.

To address chronic poverty, the GMO (genetically modified organisms)-based 2nd Green Revolution is being encouraged by a section of policymakers. Recently, the Genetic Engineering Appraisal Committee (GEAC), appointed by the Union government, has allowed field trials of a new variety of genetically modified brinjal (Event 142) without any data in the public domain.

The Second Green Revolution is not an answer to the problems created by the 1st Green Revolution. All the stakeholders of the farm sector, especially the agricultural scientists and farmers, must deliberate on this and resist any such unscientific move by the government and GMO lobby.

One year-long agitation and sacrifices of hundreds of farmers have mainstreamed the much-neglected farm sector in the political agenda of the country. Now the politicians and policymakers have to address the key questions raised by the major stakeholders. The country will be watching them!

Views expressed are personal