ARTICLE

Notes on Agrarian Crisis and the

UPA’s Anti-Farmer Offensive

B. Sivaraman

(In the backdrop of severe agrarian crisis and growing peasant assertion, a national Peasant Conference is to be held at Patna on 10 May, the anniversary of the First Indian War of Independence. The article analysis of the ongoing agrarian crisis as a note towards the Conference. – Ed/-)

After deliberately turning a blind eye to the acute agrarian crisis through the first four years of its first term, a crisis that became so acute mainly because of its brazen neo-liberal anti-farmer policies, the UPA, just on the election year before the last Lok Sabha polls, announced the one-time loan waiver. By their own admission, the move paid them rich electoral dividends. But one year into the UPA’s second term, the fury of the agrarian crisis is back with a vengeance. The following features and symptoms are quite prominent: (i) agricultural growth rate is again declining – after registering 4% in the first year of the Eleventh Plan (2007-12), the growth rate dipped to 1.6% in 2008-09 and then minus 0.2 per cent in 2009-10 according to the latest Economic Survey; (ii) a renewed wave of farmers’ suicides is being seen not only in the old suicide belts but also in several other states; (iii) agriculture in many parts of the country is reeling under the disastrous impact of a debilitating drought, and (iv) together with agricultural stagnation, the country is experiencing acute food inflation.
‘Support Price’ Hypocrisy and Food Inflation
The government and the wise men in the English media attribute the food price increase solely to drought but equally wrongly argue that food inflation would enormously benefit farmers. Congress leaders brazenly talk about “increased purchasing power” of farmers resulting from increases in support price and even mention this as a cause for inflation! But it is not difficult to see that the overwhelming majority of farmers find themselves at the receiving end of this inflation – as farmers they reel under agrarian crisis, as consumers they stand pauperized by food inflation. It is a perverse logic to argue that a drought enriches the farmers! Studies show that around 60 per cent of the farming families are net purchasers of foodgrains and they are caught in a price precipice of low output prices and high prices they pay for inputs and all consumption items.
The NSSO 64th Round report says about 50 per cent of the rural population belonged to the households with a monthly per capita consumption expenditure below Rs. 649 at 2007–08 prices (or, just around Rs. 20 per capita) and out of every rupee they spend on consumption they spend 52 paise on food. One can well imagine the kind of impact the annual food inflation of around 20 per cent can have on such meagre consumption levels. And, if nearly one-third of the country’s population (half of the rural population comprising around 60–65 per cent of the total population of the country) spends only Rs. 10 per capita on food per day (for three meals a day!), how can there be an end to the agrarian and rural crisis in the foreseeable future?
Even if we set aside the drought year of 2009–10, the high food price inflation, which began in 2008 itself, was clearly associated with low farm growth. The neglect of farm sector and the resulting stagnation in production and productivity and the shortfall in output is utilised by the hoarders and merchants to make merry out of the agrarian crisis. Paradoxically enough, this food inflation is also being invoked as one of the reasons for the delay in the enactment of the UPA’s main election promise of Right to Food Act.
Farmers get pittance as MSP for pulses compared to the market prices. For instance, the table below shows the MSP for pulses fixed by the government in 2007 to 2010.

The MSP for arhar dal increased by 35.29 per cent but the market price of this dal skyrocketed by 600 per cent. Moong and urad MSP went up by 62 per cent but the market prices of these dals shot up by 300–350 per cent.
That is, while the government paid Rs.20–25 per kg for different varieties of pulses in 2008–09, the market prices for these dals had already crossed Rs.65–70 per kg. Reports indicate that private traders paid much less in pulse areas to farmers even compared to the low MSP and farmers were forced to resort to distress sale to the private traders as the government, despite increasing the MSP marginally, has not opened adequate number of procurement points in pulse hinterlands in the countryside. The government itself fixing the MSP at one-third of the going market rate, and the farmers getting output prices even lower than this paltry MSP, supports our contention that high market prices or even mere nominal increases in MSP alone will not help in overcoming the agrarian crisis which now finds acute expression as pulse crisis. The story doesn’t end here in 2008. The next year, in 2009, the government increased the MSP for different varieties of dals by Rs. 240–300 per quintal and the farmers got Rs.23–28 per kg for different types of dals but the market prices for arhar had shot up in 2009 to nearly Rs.120 per kg!
This is true not only in the case of pulses, but also for wheat and paddy/rice. Yet, in the face of such acute disparity between the official support price announced for farmers and the reigning market price paid by consumers, rank neo-liberal reactionaries like Montek Singh Ahluwalia, the Deputy Chairperson of the Planning Commission, vociferously argue for giving fullest play to the market forces and dismantling the “outdated” support price-procurement mechanisms! His contention is that these mechanisms were needed when India had not attained self-sufficiency in foodgrains and having attained self-sufficiency in food now these have become irrelevant and he further argues that the market has the inbuilt ability to correct distortions in prices. But the illogical situation of farmers getting one-third of the market prices as “support” price for their produce doesn’t strike this key bureaucrat of the UPA and Manmohan’s right-hand man in policymaking, who is coming up with such fraudulent anti-farmer arguments. 
Markets, and the mercantile bourgeoisie, thrive all the more so when there is distress and scarcity and only by reversing the dominance of the mercantile capital over production in collusion with the state, over the farming community, can the farmers get any real relief.
Instead of giving policy concessions to the corporates, giving price incentives to the millions of farmers can better take care of the need to offset the decline in public investment and improve farm incomes and capital formation.
Food security is not just a humanitarian gesture, a measure to eliminate hunger and alleviate poverty. If food security and food availability are threatened, the entire economy will go into a tailspin. For instance, if high food inflation continues for long, it will put pressure on wage goods, turn into generalized inflation, lead to a hike in interest rates, bring down aggregate investment in the economy and hence also the growth, affect exports, devalue currency and hamper imports also and thus lead to a series of macro-economic destabilization. In this sense, food security is an economic fundamental guaranteeing stability. After introduction of the green revolution, as far back as 1960s, India proudly proclaimed to the world that it had achieved self-sufficiency in food. That food self-sufficiency is now under threat despite the deceptive manifestations like export of foodgrains in some years as it turns a full cycle soon and food is imported. We must also understand that the nation cannot have food security if farmers cannot have economic security.
Unregulated International Trade: Sure Recipe for Disaster
Apart from this “support price” humbug, indiscriminate imports and exports of agricultural commodities is even worse a recipe which is an underlying factor behind the ongoing agrarian crisis. Far from addressing this calamity by setting up an autonomous tariff and quantitative trade regulatory commission along the lines of the Agricultural Costs and Prices Commission as demanded by academics and farmers’ movements, the UPA is continuing with its reckless trade practices in agri products.
Let us take the case of wheat. India exported 2–4 million tonnes of wheat every year in the first four years of this decade and imported around 6 million tonnes in 2006–07, imposed an export ban in 2007–08 and again imported 5 million tonnes in 2008–09.

Despite drought, thanks to the recovery during the rabi crop, in 2009–10, the total wheat production was comfortable 80.68 million tonnes, and this year, with predictions of a normal monsoon, this level is expected to be exceeded. Apart from projected record output, India had a buffer stock of 206.23 lakh tonnes of wheat and 256.58 lakh tonnes of rice as on January 31. This buffer stock is supposed to be twice the normal level usually maintained and in case of a second successive drought this would have come in handy. There is no reason why the country, which maintains more than $350 billion as foreign exchange reserves to provide a safety cushion to the big business and corporates,  cannot afford to maintain this much or even more food stocks to ensure food security. But right in the middle of the drought year, in July last year, the ban on wheat exports was revoked and reports indicate that UPA is planning to revive export of wheat in a big way, even when the international wheat prices are low, for the simple reason that there are no adequate godown facilities to stock foodgrains! Rice exports have already started.
Private traders and futures market speculators have unlimited storage capacity to hoard grains but the government doesn’t have the necessary infrastructure even to assure food security to the citizens or to intervene in the international markets only when the prices are ruling high. Foodgrains are exported at prices lower than the domestic BPL prices and foreign companies are paid money for imports at rates more than what the Indian government pays to our own farmers. It is a common knowledge that from foreign suppliers and export houses the politicians get massive kickbacks. Foodgrain import-export scams have become an annual feature with the UPA government and, worse still, the criminals let nearly 2 million tonnes of wheat, worth nearly Rs. 1800 crore,  to rot in the FCI godowns in Punjab. Not a single bureaucrat has been made accountable for this and punished. Ironically, the shocking news came on 19 March 2010 even as the Union Cabinet was discussing a proposal to increase the APL PDS price of wheat and rice from Rs. 6 and Rs. 8.30 to Rs. 11 and Rs. 15.37 respectively under the pretext that government is incurring a loss by supplying wheat and rice to APL buyers at these rates in view of the higher procurement and issue prices. Some observers have opined that this is a move to scuttle the demand for universalisation of the PDS and to pave way for abolishing PDS for the APL category altogether. Whatever it is, presently the consumers and tax-payers, of course, will have to bear the additional cost of this rotten government’s criminal inefficiency.
The trade scandal is not limited to wheat alone. The Rs. 2500 crore rice export scam of 2008–09 reads like a nail-biting crime thriller. The UPA allowed indiscriminate export of rice which caused a steep increase in domestic prices. When the steep increase in domestic rice prices snowballed into a major political issue, the UPA imposed a ban on non-basmati rice exports in October 2007. The ban caused a nearly threefold increase in the world market rice prices as India was a major exporter of rice. The market dynamic is such that even an anticipated 10–20 per cent supply shortfall would trigger a doubling and even trebling of the prices. The OECD lashed out against India for causing a global food crisis due to a very sharp increase in rice prices resulting from the ban. The shaken Indian government promised to revoke the ban in 3–4 months. But three months after the ban, illegally bypassing the ban and capitalising on the rise in international rice prices, and even bypassing the state trading corporations, in the name of humanitarian gesture, some select private companies were allowed by Sharad Pawar-Kamal Nath duo to export 10 lakh tonnes of rice to some African countries. In March 2008, the companies purchased rice from the domestic market at $280 per tonne and sold them at $470 to some African governments like that of Sierra Leone. The rice farmers, of course, did not get a single rupee more. They got only their bare Minimum “Support” Price and nothing more. Worse, much of the rice was not purchased at the open market rates even but some PDS mafia supplied the diverted PDS rice at even much lower rates. The scam is estimated to be to the tune of Rs. 2500 crore and it contributed in no small measure to further domestic price rise of rice in the open market. The Outlook magazine exposed the scam in a story in its issue dated 27 July 2009. The Prime Minister didn’t bother to order even an enquiry. Sharad Pawar and Kamal Nath, the main architects of this scam, till date continue to be “honourable” members of the supposedly clean government of Manmohan-Sonia’s UPA. Clean and neat loot indeed!
In another major scam, Union Agriculture Minister Sharad Pawar allowed the sugar lobby to reap super profit first through massive export and then through domestic sales at exorbitant prices even as the government sought to rob the farmers through a patently unjust ordinance that depressed the ‘support’ price for sugarcane. In a very unusual move, in November 2009, the UPA Agriculture Minister got an ordinance passed that sought to ban the State governments from fixing increased amounts for sugarcane to be paid by the sugarmills as State Advisory Price (SAP). Accordingly, the farmers were to get what the union government had fixed which would have been Rs. 10 less than what the sugarcane farmers got the previous year in Uttar Pradesh. The incensed farmers took to the streets and there were numerous demonstrations, not only in UP but also in Haryana and Punjab and even in Maharashtra, Karnataka and Tamil Nadu. The issue quickly snowballed into a major political issue and lakhs of farmers from nearby States rushed to the capital for a parliament gherao. The Congress High Command got alarmed at the fallout and Rahul Gandhi was sent to Manmohan Singh in a stage-managed show and the ordinance was withdrawn in the face of nationwide protests.
First exports of sugar were allowed on a large scale when the international prices were high and the sugarmills made enormous profits. But when the domestic prices shot up due to artificially generated scarcity due to exports, imports were allowed at prices higher than export prices. Claiming that the imports were hurting their profit margins, the millowners’ lobby refused to pay even the frozen price announced by the Centre and refused to take sugarcane from the farmers. But ultimately, due to defiance from the canegrowers who refused to supply their cane at such lower prices, the mills had to pay double the amount of what Mayawati had initially offered. This is not just a flip-flop. Sharad Pawar  who has emerged as one of the unabashed  representatives of the corporate lobby clearly manipulated these flip-flops in sugar policy and brazenly pushed for promulgation of the ordinance.
The government has been putting lots of emphasis on horticulture in it strategy and even suggests that diversification to horticulture is an escape route from the agrarian crisis and low-income scenario. True, now horticulture accounts for a third of the total agricultural output. But though the vegetable production has grown by 5 per cent annually in recent years – which, of course, is on a higher side compared to foodgrains growth – and there is no reason to expect that the growth in consumer demand would be much higher compared to this, the average vegetable prices have doubled and even trebled in recent years, even after accounting for seasonal fluctuations within a year. But vegetable growers keep losing heavily in the absence of adequate coldstorage and cheap transportation facilities. The horticulture scenario also shows that there is no close relationship between the market price, the price that the farmer gets, between the supply and the price and between the high price and the rate of growth in horticulture output. Except for some marginal role in market intervention for Markfed and other cooperative vegetable marketing federations like Hopcoms in Karnataka and Mother Dairy in Delhi, there is no administered price regime for vegetables and if the argument of the neo-liberals that market itself will set right distortions in production and prices and generate more income to the farmers, then the vegetable growers would have become millionaires and most of the farmers would have taken to vegetable growing.
If only state governments can come forward to provide a few hundred marketing outlets for farmers and even retail hawkers and arrange public transport backed by coldstorage and warehousing, the vegetable prices can come down by more than half for the urban consumers even as the farmers’ incomes can more than double. But such facilities are not available in majority of the States. This is an important issue for organising the peri-urban farmers as well as hawkers.
Relentless Increase in Input Prices
FERTILISER PRICE HIKE
Various studies have shown that in India the price elasticity of fertiliser use is very high. This means whenever the prices of fertilisers go up the use of fertiliser sharply comes down, reducing productivity and output and thus threatening food security. The impact of fertiliser price increase in Indian conditions cannot be mitigated by increase in agricultural output prices and this is mainly because here the share of small and marginal farmers is very high and their marketed surplus constitutes a small share of their total produce; the price increase for their outputs cannot neutralise the higher prices they pay for fertilisers. If the fertiliser subsidy had crossed one lakh crore rupees in 2009–10, it is not because of any generosity towards farmers from this otherwise stingy UPA government but due to this grim reality. In spite of such a scenario, Mr. Montek Singh Ahluwalia and the Planning Commission had the gall to recently propose halving of fuel and fertiliser subsidies. If fertiliser subsidy is halved, the fertiliser prices would rip through the roof and not only agriculture but all other sectors of the economy would go into a tailspin in the resulting shortage in foodgrain production and food inflation.
Under the retention price scheme presently being followed, in theory, the government fixes 12 per cent (profit) margin on net worth for fertiliser industries but the cost of the worst efficient unit is taken to be the benchmark for calculating this 12 per cent profit. Not only that, this 12 per cent profit is calculated as post-tax profit, that is after the government pockets a good amount as tax for its own kitty. If the government reduces the tax, the cost increase due to increased prices of crude oil – the raw material for chemical fertilisers –in the international market can be considerably neutralised. But no, as it adamantly refused in the case of petroleum products, it is refusing to bring down taxes on fertilisers. In other words, the government takes away with the other hand a sizable part of what it gave with one hand. The net worth (i.e., total assets minus total liabilities of the fertiliser companies on which 12 per cent margin is calculated) figures are highly inflated figures which are not taken seriously in the share market when investors buy the shares of fertiliser companies. All the fertiliser companies employ contract labourers to the tune of 80–90 per cent of the labour force and they often get not even 50 per cent of what the companies cite as labour costs. Thanks to the most inefficient units with relatively higher cost, the more efficient units in the private sector get more than double the fixed rate of 12 per cent as profit due to their lower costs.
In the era of liberalisation starting in the early 1990s, fertiliser prices were partly decontrolled for phosphatic and potash fertilisers and removed the pricing and distribution  controls and the use of these fertilisers drastically came down and it created an imbalance in the proportion of nitrogenous-phosphatic-potash (NPK) use and resulted in ecological damage to the soil and environment. When prescribed amount of fertiliser use, especially in irrigated areas, was a precondition for green revolution agriculture, the very high cost green revolution farming becomes meaningless and high expenditure on other inputs does not yield the result when a key input is not used in specified quantity. No wonder green revolution would still remain a mirage in vast tracts of eastern India in a regime of fertiliser price decontrol.
The price of urea was also repeatedly increased. This is one of the important reasons for the agrarian crisis. In 2000–01, the total fertiliser subsidy was around Rs. 8500 crore and by 2009–10 it had crossed one lakh crore – more than tenfold/1000 per cent increase. But in this decade the growth in output was about 20 per cent! The subsidy is paid on the imported fertilisers also and since imports have been liberalized the importers mafia inflate the cost through over-invoicing and garners huge subsidies. Recent history shows that around 30 per cent increase in prices led to about 18 per cent reduction in fertiliser use in the 1990s. One study established that in 1999–2000, only 45.85 per cent of the total fertiliser subsidy went to the farmers and fertiliser industry’s share was 54.05 per cent (See the study Fertiliser Pricing Policy available at http://knol.google.com/k/fertilizer-pricing-policy#). It was in this kind of backdrop, the UPA-II has gone in for a 10 per cent hike in urea and, worse than that, giving a free hand to the industry to fix phosphatic and potash fertiliser prices. In fact, in a short-sighted approach, to bring down the aggregate fertiliser subsidy amount, the government created an artificial scarcity and fertiliser was not flowing freely.
In fact, a powerful lobby of policymakers and academics keep advancing the adventuristic argument that the subsidy to agriculture is four to five times the total investment and the ratio should be reversed. Well, investment can be brought up to the level of subsidy without reducing it as the subsidy can be reduced only at the cost of putting the total agriculture in peril. If tax waivers and stimulus subsidies to the corporates in a single year, 2009–10, could be about ten times more than a rare election eve one-time  loan waiver to farmers the previous year, then if at all any reversal is needed, it is the ratio of subsidy to the corporates and subsidy to hundreds of millions of farmers.
DIESEL PRICE HIKE
By 30 June 2009, there were 16 million energized pumpsets in the country. But number of diesel pumpsets is also increasing steadily and the rate of conversion of diesel pumpsets to power-driven ones is negligible. The diesel pumps are cheaper to install but recurrent operational costs are very high. Some 30–35 energy saving can be achieved easily by converting diesel pumps to electric pumps. The borewell irrigation schemes based on pump subsidy like Million Wells Scheme failed in UP and Bihar because of the high operational costs of the diesel pumps. The share of electric pumps is the whole of eastern India is less than 15 per cent of the total.
If only the Central government could have evolved a strategic policy for rural electricity supply and pricing in cooperation with States with appropriate federal incentives, farmers could be spared the blow of repeated hikes in diesel prices.  Use of electricity instead of diesel for irrigation would also result in lots of carbon saving. The UPA National Action Plan on Climate Change document however doesn’t address this issue at all. Now there is an exclusive ministry for renewable energy and in the name of renewable energy thousands of crores worth of incentives are being extended to the corporates but assuring power supply to dissuade farmers from using diesel pumps doesn’t figure as a climate response at all. In this backdrop, repeated increases – seven in this decade – in diesel prices will cripple irrigation development and increase the cost and make agriculture unviable for farmers. By contrast, four per cent growth in agriculture per year can be achieved quite easily if power supply to the rural areas can be doubled in the next ten years.
A New Chapter in the Neo-Liberal Agenda
Recently, Montek Singh Ahluwalia, and later the full Planning Commission, called for 50 per cent reduction in fuel and food subsidy. He also called for a greater role for private sector and agribusinesses. This is in the backdrop of India signing a MoU with the USA on Agricultural Cooperation and Food Security. Other than this, there is also a Green Partnership with the USA which might pave way for conversion of foodgrain lands to biofuel plants cultivation. There is also a move in this backdrop to hustle through this budget session itself a Seed Bill which, like the waiver to the US companies supplying reactors and other N-power equipment from any nuclear liability in the case of accidents, would give a waiver to the US MNCs from any liability from seeds failure.
Thus, while making it easier for US MNCs to enter the agricultural arena via wholesale and retail trade and contract farming, there is also a move to rope in SHGs and to convert them into intermediaries for the big capital, especially in procurement, retail distribution and food processing. In the name of value chain improvement and skill development, all sections of rural India are being subordinated to the interests of the global capital. For this purpose, like the DFID of the UK, the USAID has roped in a private US consultancy NGO, ACDI/VOCA (Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance) to do policy steering in India. Funded by the USAID, the ACDI/VOCA, which is working in 145 developing countries, has already started working in India with multimillion projects in areas like agribusiness systems, (micro) enterprises development, financial services, community development and food security. This outfit is playing a key role in US “disaster capitalism” project in Haiti. It is also into generating “green jobs” and evolving a rural “green economy” to put American blueprint on Climate Fund utilization in developing countries.
In India, the ACDI/VOCA has already implemented USAID’s first enterprise development project, the 4-year, $6.3 million India Growth-Oriented Microenterprise Development Program (GMED) under its Accelerated Microenterprise Advancement Project (AMAP). GMED’s agribusiness component focused on fruits and vegetables, organically certified food products and maize value chain improvement and so on. It has promoted a farmers’ cooperative called Nandani in several States including AP, Maharashtra, Uttarakhand and Karnataka etc., in league with big corporates like ITC and Radhakrishna Foods and has made these cooperatives the supply channels for corporates in the name of “integrating the smallholder fruit and vegetable farmers into the commercial supply chain”. It is also into skill development related to processing procedures for organic food. It works with MNCs to diffuse maize processing technology in India. It claims to be developing a model of food security through the market. It is working with several leading donor governments/agencies and funding agencies and trains the NGOs in taking up these activities in the name of capacity building. In the name of rendering technical services, it is dictating policy to a pliable UPA Government. In other words, even before the February MoU on Agricultural Cooperation and Food Security could be signed into a full-fledged Indo-US Agri Deal like the N-Deal, this ACDI/VOCA has started doing the groundwork for greater role for the US agribusiness firms in India. Since it mainly works with the top government officials, corporates and NGOs, it activities have not come into limelight much. But it is clear that this less known outfit is evolving the framework for multinational corporate invasion of Indian agriculture.
Corporate Invasion of Agriculture
We prefer to use the expression ‘corporate invasion of the agricultural sector’ instead of ‘corporate farming’. Direct large-scale mechanised farming by the corporate sector is still marginal in India and Indian agriculture is still characterised overwhelmingly by small-scale peasant cultivation. But corporate invasion of agriculture in areas other than direct cultivation is substantial.
Of course, corporate invasion of agriculture is also not new. Agriculture used to supply the main raw materials for industries like cotton, jute and sugar mills, tobacco industries, edible oil mills and certain traditional processed foods and the corporate sector used to supply agricultural machineries and inputs like fertilisers. But these didn’t exactly fall in the category of contract farming where the price is agreed upon before the farmer starts cultivation and the entire produce is bound to be sold at the pre-fixed price to the corporates with possible other clauses in the contract that may or may not involve supply of inputs and technical assistance in farming etc.
Apart from a significant rise of corporate farming, corporate capital is also entering the agricultural arena through retail trade and food processing. Big capital is also making forays into fruits and vegetables, organic food, seeds and herbal medicinal plants in a big way. There are also tripartite and multiparty contracts involving the banks, insurance companies and input dealers which however leave little bargaining capacity for farmers and make them virtual slaves of the capital with interest rates, premiums and even input prices remaining much higher compared to market rates but the procurement price much lower compared to open market prices. About 20 big business houses, some of them in league with MNCs, are engaged in contract farming and in the absence of any regulatory authority, the official data on acreage under contract farming, the quantity and value of the produce and the number of farmers who have been contracted are not available. But to take some examples, contract farming is being carried out in 1,34,800 hectares in Maharashtra, mainly in soyabean for exports; Nestle India is procuring 65,000 tonnes of milk per day from contracted farmers in Punjab, and Pepsico too is doing contract farming in Punjab in around 12,000 acres.
Contracting firms’ linkages with futures trading and speculation means depressing prices at the time of entering into contracts and jacking up market prices after procurement from the contracted farmers, and the nexus of futures trade and contract farming, instead of guaranteeing stable prices to the farmers as propagated by neo-liberals, depresses the prices for their products, and the farmers also have numerous other complaints. The Kisan Sabha should intervene on this issue to demand ban on futures trading in agricultural commodities and strict regulation of contract farming through a pro-farmer legislation and an all-India authority to safeguard the interests of farmers.
With a massive entry of the corporates/big capital in agriculture, the UPA is also liberalizing the agricultural sector in a big way to facilitate that. The APMC Act has been amended in ten States to allow contract farming and entry of organised corporate retail in the agricultural sector. Agricultural infrastructure is also being privatized. The FCI is already hiring godowns from private parties for storage of grains instead of building them on its own. The idea is to entirely handover maintenance of food stocks to private parties and a new Godowns Accreditation Policy is in the making. In the name of private-public partnership and corporate sponsorship, state agricultural research institutions and their personnel and other resources are being increasingly controlled by the corporate sector. Even irrigation is being privatized and entire rivers are being handed over to private companies. The power sector, especially power distribution, is also being privatised.
Agricultural exports are managed almost entirely by private trading companies. The administered price regime had hitherto exerted considerable influence on the private market prices and the government occasionally resorted to market intervention to regulate prices in the open market as well. But the emergence of the commodity futures trade/market and the speculation based on that has introduced a totally new uncertainty in the markets and unpredictable impact on market prices. Exemption from land-ceiling laws is being given to corporates for direct farming by companies.
If the dilution of Essential Commodities Act 1955 was mainly due to the entry of organised retail in the agriculture sector, of late, the government is actively considering a proposal to scrap the Act altogether. Ironically, it was the NDA Government which passed in 2003 the Removal of (Licensing requirements, Stock limits and Movement Restrictions) on Specified Foodstuffs (Amendment) Order, 2003 to make the Essential Commodities Act toothless, using the powers conferred on the Central government to pass such orders under Section 3 of the same Essential Commodities Act 1955, to pave way for the entry of organised retail and wholesale trade in agriculture and for the emergence of futures trading. At that time, neither the Congress nor the Left opposed this order. But having permitted futures trading through this order in 2003, the BJP is now attributing the price rise to futures trading only. This order of 2003 has made the Essential Commodities Act virtually toothless and, though the UPA Government partly rescinded the 2003 order by making new notifications in 2006 and 2007 in the backdrop of belated opposition when high inflation in agricultural commodities began, these notifications were for temporary periods and were extended only for six months in 2008 and this was one reason why even the willing State governments were unable to arrest hoarders and speculators though the Centre passed the buck on them to rein in these crooks to arrest food inflation in 2009.
It is common knowledge that even 10–15 per cent shortfall in the supply of any agricultural commodity triggers a 50–70 per cent price rise and all that the stockists will have to do is to withhold release of the commodity into the retail markets for a couple of weeks and there is a price boom. And there is no dearth of speculative finance available to futures traders to work in league with the stockists to create artificial scarcity at times to increase prices and to depress the price when needed by releasing stocks at lower prices depending on whether they want to sell their futures at a premium in the commexes or honour the futures contracts when they mature. Likewise, at the time of permitting organised retail, the government said that these companies would directly procure from the farmers and thus the elimination of middlemen would benefit both the farmers and the consumers. But till date not a single retail major has developed an elaborate network of its own to purchase directly from the farmers but they all purchase through middlemen/arthias (commission agents) and these arthias are a well-organised gang everywhere cheating farmers and they have become a readymade network of procuring “staff” for the retail majors. Even the Reliance Retail, which is supposed to procure the most from the farmers directly, is procuring only around 50 per cent from the farmers directly and, contrary to the initial hype about the organised retail, the Reliance Retail is marketing only a paltry 700 tonnes of fruits and vegetables per day, a miniscule fraction of the daily turnover of even the Koyambedu retail market on the outskirts of Chennai leave alone the Azadpur wholesale market in Delhi.
Anyway, the nexus between corporates in contract farming, the organised retail chains, the futures traders, the speculative financiers and the arthias is a deadly nexus which has become so powerful  that very influential policymakers have started articulating their interests to propose total dismantling of the policy of support prices/MSP and state procurement. There should be no place for any organised retail that doesn’t procure directly from the farmers but operates through arthias and all the farmers engaged in contract farming should become members of duly elected and democratically functioning contract farming cooperatives and any firm engaged in contract farming should negotiate with and enter into contract with such cooperatives only and, for some reason, if the market price rises above the contracted prices by some fixed percentage then the contract should automatically become ineffective and the farmers should become free to sell their produce in the market. The contract farming companies are demanding that the practice of not honouring the contract by the farmer should be made a cognizable offense but it should be the other way around and not honouring the contracts by the companies must be made a cognizable offence and an independent regulatory authority with farmers’ representatives on it should decide whether the farmer is unable to supply the required quantity at contracted price due to genuine crop loss due to natural disasters and so on.
Corporate Capital Gobbling up Rural Non-Farm Sector
Not only farmers but the small-scale rural capital is also being gobbled up by the entry of big capital and corporates. Rural areas used to account for 53 per cent of employment in total manufacturing in the country, 71 per cent in construction and 45 per cent in trade at the turn of the 1990s but these were overwhelmingly concentrated in the unorganised/informal sector. This provided a lucrative area for the invasion of the big and corporate capital and the share of the corporates/organised sector in rural manufacturing and trade is steadily going up. If multinationals team up with Indian big corporates (for instance, Walmart with Bharti), the big capital is also taking as partners the native-grown rural bourgeoisie and a chain of new class relations/alliance is emerging.
The special thrust for food processing by big corporates is destroying traditional food processing in rural cottage/household industries and a few big units are cannibalising tens of thousands of tiny units and the traditional unity of agriculture and crafts among peasants in the village community itself is being smashed, depriving non-farm supplementary employment and income to the peasants. Home-based non-farm work, either self-employed work or market-contracted wage-work, used to sustain the peasants whose income from cultivation alone could not sustains them for a large section of small and marginal farmers. Now, this is also under threat.
Bt Brinjal “Democracy”
The UPA has been trying to push genetically modified (GM) crops as a solution to India’s agrarian crisis and a means towards “Second Green Revolution” which is really bogus. The UPA-II recently enacted another charade on the controversial GM crops. After first announcing that they might permit commercial production of Bt. Brinjal in the country, in the face of opposition from farmers’ organisations, scientists, environmentalists/ecologists, NGOs and other activists groups, Jairam Ramesh enacted a stage-managed drama of “consultations” and finally announced that the commercial introduction of Bt. Brinjal has been postponed. As soon as the move was put on hold, the differences within the UPA surfaced and the Agriculture Minister Sharad Pawar came out with a loud declaration that GM crops are the solution for food insecurity, thereby proving himself to be a loyal champion of the interests of Monsanto and Cargill.
Only belatedly the UPA Government is now talking of setting up some National Biotechnology Regulatory Authority and a Bill to that effect is expected to be tabled in the parliament in this budget session. This Bill is about regulatory power of the proposed authority and not on seed companies/GM seeds per se. Strangely enough, the Seeds Bill also doesn’t address the special concerns about the GM seeds. Still, this regulatory authority Bill also calls for a thorough scrutiny from peasants’ associations to ensure that farmers’ interests are fully taken care of in the Bill. Our concern here is not about the scientific merits of the GM seeds; this is a subject better left to the science community itself to settle. We are concerned about the possible health and ecological consequences of such seeds, their possible failure, indiscriminate introduction of spurious GM seeds and the liability of the companies and legal guarantees for damages to the farmers in case of seed failures. In the face of mounting American pressure, only vigilant farmers’ organisations can ensure a policy framework on the part of the government that can keep primacy of the public sector in seeds production and the role of the state distribution networks and agricultural extension services in ensuring that quality seeds reach the farmers in a timely manner and private monopolies do not make super-profits by fleecing the farmers. Greater role should be there for “seed banks”/”seed reserves” under community control. The existing Genetic Engineering Approval Committee needs to be overhauled with participation from the entire spectrum of scientists and be freed from under the dubious and pro-corporate Ministry of Environment and Forests and be made an autonomous body.
In general, we are not opposed to the introduction of new and safe advanced technology and the latest in modern science but where the scientific opinion itself is divided on the issue and several European countries themselves have banned GM crops and their potential disastrous consequences for human health and bio-diversity remain untested, why this unseemly hurry over Bt. Brinjal, driven purely by commercial considerations of multinational seed companies? We should continue to oppose such “scientific’ adventurism solely to pander to the multinational commercial interests.
To argue that Bt. Brinjal would ensure food security not only makes mockery of food insecurity but is an outright insult to the guarded scientific opinion. Anyway, Jairam Ramesh’s “Bt. Brinjal democracy” was limited to brinjal GM crops only and did not cover the entire gamut of GM crops for which commercial production has already commenced or field trials are going on. We must insist on a stringent law stipulating liability for the seeds companies, whose seeds fail causing a heavy loss to the farmers or cause health hazards to consumers, and demand a stronger regulatory body with representation from farmers’ organisations and consumers’ representatives. The revised Seed Bill which the UPA was trying to rush through the Winter Session despite widespread opposition from activists/campaigners is basically flawed because it doesn’t have any provision on liability on the part of the seed companies.
Bio-Fuels Racket – Corporates Capitalising on the Climate Change Crisis
Tens of thousands of hectares of supposedly degraded wasteland are being grabbed by the corporates in the name of jatropa cultivation for bio-diesel production. In 1990–91, India had about 70 million hectares of different categories of wasteland: 21.22 million hectares of barren and uncultivable land (7% of total reported area), 11.8 million hectares of permanent pastures and grazing land (3.9% of total reported area), 15 million hectares of culturable waste land (4.9% of total reported area) and 23 million hectares of fallow land (7.7% of total reporting area). Overtime, most of these categories of wasteland have declined in area terms, except current fallows. This is both due to land-grabbing by the rich and conversion of culturable wasteland into cultivated land by the poor through their hard work and own expenses. The corporates are now eyeing these vast areas. Thousands of hectares of “wasteland’ have been given on long-term lease to the corporates in Gujarat, Karnataka, Maharashtra, Chhattisgarh and Andhra Pradesh for raising biofuel plantations. Even the poor in these areas have been roped into contract farming for the same. How big a racket this is by Modi Government in Gujarat would be clear from the following facts: Each company can get upto 2000 acres of wasteland on 20 years lease for raising biofuel crops simply by paying Rs. 500 as security deposit. For the first five years there will be no rent and for the next five years the rent will be Rs. 40 per acre per year and it will be Rs. 100 per acre per year for the following years!
Cooperative sugar mill plants are being taken over by corporates with an eye to convert them to ethanol production. Corporates have taken over many government-owned sugar plants in UP and Bihar have been sold to the business houses for ethanol production. Fearing grim consequences for the sugar economy, the Centre has blocked this and both Mayawati and Nitish Kumar are tirelessly campaigning against this at the behest of the corporates.
Despite being a threat to environment, by blocking the development and conversion of these lands into fields suitable for normal cultivation of food crops by the poor peasants, this bio-fuel racket of the corporates-government nexus is a major threat to food security. This is being acknowledged all over the world and even by the Copenhagen summit which also called for moderation and regulation in this. The Kisan Sabha should demand that all farmers should get carbon credits and all industries should pay a carbon tax. The “wastelands’ should be handed over to the poor along with the needed funds for reclamation.
The New Seeds Bill
After lots of criticism from the farmers’ organisations and environmental groups, the UPA modified the earlier 2004 version of the Seed Bill and tabled a modified 2005 version of the Bill and this Bill has been listed in the House business list for passing in the current budget session of the parliament. The main bone of contention over this Bill was the rights of the farmers versus the greed of the big business seeds industry. Farmers rights include the right to produce, exchange and trade seeds, right to reuse the patented seeds, the right to get compensation from the seed companies in case the seeds fail, stringent punishment to companies and traders selling spurious and substandard seeds and the right to biodiversity and protection against monoculture and protection to the rich germplasm of any plant variety in India cultivated by them. Farmers’ right to get assured supply of quality seeds also demands that the government undertake research in public sector research laboratories and some guarantee that they would not be solely at the mercy of the profit-oriented seed companies. The companies put forth their case for patent protection for their seeds to monopolise the seed business.
In the very objectives of the new Bill itself the government makes it clear that the Seeds Bill 2005 was aimed at encouraging the development of the seeds industry. Instead of having a stringent liability clause making the seed companies provide specified amount of full compensation to the farmers in case of seeds failure, the Seeds Bill 2005 asks the farmers to go to the district consumer courts and fight their case under the Consumer Protection Act. Then what is the need for a law on seeds trade unless it is exclusively for the protection of the seed industry? The law is also draconian: it says that the farmers producing seeds and trading a part of them should compulsorily register themselves. It empowers the seed inspectors to search any farmer’s farm or premises without a search warrant from a magistrate. While there is no bar on companies to grab naturally existing varieties, and even the new varieties developed by the farmers, and patent them, the onus of patenting the varieties developed by the farmers and communities fall entirely on the poor farmers.
Actually, in the face of public outcry in the 1990s against the offensive by the developed countries in the context of WTO negotiations to win patent rights to their seed companies under TRIPS and to steal the germplasm in countries like India and the naturally existing as well as the new varieties developed by the farmers and establish their monopoly over them by patenting them and their attempts to deny the rights of farmers to reuse the seeds in the next seasons which they purchased from the companies and to prevent them from exchanging/selling a part of the seeds they had grown with other farmers, the Plant Varieties Protection and Farmers’ Rights Act was passed in 2001 (PVPFRA 2001). But the seed multinationals carried on a sustained campaign against this PVPFRA 2001 and the developed countries also continued their offensive on this issue in the subsequent WTO negotiations. Actually, the UPA-II is keen on passing this new Seeds Bill to make this PVPFRA 2001 irrelevant so as to reassure the multinational and big business seed industry and make the seeds patent regime compliant with any possible unequal treaty with the developed countries again on agriculture in the WTO.
Further, despite the issue of genetically modified (GM) crops/Bt. Brinjal controversy snowballing into a political issue, there is nothing in the new Seeds Bill to offer comprehensive protection on GM crops. Also, horticulture now accounts for nearly 30 per cent of the agriculture GDP in the country and a sizable amount of horticultural plants breeding is through non-seed methods like tissue culture, grafting, cloning and layering and so on and seeds MNCs supply these for major crops like banana and there is nothing in the bill to cover these methods of plant breeding/propagation.
The New Agri Deal with the US
Interestingly, the Union Cabinet approved the Seeds Bill 2005 on 4 March 2010 and the government listed it for passing in the current parliamentary session itself hurriedly in the backdrop of the Indian government signing a secret MoU on “Agricultural Cooperation and Food Security” in the middle of February with the US to pave way for promoting the privatization of agricultural extension services and facilitating cooperation between American agribusinesses and the Indian farm sector. Gargi Parsai of The Hindu who managed to access a copy of the MoU, in a report in that newspaper on 24 February 2010, explains the MoU in details and says that the MoU was to give a push to private corporate investment in Indian agriculture and according to the MoU the agriculture-related intellectual property issues between the US and India would be governed another S&T draft agreement between India and the US approved by the Cabinet the same day. This draft has also not been made public yet. According to Ms. Parsai, the present MoU on “Agricultural Cooperation and Food Security” was initiated under Indo-US Agriculture Dialogue that was agreed upon during Manmohan’s visit to Washington in November 2009 when six MoUs were signed and which in turn was a sequel to the Indo-US Knowledge Initiative Agreement (KIA) initiated by Bush and Manmohan. It is pertinent to recall here that the US seed MNCs Monsanto and Cargill are both on the governing board of the Indo-US KIA.
An impending full-fledged agreement on framework for “Agricultural Cooperation and Food Security”, for which the mid-February MoU was a precursor, was further taken up by Anand Sharma, the Minister for Commerce, when he visited the US in the third week of March. According to a statement issued by Anand Sharma upon his return (See The Hindu, 19 march 2010), India and the U.S. had then agreed to negotiate and finalise the Framework and undertake a number of initiatives for increasing opportunities for private sector partnerships “in infrastructure, green technologies, geo-technologies, innovation, creating awareness on IPR; also for bilateral cooperation in energy, in information technology, environmental services industries and working empower women and disadvantaged groups, and small and medium enterprise development” at the Indo-U.S. Trade Policy Forum which had met in New Delhi in the third week of October 2009 and on that basis he had concluded the “Framework for Cooperation on Trade and Investment,” which was signed by Mr. Sharma and the U.S. Trade Representative Ronald Kirk on 17 March 2010 during his visit. He had also entered into another agreement on SMEs and the final shape to the key agreement on “Agricultural Cooperation and Food Security”, on which consultations advanced during his visit, is expected to be given during Obama’s proposed visit to India later this year. We must denounce this evolving Indo-US deal on “Agricultural Cooperation and Food Security”, especially the conspiratorial and secretive manner it is being prepared behind the backs of the nation’s farmers and without a semblance of parliamentary discussion and approval
Real Estate Speculation: Corporate Landgrab Continues
After successful instances of resistance struggles against SEZs in Kakinada, Nandigram, Pen in Maharashtra, in Goa and many other places, presently there seems to be a lull in the landgrab drive as well as the resistance movements by the peasantry. But the lull is deceptive and the landgrab threat is still intact and the lull is more due to the bursting of the SEZs real estate bubble in the context of the global crisis and as and when the Indian economy stages a full recovery, the forcible landgrab onslaught by the corporates and the Indian state would also resume in full measure.
When Special Economic Zones mushroomed – 579 approved SEZs as of date but only 335 of them notified, just 101 of these notified SEZs starting operations and very few of them succeeding in attracting units and capital and reaching even half the originally cited figures of investment, production and exports – and were bandied about not only as major enclaves of export but also as centres attracting investment, domestic and foreign, and mindboggling figures were cited. But in the backdrop of the global crisis, the entire exercise proved to be primarily a real estate speculation and many notified SEZs queued up for de-notification.
Ironically, a single SEZ among the 101 which have commenced operations, the Nokia SEZ located in Sriperumpudur of Tamil Nadu alone accounts for 17 per cent of the production and 10 per cent of exports by all the SEZs in the country! If we take a few more SEZs like the gems and jewellery SEZs in Surat (Gujarat) and Manickachan (WB) and the “dirty” oil and petroleum SEZs like Hazira and Reliance SEZs which rank next, some 10 SEZs would together account for more than 90 per cent of production and exports. The rest in the 579 are part of the speculative bubble and as the bubble has burst it remains to be seen how many of them would sink.
Earlier 105 approved SEZs were given one year extension to commence operations but now more are in the queue and those given extensions earlier are now demanding further extensions. Some which have commenced operations have only started some token and minimal operations and are nowhere near the figures originally cited in their applications. Even those that have commenced operations at a reasonable level are alarmed by the Finance Ministry proposal for tax reform and introduction of Direct Tax Code by which earlier concessions like tax waivers on profits extended to corporates would be replaced by supply side incentives at the time of investment. The Commerce Minister himself had to plead the case of SEZs and got a reassurance from the Finance Minister that the tax concessions extended to the SEZs would not be disturbed by the Direct Tax Code.
Anyway, while the full impact of these tax havens on the domestic economy is yet to fully unfold, the real estate speculative nature is already backfiring as the Andhra Pradesh government has announced that it would take back 78 acres out of the 100 acres it allotted to the Fab City SEZ promoted by the SemIndia Fab as the company failed to fulfill the promised investment and employment levels to justify grant of 100 acres at throwaway prices. Soon similar demands would rise from other State governments and farmers and other land losers also against numerous SEZs which grabbed enormous quantity of lands after making exaggerated claims. 
The SEZs promoters were also busy in pre-budget lobbying with their demand for a package of fresh extensions and concession to save their SEZ projects and not only the Ministry of Commerce but even the Finance Ministry is obliging them these days readily as if they are sick industries. At the height of the SEZ craze, the farmers were running to the government with the slogan, “Save Agriculture, Save Our Lands”. Now the SEZ promoters are running to the government with the slogan, “Save SEZs!” Some turnaround, indeed!
But, as mentioned earlier, this is only a passing phase and it is only a matter of time before the brutal landgrab resumes with its full predatory force. There are already several indications for this. So our kisan comrades should not fall into complacency but take lessons from the glorious resistance struggles that came up till now and prepare for more ruthless battles ahead.

Already Orissa is emerging the new battlefield for many more Nandigrams with POSCO, Vedanta University and Kalinga Nagar-II hotting up and a dozen power project plus 6 new approved in the first week of April and the new US interest in mining in Orissa as evident from the US Ambassadors confabulations with Naveen Patnaik indicate major battles are ahead in the near future in Orissa.