The purpose of agriculture reforms is to increase farmers’ incomes. Farmers want the laws (the Farm Bills) repealed . The Supreme Court of India has called for discussions between the government and farmers around the country. It is time to go back to the drawing board about the purpose and the process of agriculture reforms.
Economists say fewer people must work on farms for farm productivity and incomes to be improved. Which begs the question how the millions displaced from farms will earn incomes. Indian industry is not growing much. There too, according to economists, humans should be replaced by technology for improving productivity.
Also read: Farmers have constitutional right to continue with protest: SC
Flip side of productivity
Landholdings are too small for mechanisation to improve farm productivity, economists complain. Their solution is to ‘scale up’ farms. Since mechanisation requires standardisation of work, mechanised farming on scale requires monocropping. Large-scale specialisation upsets the ecological balance. Reduced diversity of flora enables pests to spread more easily; soil quality is reduced; water resources get depleted. Solutions to these new problems require more industrial inputs, with more costs for farmers. The deleterious side-effects of this approach to improve agriculture productivity are very visible in Punjab now. Farm incomes have grown there while water resources have depleted and soils have been damaged.
Also read: Farmers' protest | Protests continue amid stalemate over farm laws
In Seeing Like A State: How Certain Schemes to Improve the Human Condition Have Failed , political scientist James C. Scott documents the history of ‘scientific forestry’ in Germany. The clearing out of other vegetation to plant a single variety of commercially useful tree in neatly spaced rows enabled mechanisation of timber production. However, the ecological imbalance made the trees more vulnerable to pests, and over time, the quality of the timber also reduced. Nature is a complex ‘self-adaptive’ system. It knows how to take care of itself. When Man tries to overpower Nature with his science and industry, without understanding how Nature functions, he harms Nature — and ultimately himself.
Twenty-first century challenges of environmental degradation and increasing inequalities require that the economic calculus shifts from ‘economies of scale with standardisation’ to ‘economies of scope for sustainability’. This will make large-scale mechanisation more difficult. However, it will require the use of more ‘flexible’ human labour. In the long run, not only will this be good for the ecology, it will also increase employment and incomes for people in the lower half of the economic pyramid.
Market access
Farm incomes can increase with access to wider markets for farm produce, which is an objective of the agricultural reforms. The fear of Indian farmers is that they will not have adequate pricing power when pushed into large supply systems and less regulated markets. Connections into global supply chains can increase volumes of sales. However, the terms of trade will always favour the larger players in the supply chains who have easier access to capital. In her book, The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade , economist Pietra Rivoli reveals how small cotton farmers in Texas, unlike farmers in developing countries, became progressively richer as well as politically powerful in setting the rules of global trade. Texan farmers formed collectives to own upstream processing and marketing linkages when they joined global supply chains. Thus, they could obtain larger margins in trade. And their collective voice swayed national politicians.
Strengthen cooperatives
Institutions for cooperative ownership and collective bargaining must be strengthened to give power to small farmers before opening markets to large corporations. The Indian dairy sector is a good example. Its ‘per person productivity is much lower than New Zealand and Australian dairy producers’. However, it provides millions of tiny producers with reasonable incomes which large-scale industrial dairy producers do not. Moreover, with its cooperative aggregation, the Indian dairy sector has also acquired political clout. It has compelled the Indian government to withstand pressure from trade economists who are urging it to join the Regional Comprehensive Economic Partnership (of which New Zealand and Australia are members) to connect the Indian economy with larger supply chains.
The problem of low incomes in India’s agriculture sector is a complex systems problem which cannot be solved by agriculture experts alone. Experts from many disciplines must collaborate to find systemic solutions. Also, the intended beneficiaries of the new policies must be included in the designing of the new policies right at the beginning. Often they understand the realities of systems better than experts do with their abstractions in mathematical equations of inputs, outputs, and productivity. When policymakers say ‘the people don’t get it’ after the policy is announced and the intended beneficiaries protest, it is an indication that the experts didn’t get it.
The reforms of the 1990s
The stand-off in agriculture reforms, with farmers besieging the national capital demanding they be heard, has caused a flurry of discussions about democracy, consultation, and processes for economic reforms. Economists point, wistfully, to the firmness with which bold reforms were brought about in 1991, and how the government stood up to the ‘Bombay Club’ of industrialists who opposed them. They also complain that politics (and even democracy) comes in the way of good economics. This reveals an inadequate understanding of processes by which complex economic reforms are evolved.
The immediate beneficiaries of the 1991 reforms were all Indian consumers, rich and poor, who would benefit from access to better quality products from around the world. The principal opponents of the reforms were a few large industrialists whose products citizens were not satisfied with. Governments have more power over a few industrialists than they have over the masses.
With a stroke of the pen, policies could be changed in the early 1990s, the immediate benefits of which were clear to the masses. Hundreds of millions of citizens who hope to be beneficiaries of the ‘big ticket’ reforms, in agriculture, and in industry too, now want to earn better incomes, to earn enough to buy all the good stuff they have begun to aspire for, and even to make both ends meet. They cannot see how the bold reforms being pushed through will result in improvement of their incomes. A trickle down is promised. When will that ever happen, they ask?
The 1991 reforms changed industrial licensing and trade policies — both subjects of the Union government. ‘Factor market’ reforms, in land, agriculture, and labour regulations, which are necessary to realise the full benefits of the 1991 reforms are State subjects in which States have jurisdiction too, and with good reason. They affect the lives of people on the ground, and differently, around the country. Therefore, the central government, no matter how strong it is, must not force these reforms onto the States.
Silo experts cannot help
India’s policymakers must improve their expertise in solving complex, multi-disciplinary problems. They must apply the discipline of systems thinking, and not rely on siloed domain experts. Moreover, citizens around the country must be listened to at the very beginning, and throughout the evolution of policies; not communicated to at the end by experts who then complain that citizens are being misled by political forces.
Prof. Mark H. Moore says, in Creating Public Value: Strategic Management in Government , “We might think of (the process of making policy) as helping to define rather than create public value. But this activity also creates value since it satisfies the desire of citizens for a well-ordered society, in which fair, efficient, and accountable public institutions exist.” Trust is essential for a well-governed society. The lesson for India’s leaders is: good processes for making public policies build trust between citizens and their governments.
Arun Maira is a former Member, Planning Commission and the author of ‘Transforming Systems: Why the World Needs a New Ethical Toolkit’
