Three controversial laws that will change the way Indian farmers do business have sparked one of India’s biggest protests and a months-long standoff with the government.
Since November, tens of thousands of protesting farmers demanding repeal of the laws have camped on highways around Delhi.
Parliament passed the three bills in September, which were then made into law by the president.
Opposition parties have accused the government of disregarding parliamentary procedure by hastily passing bills and ignoring their demand to send bills to parliamentary committee for further deliberations.
But in addition to the political turmoil, the bills also divided opinions – while Prime Minister Narendra Modi called reforms a “watershed moment” for Indian agriculture, opposition parties called them “anti-farmer” and compared them to a “death sentence”.
Groups of angry and concerned farmers consider them unfair and exploitative. Pro-reform economists have widely welcomed the move, saying the new laws will help improve agricultural incomes, attract investment and technology and increase productivity.
Nearly a dozen rounds of negotiations between the 30 farmers’ unions and the government have yielded no results.
What exactly do the accounts propose?
Together, the reforms will loosen the rules on sale, prices and storage of agricultural products – rules that have protected Indian farmers from the free market for decades.
They also allow private buyers to accumulate essential commodities for future sales, which only government-authorized agents could do before; and they outline rules for contractual agriculture, where farmers adapt their production to meet the demand of a specific buyer.
One of the biggest changes is that farmers will be allowed to sell their products at a market price directly to private participants – agricultural companies, supermarket chains and online grocery stores. Most Indian farmers currently sell most of their production in government-controlled wholesale markets or mandis at guaranteed minimum prices.
These markets are run by committees made up of farmers, usually large landowners, and traders or “commission agents” who act as intermediaries to mediate sales, organize storage and transportation, or even finance business.
It is a complex system supported by regulations and a series of personal and commercial relationships.
The reforms, at least on paper, give farmers the option of selling outside the so-called “mandi system”.
So what’s the problem?
The problem is that it is not clear how this will actually work. On the one hand, farmers can now sell to private participants in many states, but what these laws offer is a national structure.
But farmers are mainly concerned that this will eventually lead to an end to wholesale markets and guaranteed prices, leaving them with no reserve option. That is, if they are not satisfied with the price offered by a private buyer, they cannot return to the mandi or use it as a bargaining chip during negotiations.
“First of all, farmers will be attracted to these private actors, who will offer a better price for production. Government mandils will pack up in the meantime, and after a few years, these actors will begin to exploit farmers. That is what we fear, ”Multan Singh Rana, a farmer in the northern state of Punjab, said.
The government said the mandi system will continue and will not withdraw the Minimum Support Price (MSP) it currently offers. But farmers are suspicious.
“This is a death sentence for small marginalized farmers. The goal is to destroy them by handing over agriculture and the market to large corporations. They want to steal our land. But we will not allow them to do that,” Sukhdev Singh Kokri, a farmer, Punjabi told the BBC.
The protests were strongest in Punjab and the neighboring state of Haryana, where the mandi system is strong and productivity is high – so only the government was able to buy that volume of production at a set price.
“Giving the farmer freedom to sell outside the mandi system, to anyone, is a welcome step, to untie the farmer,” says economist Ajit Ranade.
“But you need the Mandi system to coexist with the private trade system. Perhaps the government needs to create a written law that will not remove the MSP or the Mandi system.”
Other analysts also say that much larger reforms – in land use, for example – are needed to give private players any real influence.
India still has strict laws on the sale and use of agricultural land and high subsidies that protect farmers from market forces.
Why do farmers in India feel insecure?
Given this, Indian farmers should not complain.
The government offers generous subsidies, income tax exemptions and agricultural insurance. They have guaranteed prices for 23 harvests and debts are often canceled when they are unable to repay loans.
But farmers have been boiling for a few years.
Although more than half of Indians work on farms, agriculture represents only one sixth of the country’s GDP.
Indian farmers are mostly small or marginal: 68% of them own less than a hectare of land. Only 6% of them actually receive guaranteed price support for their crops, and more than 90% of farmers sell their products on the market. More than half of the farmers, in the words of an economist, “have nothing to sell”.
From low productivity to fragmented properties, lack of storage infrastructure and high indebtedness, there are several reasons for persistent agrarian suffering in India.
Declining productivity and a lack of modernization have long hampered progress.
The size of the plots is decreasing, as is the income from agriculture. Prices can be extremely erratic and middlemen’s cartels swallow much of the profits.
“Anger over injustice to farmers was building. Now it is being channeled through this protest against the new laws,” said Devinder Sharma, a food and trade policy analyst.
“Leaving farmers to the tyranny of markets would be tantamount to putting sheep before the wolf. There are leaks in the current system and it needs to be reformed, but replacing one failed model with another is not the solution,” said Mr Sharma.
There are no easy answers. But experts agree that in a country where agriculture employs so many millions, leaving farmers’ fate to the whims of the market cannot be the only answer.
What did the government propose?
The government suggested adjustments to the laws and subsequently offered to suspend them for up to 18 months, even while negotiations continued.
But the farmers remained firm, saying they would settle for nothing less than repealing the laws.
Why did the protests become violent?
On January 26, a demonstration against the laws turned violent after protesting farmers broke through police barricades to invade Delhi’s historic Red Fort complex.
On foot and on tractors, the protesters were part of a major demonstration planned for Republic Day in India. Many protesters deviated from the agreed routes and clashes broke out with the police.
One protester died and about 500 police officers were injured.
Farmers’ union leaders condemned the violence and blamed dishonest elements on a peaceful march for blame for the chaos.
Many said the protests lost their legitimacy after the violence. Others said that farmers should accept the government’s offer to suspend reforms and return home.
Since the beginning of February, iron nails, rods, barbed wire, stones and improvised walls have been used to barricade the capital’s borders against protesters.
But the farmers refused to leave and did not yield to their demand. The protest is already in its third month and there is no solution in sight.