Farmers in Amritsar burn an effigy of Indian Prime Minister Narendra Modi, Reliance Industries chairman Mukesh Ambani and Adani Group chairman Gautam Adani to protest against corporate businesses after farm bills were passed in Parliament. Photo: AFP / Narinder Nanu

“No race can prosper until it learns there is as much dignity in tilling a field as in writing a poem.” – Booker T Washington

Fire, the wheel and agriculture are three key innovations that transformed human lives forever. But agriculture plays a more crucial role in humanity’s progress. It marked the transition from nomadic bands into early civilization.

The rise of the human population coincides with the rise of agriculture. Despite that fact, human civilization has witnessed more successful revolutions in the industrial and information realms, while agriculture remains most sensitive to humans because the idea of societies, states, and nations all originated from the land.

That’s why there is an emotional connection to it across human societies. More so, it still plays a crucial role in the economy of developing countries and acts as the main source of food, income, and employment for rural populations.

India is one such country, where agriculture contributes about 17% of total gross domestic product and provides employment to more than 60% of the 1.3 billion population. So any changes are likely to bring emotional responses from hundreds of millions of people as they will impact not only the structure of the economy but also their lives. 

Recently, Delhi has become a war zone. Its borders with neighboring states Haryana and Uttar Pradesh have closed, as the government locks horns with farmers over controversial legislation that will change their fate.

A countrywide strike by farmers was recently called for. About a hundred thousand farmers have laid siege to the national capital, choking almost all the entry points. Tens of thousands of people associated with farm unions are sitting on the roads of neighboring states Punjab and Haryana and more than 60,000 farmers are on the Delhi borders protesting against the bill.

Under the supervision of the Delhi Police, government staff have started strengthening the border-sealing arrangements. The roads are being obstructed strongly by boulders unloaded from trucks by large cranes.

So what’s inside the controversial bills that have pitted Indian farmers against the government led by Prime Minister Narendra Modi? 

Farmers’ futures in question

In the third week of September, within the span of three days, both houses of the Indian Parliament passed three major bills aimed at transforming the agriculture sector with the promise of raising farmers’ incomes. Modi hailed the passage of these bills as a watershed moment that he hopes will act as “liberation” of farmers from the tyranny of middlemen.

But as soon as the bills were passed, farmers from Punjab and Haryana launched their protest. They fear that the new legislation will be a death warrant for small and marginalized farmers as the small middleman is replaced by a bigger one with gargantuan financial firepower.

They foresee that their losses will be bigger than their gains, while the main beneficiaries will be agricultural corporations rather than themselves.

But to understand whether there is any truth to such claims or it is mere speculation, let’s get into the details of the bills to get a clear picture.

What the bills do

The three bills are the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, and the Essential Commodities (Amendment) Bill.

The first bill allows intra-state trade of farmers’ produce beyond Agricultural Produce Market Committee markets. Currently, farmers take their produce to wholesale markets, or mandis, governed by the APMC. These markets also became nodal points for government procurement of food grains.

The APMC in each state decides the prices it will pay the producers, and then sells the produce on. Through this mechanism, the state governments monitor the agricultural market. But the Promotion and Facilitation bill overrides the state laws, and from now onward, policy decisions like MSP (Minimum Support Price) and procurement of food grains will not be under the jurisdiction of state governments.

The second bill creates a framework for contract farming through an agreement between a farmer and a buyer before the production or rearing of any farm produce, setting a minimum one year and a maximum of five years. This act “allows” the farmers to enter agreements with “sponsor parties” to undertake contract farming quite similar to those that happened under the East India Company in the form of indigo cultivation in colonial times.

But such practice is already going on in various parts of the world, and has produced disastrous results, as sponsor parties force the farmers to produce according to their demands or market conditions, instead of local food demand or crop cycles. And the farmers have to honor the commitment as they are legally bound by it.

The third bill allows the central government to regulate the supply of certain food items under extraordinary circumstances such as famine or war. But there are serious legitimate concerns that have not been addressed, such as why the government didn’t guarantee the purchase of the listed crops on the MSP. What happens if farmers do not get the minimum support price from private traders?

The MSP is a minimum price guarantee from the government that acts as a safety net or insurance for farmers when they sell particular crops. It cannot be altered in any given situation.

Why were farmers not involved in the decision-making process before these laws were passed? What was the hurry to pass these bills in three days without proper discussion? What about the condition of the sharecroppers and landless peasants, who comprise a large portion of the Indian farmer community? 

There is no denying the fact that over the years, the APMC system has not been as effective as expected and the government has a substantial burden on its shoulders in terms of cushioning farmers against sharp drops in MSP. But instead of filling those loopholes innovatively, the government wants to replace the old structure with new ones, putting the most vulnerable section of society in the hands of a few corporate players. It’s like putting the sheep in front of the wolves.

So the question remains, if the farmers didn’t want these changes, why was the government so eager to transform their lives? Does it care about farmers’ interests, or is there something else in play?

Some farmers are accusing the government of acting at the behest of Mukesh Ambani and Gautam Adani, Modi’s closest corporate allies. The farmers’ suspicion is understandable, not only because these big players have a lot of clout, but also because their past experiences with them have not been rewarding. But one needs to go into the details to see whether or not this accusation holds some truth. 

Government bills or Ambani’s bills?

At the 42nd annual general meeting of Reliance Industries in August last year, Mukesh Ambani put forward a US$700 billion opportunity for investors in the company’s retail arms “empower” more than 30 million small traders and merchants in the name of a New Commerce Plan. The idea was to convert 80% of the unorganized retail industry into the ambit of Reliance Retail. It was going to be India’s largest online to offline (O2O) e-commerce platform.

The plan was highly ambitious but the question in the investors’ minds was how Ambani was going to do it. But if a favorable government on your side, no ambition is too small.

It took only two months for Ambani to take the first steps toward his ambitious project by the soft launch of the e-commerce platform JioMart to take on Amazon, Flipkart, and another e-commerce platform in December 2019. It is an O2O e-commerce platform under the Reliance umbrella that retails groceries through local shops.

In February this year, Ambani moved one step further with the launch of the Jio Krishi (Jio Farm) application. The app is meant to enable precision farming aided by farmland data. It will use data analytics to alert farmers about the right time to sow, irrigate, and fertilize their crops.

Now, it appears that Reliance Jio is all set to foray into the agriculture sector, which accounts for 15% of the country’s GDP. Reliance’s farm-to-fork business will focus on ensuring a 12-hour delivery cycle from harvest to the store by sourcing nearly 50% of all vegetables required for retail.

This will benefit its existing grocery businesses Reliance Fresh and JioMart, backed by Reliance Jio, the country’s second-largest telecom operator. Thus the company has captured a major chunk of the customer base in the rural as well as the urban sector. Jio Krishi could also be integrated with JioMart, where Reliance would make the deliveries directly to consumers from the farm to their home.

Ironically, soon afterward, in April this year, US tech giant Facebook announced that it was buying a 9.99% stake in the Jio platforms for $5.7 billion. It’s the largest investment ever made by a tech company in return for a minority stake, as well as the largest FDI (foreign direct investment) deal in India’s tech sector to date.

Facebook has good reason for paying such a high price. Jio and WhatsApp have a combined user base of 700 million in India. With farmers coming on board, WhatsApp Pay could gain early momentum, if indeed it is integrated within Jio Krishi. JioMart has already started taking payments through WhatsApp.

But the story doesn’t end here. On August 30, Reliance announced that it had acquired India’s second-largest retailer, Future Group, for $3.5 billion, giving it a strong foothold on its new O2O commerce sector. After this acquisition, Reliance became the single largest retail occupier in India, and this brings with it considerable clout.

So one must wonder whether it’s a mere coincidence that the government introduced these farm bills immediately after all those mergers and acquisitions. It looks as though a certain chronology has been followed. But what is interesting is that the Competition Commission of India didn’t question any of the Reliance deals despite Amazon raising a serious objection about the Reliance-Future deal, or where the existence of a monopoly is evident.

It doesn’t require much guessing as to why the government is so reluctant to make any changes to the farm bills. If so much money is involved, the stakes would be too high.

Recently in a digital interaction with Mark Zuckerberg on the Facebook-Reliance deal, Mukesh Ambani said, “A crisis is too precious to be wasted.” In this case, the Covid-19 epidemic did provide him an opportunity he did not want to waste.

So it doesn’t require much common sense to figure out who is going to get the maximum benefits. But the truth is, millions of farmers who are the soul of India are begin sacrificed for the sake of one man’s ambition. If today it is Indian farmers’ future that is in jeopardy, sooner or later it will be that of the rest of the population.

Ravi Kant

Ravi Kant is a financial writer with a deep passion for technology and economics, and also covers international politics and cybersecurity. He has wide experience in the financial world and his analysis has been published in leading magazines such as Mogul News and The Indian Economist. He is author of the book Coronavirus: A Pandemic or Plandemic. He tweets by @Rk_humour