Agriculture, Sustainable Development, and Government Policy in Developing Countries


By Dr. Kalim Siddiqui 

I. Introduction

Bandung Conference (1955) in Indonesia was the first large meeting of leaders from newly independent countries from Asia and Africa, where a declaration was submitted, which included opposing colonial and neo-colonial policies, to improve cooperation among the newly independent countries. It was also said to improve the living conditions of their people by safeguarding economic sovereignty and raising agricultural output to avoid occurrences of famines, which killed millions of people in the pre-independence period (Siddiqui, 2020a; 2020b). However, the strategy adopted to raise agricultural output was through land distribution i.e. allocating land to the tillers. It aimed, firstly, to remove rural inequality and increase output and incomes of the rural poor. Secondly, by increasing rural incomes, it was intended to expand markets for industrial goods. In most of East Asia, such as Japan, South Korea, and Taiwan, and also in Vietnam and China, land was re-distributed to the tillers, which dramatically reduced rural inequality and increased agricultural outputs. Moreover, the state took a number of measures in the industrial sector both to encourage investments and joint-ventures, and also to encourage exports. As a result, these countries emerged as successful and economically powerful nations.

However, in contrast to East Asia, land reforms in South Asia and in Africa either did not take place or were incomplete. It did not make any dent on rural inequality. For instance, land reform measures in India only removed big urban-based absentee landowners and did not touch village-based big-landlords. (Siddiqui, 2019b) Thus, rural inequality continued and domestic markets for industrial goods remained sluggish. However, to increase food production in the late 1960s, a technological solution was initiated, where the government subsidised new agricultural inputs such as fertilizers, pesticides, power, and irrigation, which was known as the ‘green revolution’. By the early 1990s, these policies were exhausted and the farmers’ frustration rose to new heights. However, by 1991, the economic crisis deepened and the government had to borrow money from the International Monetary Fund (IMF) and accepted IMF conditionality by adopting a ‘Structural Adjustment Programme’ (SAP). This resulted in the gradual withdrawal of agricultural subsidies and which sharply increased input prices.

At present, Indian agriculture is facing a deep crisis and farmers’ distress and suicides have risen sharply since the early 1990s. Nearly thirty years have passed since the neoliberal reforms were launched in India, but until recently, inadequate attention was paid to the agricultural sector. The economic liberalisation first ignored agriculture and treated it as if it were just another industry. The policy framework for agriculture largely continued as laid out during the ‘Green Revolution’ i.e. it provided credit for investment in new technologies, and the output was purchased by the government via the Food Corporation of India (FCI) and sold through the Public Distribution System (PDS). Until recently this system served well to buy surplus foodgrains from agriculturally developed regions like Punjab, Haryana and western Uttar Pradesh, and distribute the output to food deficient regions like Bihar, Orissa, Madhya Pradesh and elsewhere in the country.

Indian agriculture is facing a deep crisis and farmers’ distress and suicides have risen sharply since the early 1990s. Nearly thirty years have passed since the neoliberal reforms were launched in India, but until recently, there inadequate attention was paid to the agricultural sector.

Internal pressures on state support for agriculture occurred at a time when there were more fundamental strains emerging in this sector. With a rising population and divisions of land between members of a family, farms became smaller. At the same time, the growth of manufacturing was very slow and employment opportunities stagnated in this sector due to advancements in technology and automisation. Services provided very few job opportunities and overall unemployment soared to a very high level. Since 1991, the services sector of the economy had begun to grow at a higher rate. As a result, the share of agriculture in the GDP had more than halved from 33% in 1991 to merely 13% in 2019. While on the other hand, still more than two-thirds of India’s population relied on agriculture for their livelihoods, which had not changed in the last thirty years. The recent ‘Farm Laws’ are the instruments that will open up agriculture to the market and corporatisation. Farmers also know from experience that if the international market could offer higher prices in some years, then the farmers will benefit, however, at a time of global foodgrains surplus, prices would crash. Without MSP (Marginal Support Prices) guaranteed by the government for their products, they would be left with large unsold stocks that would bankrupt them and increase their debts.

Therefore, the ‘New Farm’ laws brought by the BJP government constitute a major change favouring the entry of agro-business capitalism and that of increased centralised control of agriculture in India. The economic distress leads the overwhelming majority of farmers to suicide. Farm income has been dwindling over the past many years, and farmer debt has been increasing since 1991 (Siddiqui, 2014; 2018b). Furthermore, the de-regulated agricultural markets often raise problems related to uncertainty, equity, collusion, quality control, asymmetric information, contract enforcement and abuse of non-economic power, among other possible sources of so-called ‘market failure’.

Farmers shout slogans during their ‘Delhi Chalo’ protest march against the Centre’s new farm laws, at Singhu border on December 2, 2020 in New Delhi, India. (Sonu Mehta | Hindustan Times via Getty Images)

This study will also emphasise the importance of small-scale farms and the importance of food sovereignty in developing countries. In recent years, some big multinational companies bought land in poor countries, which could be environmentally destructive. We must learn from Central American experiences, where the US fruit companies took over lands to produce fruits and cash crops to be sold on US and European markets (Siddiqui, 1998). Several decades later, studies found that such policies did not benefit the local population, fewer jobs were created due to increased mechanisation, and a high level of use of fertilizers and pesticides has brought ecological and environmental problems to the region. Thus, the agrarian model pursued by the developed countries is capital-intensive and labour-saving, and is based on excessive use of chemical fertilizers and pesticides and average farm size is much larger than the developing countries. Such agrarian solutions are not viable and suitable for developing countries.

II. The Debate

In recent years in some developing countries, foreign companies have bought land and displaced local farmers to increase agricultural output. In the past, commercial farming has often opted for policies that were environmentally destructive and policies that undermined local farmers but largely benefited multinational agribusiness. This shows the rise of a global ‘corporate industrialised agriculture’, and indicates a ‘changing relationship to food imposed by the ‘industrialization of agricultural production and the globalization of agricultural trade’, resulting in ‘food insecurity, fossil-fuel dependence and global warming’.

The International Forum on ‘Food Sovereignty’ in 2007 in Mali was a very important policy discussion. The conference was represented by 500 academics and farmer leaders from 80 countries that discussed future polices and strategies to provide directions for farmer movements for the importance of food sovereignty and how to strengthen it. The Declaration of Nyéléni in Mali (2007) encapsulates the vision of the conference: “Food sovereignty is the right of peoples to appropriate food produced through ecologically and sustainable methods. It puts those who produce, distribute and consume food at the heart of food systems and policies rather than the demands of markets and corporations”.

Food sovereignty emphasizes ecologically appropriate production, consumption, and distribution with socio-economic justice and more reliance to local food systems as ways to solve problems of hunger and guarantee sustainable food security for all peoples. It empowers local community control of productive resources; argues for agrarian reform and tenure security for small farmers; promotes biodiversity; and respects the local knowledge of indigenous peoples in developing countries.

Food sovereignty emphasizes ecologically appropriate production, consumption, and distribution with socio-economic justice and more reliance on local food systems as ways to solve problems of hunger and guarantee sustainable food security for all peoples.

Increasing dependence on industrial food has reduced smallholder incomes in local markets, and seems to have served to undermine the viability and livelihood of small-scale farms. Such development has led to increased food import dependency and has also increased the consumption of unhealthy diets, such as fewer varieties of wheat, maize and rice, along with a range of highly processed foods. It has also increasingly displaced native food in favour of genetically modified crops. It has made a number of developing countries increasingly rely on food imports, which has an adverse impact on the balance of payments. The availability of cheap imported food is gradually destroying local food production because the local cost of production based on small farms is relatively higher than imported subsidised food from developed countries, and this is described as ‘food dumping’. This situation has led to small farmers abandoning farming and migrating to towns as unemployed and underemployed, who often settle in slums in big cities. Moreover, poorer countries are especially threatened by conditions they have done little to cause and could become still more dependent upon food imports from developed countries that are part of these countries’ extremely disproportionate contribution to climate change.

Food sovereignty is inherently a multidimensional concept. The only way to be a food sovereign is to improve food production and distribution, which should be linked to other sectors of the economy. Food sovereignty discourses should focus on food production, but the policy should strengthen food producers and consumers and facilitate making them truly sovereign, then both will have to be supported by and incorporated into a variety of social, economic and political policies related to the agriculture sector that go well beyond the food itself. In short, food sovereignty requires a healthy, sustainable and diverse rural economy that goes well beyond food production.

To understand the complex socio-economic situation of the peasantry, nearly a century ago in Russia, Chayanov presented the ‘theory of peasant economy’. Chayanov’s family household model in agriculture had focused on the internally generated needs and resources of the peasant family. According to him, the aim of peasant households is to meet the needs of (simple) reproduction while minimising ‘drudgery’ (of labour). His model of ‘peasant economy’ is centred on the organisation of ‘family labour’. On the other hand, the imperatives of reproduction in family labour enterprises mean that labour costs are discounted in adverse conditions, generating peasant ‘self-exploitation’. In effect, peasants tend to farm more intensively than capitalists, albeit at lower levels of labour productivity; similarly they are often constrained to buy or rent land at higher prices, and to sell their product at lower prices, than capitalist farmers are prepared to do. He assumed that the logic of a peasant economy (simple reproduction) excludes the capitalist imperative of accumulation for its own sake (expanded reproduction). Increasing dependence on industrial food has reduced smallholder incomes and seems to have served to undermine the viability and livelihood of small-scale family farms in the developing countries (Bernstein, 2009).

The agricultural sector in developing countries suffers from historical legacies that favoured the industrial sector, known as ‘urban-bias’. Policy-makers have contended that agriculture generates only limited backward and forward linkages and that development, therefore, necessarily means the rapid transition from rural economies to urban ones. Particular industries and urban areas were targeted for development while the farmers, especially small holders, were seen as sources of cheap labour, and the large land holders were seen as producers of raw materials and cheap food. The current agrarian crisis in rural areas has less to do with a rejection of farming per se than with a rejection of farming under the negative, insecure conditions fostered by ‘urban-bias’.

The commodity production in the full sense occurs when the product which is both a use-value and an exchange value for the buyer, is only an exchange value, just so much money, for the seller; which is determined by the market. But it leads to destruction of small farms by the corporate. The withdrawing of the state support that had prevented the destruction of small size farms by corporate capital, which will make them increasingly unviable and will further increase in farmer’s suicides. In fact, under commodity production in developing country like India, with the State not interfering in the functioning of the agricultural markets will bring enormous changes in the rural society and economy. Such as, it would open up Indian agriculture to the dictates of the world market. Moreover, the demand of the developed countries has risen for tropical crops and fruits, which means a diversion of land away from foodgrain production. This would further mean the country will become food-import dependent. So, when world food prices fall, the farmers’ debts will increase. Then many farmers will be forced migrate to cities in search of jobs, swelling the number of unemployed (Siddiqui, 2012a; 2017c).

A number of researchers have found that industrial agriculture is the biggest single contributor to a loss of biodiversity, and is profoundly shaped by contemporary capitalism, not least because only a handful of “commodity” species are deemed to have any value, and because, in the sole pursuit of profit and growth, “externalities” such as pollution and species loss are ignored. Agro-exporting systems leave rural populations increasingly deprived of land, and in developing countries, create an increasingly food dependent large population. The neoliberal policy of market deregulation across the world has intensified the marginalization of small farmers in developing countries. It has been found that the adverse impact of climate change is disproportionately felt by the poorest people in developing countries, who are contributing to it the least. Identifying these inequalities matters because inequality is endemic to capitalism (Siddiqui, 2019a).

However, neoclassical economists argue that to improve efficiency, the demise of the agriculture sector and in particular small farmers is seen as necessary for economic progress. However, this is fundamentally incorrect in the present era of global climate change, where sustainable agriculture is central to a new sustainable development paradigm. The neoclassical economists’ belief regarding the one-size-fits-all approach to measuring and understanding complex investment environment issues is very problematic, especially when based on the interests and priorities of particular institutions and powers.

We must then move into a new realm of creative thinking, collective democratic policy-making, respect for local and indigenous people’s knowledge and experiences, and involving them in long-term planning to develop ecologically friendly and sustainable agriculture. This is the only way to deal with the challenges that agriculture, economy, ecology and society currently face in developing countries.

The neoclassical economists’ solution to the contemporary environmental crisis is more market not less market. For this solution, there is a need to change the market-led economic policy to address the contemporary agricultural crisis. They see in monetary terms, and the loss of nature is very difficult to monetise. They favour using market prices for all these irreplaceable commodities. The contemporary corporate-led food regime, from the concentration of power in food chains to genetically modified seeds is consolidating global markets in the name of market freedoms and efficiency. The critique such as, Naomi Klein (2015), a Canadian author, notes: “The market has not and cannot fix the climate crisis but will instead make things worse, with ever more extreme and ecologically damaging extraction methods accompanied by the rampant disaster capitalism.”

In the world generally, there seems to be increased trade and capital liberalisation, (Siddiqui, 2020b; 2020c) especially in agricultural commodities, which means a greater amount of trade, and thus could result in a loss of biodiversity and environmental crisis. Reducing tariffs and removing domestic regulations against multinational companies could have a much wider impact on local economies, without foreign agro-companies sharing any responsibilities. It is viewed that due to access to more information, low wages, and relaxed environmental regulations, these global food companies would find it attractive to invest in agriculture in developing countries, as it increases their markets and profits.

III. The Issue of Food Sovereignty 

There is a strong case that a new phase of global capitalism with new modalities of accumulation started to emerge for the last three decades which, among other things, changed inherited conceptions of the agrarian question centred on the ‘national’ paths of the development of capitalism in the countryside. The current globalisation and increased trade in agricultural commodities will have a longer lasting impact on developing countries. Under the WTO (World Trade Organization), trade liberalisation will create a shift in the global trade patterns of agricultural commodities, (Siddiqui, 2018d) and would affect the world market prices of agricultural commodities. (Siddiqui, 2019c; 2018a) This will lead to the increased involvement of global food companies in the developing countries which would focus on global consumers rather than local markets. Speculation in foodgrains will lead to increased ‘financialisation’ (Siddiqui, 2017d).

Under WTO pressure, the neoliberal reforms in developing countries, required to remove government subsidies and other forms of government support to small farmers in developing countries. This will reduce government investment and aid budgets for farming and will promote ‘export platforms’, especially of animal feeds and high-value commodities. This will lead to neglect of food production, and shortages will lead to increased food prices and will adversely affect food consumption and access to food for the poor. Moreover, the increasing concentration of global corporations in both agricultural inputs and agro-food industries, marked by mergers and acquisitions, and the economic power of fewer corporations commanding larger market shares, will reduce competition. In recent decades agricultural exports have increased sharply both in terms of value and volumes, as shown in Figure 1. The developed countries namely, the US and the European Union are among the world’s top agricultural export countries (See Figure 2). Moreover, the big corporations along commodity chains have increased their control from farming through processing and manufacturing to retail distribution. Such development will further encourage specialisation in the cultivation of fewer crops i.e. ‘monoculture’ and it will contribute to the loss of biodiversity.

Figure 1: World’s Agricultural Exports, 1950 – 2018.

Figure 1: World’s Agricultural Exports, 1950 – 2018.
Source: WTO, World Trade Statistics Review, 2019.

Figure 2: Ten Top Agricultural Export Countries in the World, 2019.

Figure 2: Ten Top Agricultural Export Countries in the World, 2019.

The tendencies of capitalist agriculture, including the pace of technological change in farming with the increased use of chemicals, and in its upstream and downstream industries, is driven by the accumulation strategies of agricultural input and agro-food corporations. Large-scale mechanization, which has intensified production in the name of achieving economies of scale, and keeping food prices low, is booming. Such policies will lead to a sharp fall in small-scale family farming and a rise in rural unemployment. While the manufacturing sector is either stagnant or growing very slowly, and thus, unable to provide jobs, it will lead to increased joblessness and poverty. If half of a developing country’s population was pushed out of the countryside and into the cities to rely on cheap imported food, this could have a devastating long-term impact and could further destabilise many countries. This is a central threat running through the political economy of capitalism and agriculture with implications for food sovereignty.

The challenge of regulating multinational agribusiness and international trade is important in order to ‘protect’ ‘domestic food production’ and small farmers as ‘guardians of the commons’ and to support resistance to ‘land grabbing’ for commercial food farming, and mining. There can be serious contradictions between the key features of the food sovereignty vision, such as between the goals of national and local food self-sufficiency; between promoting food crops and a farmer’s freedom to choose to what extent to farm, which crops to grow, and how to grow them; between strengthening family farming and between collective and individual rights, especially over land ownership.

IV. The Importance of Food Self-Sufficiency

A dramatic rise in food prices in 2007-2008 shook the world out of its complacency. There was nearly a 40% rise in the food price index relative to 9% in 2006. Wheat prices almost quadrupled and maize prices almost tripled between 2000and 2008. The adverse effects of this price rise fell on foodgrain importing developing countries and on net buyers of foodgrains within countries.

In 2018, Asian farmers produced 90% of the world’s rice and around 40% of its wheat and total cereals. But most Asian countries consume what they produce – the exports come from only a few. For instance, although over 80% of rice exports came from Asia in 2018, the exporters were primarily Thailand, Vietnam, India and Pakistan and, beyond Asia, the US. Similarly, 85% of wheat exports came from only four regions – North America, Russia, the EU and Australia; and 81% of maize exports came from North America and Latin America especially Argentina and Brazil. Taking all cereal exports together, 65% came from North America and Europe (see Figure 3).

Foodgrain output and supplies will fall and prices rise, for example, if the exporting countries shift large areas earlier devoted to foodgrains to biofuels, or fail to control speculative hoarding. Adverse weather conditions can add to these negative effects. Such factors were important in the 2007-2008 price rises. In that year, almost 100 million tonnes, or 4.8% of all cereals produced, went into ethanol production. Thirty-three percent of the corn production in the US in 2008-2009 was similarly used. Facilitated especially by government subsidies for growing energy crops, the US farmers shifted large areas from soybean and wheat to maize for biofuel.

Seeing the vulnerability in global food production, the goal of food self-sufficiency for developing countries becomes extremely important. For instance, the government policy should aim at reducing vulnerabilities arising from the dependency on food imports. Many of the developing countries depend on food imports from developed countries, and only a few developing countries, to fulfil their food needs. Given the uncertainties arising from such dependence, such as rising and volatile food prices, and the effects of climate change, national efforts are needed to achieve food self-sufficiency and move towards low chemical, environmentally sustainable agriculture.

Figure 3: Production, Exports and Imports of Total Cereals by the World’s Regions, 2018, (%).

Figure 3: Production, Exports and Imports of Total Cereals by the World’s Regions, 2018, (%).
Source: Based on FAO Statistics (http: /

But national self-sufficiency goals cannot translate simply into local or household self-sufficiency goals. Nations have to provide food for all their citizens, many of whom are in non-farm or urban jobs, and without government support, farmers may not make choices that move a country towards food self-sufficiency.

In the agrarian transitions we are currently witnessing, an increasing proportion of small farmers are abandoning agriculture in developing countries, especially since the neoliberal policy was launched. The WTO promotes trade liberalisation and the role of multinational corporations in agriculture (Siddiqui, 2019d; 2016a). Such policies contribute to the demise of small producers in developing countries. Earlier, agricultural production was centred on use-values, simple reproduction and quality foods that were environmentally and ecologically friendly to local soils and locally consumed. But mechanical agriculture has focused on exchange-values and big corporations’ profits and trade; it is ‘the global market-driven paradigm’.

As in Mexico and elsewhere, good land was devoted to export crops, imports of foodgrains increased and the local markets were driven by import prices. In China, the increased production of meat for the Chinese diet requires heavy imports of soybeans as feedstuffs for livestock. China joined the WTO in 2001; it resulted in increased food dependency and increased grain imports. However, China has no foreign exchange crisis due to increased agricultural imports as it has a huge manufacturing export surplus, but such is not the case for many developing countries. However, in China too, there are ecological limits due to water scarcity, governments funds for research and development have declined, and also millions of hectares of agricultural land have been lost to urban-industrial uses.

In the US, agro-fuels have aggravated food-price volatility, and contribute to global warming. The US received US $92billion in subsidies in 2006-2013. The main beneficiaries were transnational corporations like Cargill and ADM, and big financial companies like George Soros and Bill Gates, who have invested heavily in agro-fuels. Worse, at least for the EU, where 58% of biodiesel is imported, it will cause further deforestation in developing countries like Brazil, Malaysia, and Indonesia. These countries are regarded as the most efficient producers of agro-fuels, mostly from sugarcane. Moreover, the US government, for instance, spends nearly US$20 billion on farm subsidies annually, ranging from insurance, price loss coverage, land improvement, marketing, and research and extension support. In Japan, with an agricultural economy dominated by small farms, the government support for producers is more than 40% of gross farm receipts.

V. The Deepening Crisis in Indian Agriculture

The ‘Green Revolution’ was launched in Indian agriculture by the government in the mid-1960s, when it had acute food shortages and the country was forced to resort to foodgrain imports. (Siddiqui, 1999; 1997) This was made possible due to government investment in areas like irrigation and power and also government set-up of agricultural universities, marketing networks and provision of cheap credit from institutional sources (Siddiqui, 2014b; 1992). As a result, the state played a critical role in enabling its farmers to pursue the path of capitalist production in agriculture. This policy did manage to raise output and productivity and made India self-sufficient in foodgrains (Siddiqui, 2019d; 2018b). Moreover, besides raising incomes for big landowners, it also benefited small and medium farmers to a lesser extent. However, by the late 1980s, the agricultural crisis deepened and productivity and investment slowed down so the incomes of the farmers fell as well.

To find solutions, the neo-liberal reforms were launched in 1991, which changed the role of the Indian state towards agriculture. For the last thirty years, the private corporate sector has begun to grow rapidly. The size of the GDP increased, but the corporate economy was largely focused on the service sector, and it did not create employment. (Siddiqui, 2018c; 2017c) The share of the ­agricultural sector declined sharply, but the workforce remained employed in agriculture at the same proportion. The relative decline of the agrarian economy in terms of its value addition has produced many imbalances beyond the sphere of income and employment. The growing size of the services and corporate sectors has further marginalised India’s agriculture sector.

In India, in September 2020 the farm laws were passed by Parliament and the government did not seek advice from farmers’ organisations. There three laws associated with agriculture regarded issues such as hoarding, minimum support prices, and contract farming. The growing size of the urban middle class, and demand for processed food has risen sharply in recent years. Also, processed food could also be exported to other countries. The ruling elites have considered the neo-liberal policy to be the best option and a desirable solution for Indian agriculture. It is hoped that it will increase corporate investment in the agricultural sector.

The ‘new farm laws’ will gradually remove the government regulation of agricultural markets and will remove limits on stockpiling of agricultural commodities, and deregulate minimum support prices. In agriculture, the withdrawal of government support prices will dampen prices of agricultural commodities during the harvest period and the hoarders will be able to raise prices later on. Not only the farmers have to sell at lower prices, but consumers have to buy food at higher prices from the market. As a result, this will leave the agriculture sector at the mercy of corporations, and undermine, if not destroy, the public food distribution system and small scale family farms cultivation and will have long-term severe consequences on India’s rural population.

Moreover, nearly 70% of India’s 1.3 billion people depend on agriculture for their livelihoods and 800 million of them have relied on public food distribution during Covid-19. India’s agrarian economy has already been in crisis for over a decade due to rising farmers’ suicides, and indebtedness of farmers to banks and private money lenders. The agriculture sector is also currently severe under-invested and suffers from low farm prices. Under neoliberal reforms, the government started reducing support to the agriculture sector gradually. The reforms also reduced the support to health and education, which affected farmers as well. When agriculture became capital-intensive, the fixed costs for mechanised agriculture increased sharply. The small farmer could not afford this and went into a debt crisis.

india farmers protest
Naseemo Kaur (left) shouts slogans during a protest in the Moag area of Punjab, India, on Oct. 1.

The main reason for high indebtedness in rural Punjab seems to be the increasing gap between incomes and costs. For small farmers the main source of income is what they receive after agricultural produce is sold at the MSP, but because the produce is usually not procured at the ‘guaranteed’ prices, farmers’ tend to face losses. While withdrawal of government subsidies has led to an increase in the prices of agricultural inputs. And if the government regulated MSP is removed, the recent study on small farms (Wire 2021) notes: “this will affect the incomes of the farmers. With a rise in input costs and a fluctuating income, farmers will be forced to take more loans… Big corporations may not snatch land away from small farmers directly, but an economic system could get created which will be detrimental to small and medium farmers.” In India, for example, according to official data, only 4% farmers have land holdings, which are more than 10 hectares and 86% farmers have a landholding size of less than 5 hectares and the remaining are what are called medium farmers, who have a land holdings of 6 to 8 hectares.

Private businesses have already invested in supplying seeds and pesticides; they began to expand their operations to consumer goods, ranging from potato chips and tomato sauce to processed cereals and dairy products. Both Indian and foreign big businesses like Adani, Reliance, Tata Rallis, Hindustan Unilever Group, and foreign companies such as Nestlé, and Monsanto have increased their operations in Indian agriculture. The farm laws will “override and undermine” the role of State government and violate principles of Indian federalism. The new laws, meant to promote contract farming, fail to take into account the “huge asymmetry” between small farmers on the one hand and companies on the other. Contract farming will increase the power of big businesses and offer no protection to the peasants. These will “consolidate… the market and the value chains in agricultural commodities in the hands of a few big players, as has happened in other countries such as the U.S. and Europe.”

The absence of any mention of MSP in the legislations should be interpreted as a quiet withdrawal of the government from the public procurement system. The MSP involvement in agricultural markets by the government has facilitated India’s transformation from an import-dependent country to one that has large food grains stocks. The government procurement of foodgrains has the following advantages: providing incentives for farmers in the form of assured returns, and will dampen food price volatilities in India, which is a common occurrence in global markets. It has helped to build food grains stocks for sustaining the public distribution system (PDS). If the government stops procuring food grains by offering the MSP, the PDS will collapse.

However, according to data, only 6% of the farmers in India are fully covered by the MSP, and 84% are located in the states of Punjab and Haryana. It is a widely known fact that farmers in Punjab, Haryana and Western UP are better off compared to other regions in India. Therefore, MSP needs to be widely available to farmers in other states rather than dismantling it. Farmers across the country are demonstrating against it. The new laws have the potential to restructure Indian agriculture in areas of production, procurement, marketing, pricing, stocking and land ownership. The government is arguing that since small farms are non-profitable it is necessary to opt for corporate farming. The law will lead to large-scale landlessness, unemployment and further impoverishment of rural India. As per the 2011 census, there are 494.9 million landless individuals in villages, who are directly or indirectly dependent on cultivation for their livelihoods.

Moreover, the researchers have demonstrated that vegetable and fruit cultivation does not mean a rise in the incomes of small farmers. For example, experiences in Africa and Latin America show that no clear benefits accrue to small and marginal farmers from contract farming. Small and marginal farmers constitute the majority of agricultural producers in India, and these Acts can impact their welfare adversely. This growing crisis was further exacerbated by the entry of multinational and corporate agri-businesses. These factors had a detrimental impact on emerging capitalist farmers who owned fewer than 4 hectares. Increased costs for inputs and technology mired them in loan cycles, which culminated in a suicide wave that took the lives of nearly 20,000 farmers in the last two decades in Punjab alone. We should mention here that the number of farmer suicides in India since 1994 is more than 350,000 (The Wire, 2021).

A misconception is created that farmers’ income would increase earned per acre, and shifting an acre from foodgrains production to some cash crop for export would double the income for the farmers. However, it is ignored that it will halve the employment generated on that acre compared to producing cereals, rice and lentils. This would mean less employment, and could increase destitution and unemployment in rural India. Big corporations would bid down their purchase prices, increase contract farming, and increase poverty among small farmers, while big companies who engage in exports would increase their profits through exporting fruits and vegetables to developed countries. It is therefore not the apparent income gain, but adverse impact on employment that will be severe; also, a large populated country like India will become dependent on food imports.

It could be argued of course that if the MSP and procurement prices are raised, then that would raise food prices for consumers. This is a misconception, and procurement prices can be raised without raising issue prices through an increase in the food subsidy. All this is quite apart from the fact that what appears at first sight as an easy way to raise peasants’ income, through a shift towards more lucrative cash crops, can make them pauperized when the prices of these crops crash in the world market, as they inevitably would since they are subject to wide fluctuations.

Members of All India Kisan Sangharsh Coordination Committee (AIKSCC) and activists of left parties and trade unions participate in a nationwide protest in Hyderabad, India, Friday, Sept. 25, 2020. Hundreds of Indian farmers took to the streets on Friday protesting new laws that the government says will boost growth in the farming sector through private investments, but they fear these are likely to be exploited by private players for buying their crops cheaply. (AP Photo/Mahesh Kumar A.)
Members of All India Kisan Sangharsh Coordination Committee (AIKSCC) and activists of left parties and trade unions participate in a nationwide protest in Hyderabad, India, Friday, Sept. 25, 2020. Hundreds of Indian farmers took to the streets on Friday protesting new laws that the government says will boost growth in the farming sector through private investments, but they fear these are likely to be exploited by private players for buying their crops cheaply. (AP Photo/Mahesh Kumar A.)

The government’s minimum support price for farmers and the public procurement system are indispensable for India’s food security, public distribution system, farmer livelihood and agricultural growth. But the ‘New Farm Laws’ will facilitate a policy, which is based on the laissez-faire i.e. neoliberal approach that will undermine farmers’ interests. Moreover, India’s stride towards food self-sufficiency and agricultural growth, supported by the ‘Green Revolution’, was reinforced by institutional and policy support. The primary components of the wide-ranging policy support of farmer welfare since the mid-1960s have been the MSP and the public procurement system (PPS). However, the ‘new farm laws’ will introduce an environment wherein the MSP and PPS are likely to become redundant.

Developed capitalist countries led by the US and EU have been demanding access to agricultural production and markets in developing countries including India. Through the WTO’s ‘agriculture agreement’ of which India is a signatory they have been opposing India’s system of minimum support prices, and public stockholding of foodgrains essential for the public distribution system. The ‘Agreement on Agriculture’ regulates domestic subsidies in agriculture. Under this, subsidies such as the MSP would have to be capped at 10 % of the total value of the product. The idea behind the agreement was to get farmers to cultivate something other than wheat, sugarcane and rice. However, the ‘agreement on agriculture’ does not allow for any kind of subsidies like on water, power, MSP etc. The government also does not want to makes a law on MSP. Recently, the IMF’s chief economist, Ms Gita Gopinath supported India’s new ‘farm laws’ on the name of market liberalisation and she claimed that India’s new agriculture laws have a potential to raise farms income (The Economic Times).

In fact, a major feature of the 1991 neoliberal economic reforms was to increase private corporate involvement in the Indian economy including the agriculture. In the initial phases of liberalisation, the multinational companies were allowed to expand their control over the production and supply of farm inputs, such as seeds, fertilisers and pesticides. The new farm laws are intending to expand the hold of big companies into the sphere of agricultural marketing. The three Farm Laws will weaken the local traders, shut down the FCI and end government procurement. These would imply that the entire agricultural surplus will be available for the multinational companies to control and sell. Thus, corporate firms would gradually increase their control of the entire value chain and ultimately dominate it. The central government has undermined the powers of the states to enact laws related to agriculture and to make executive interventions in the interests of the people. The laws have been created solely with the objective of facilitating corporate penetration in agriculture, which are against the interests of farmers and people at large. To protect farmers, the government needs to be bold enough to reject the pressure from the WTO.

For India, the corporatisation of agriculture would mean the Latin Americanisation of agriculture sector in India where increased market based exploitation of natural resources have resulted in rise of rural inequality and violence. It must be rejected and alternatives must be found. At present, in India much of agricultural produce, especially food grains and vegetables, is sold at rates that do not reflect the real value of these commodities. There is a huge self-exploitation by farmers (of themselves and their family labour), and the real value of natural resources (of soil, water and biodiversity) are underestimated. The government should assist farmers in terms of payment for conservation activities and eco-services and for larger parity payments to rural and agricultural sectors in terms of better infrastructure and regulatory and supportive institutions.

Farmers need to have assured access and control over basic resources, which include land, water, credit and insurance, technology and knowledge management, and markets. The Congress government did set up a commission in 2004 (known as the Swaminathan Commission) to study the distress of farmers and to provide suggestions for improvements to the agricultural sector. The Swaminathan Commission presented its findings in 2006, and suggested “faster and more inclusive growth” for farmers, and contained suggestions for the inclusive growth of farmers and the agriculture sector. It aimed for a system of food and nutrition security, sustainability in the farming system, enhancing the quality and cost competitiveness of farm commodities and also recommended measures for credit and other marketing related steps. However, nearly fourteen years have passed since its findings were presented to the government, and still its recommendations have not been implemented.

Farmers need to have assured access and control over basic resources, which include land, water, credit and insurance, technology and knowledge management, and markets.

The present Bharatiya Janata Party (BJP) government policy is guided by the ideologues of the Rashtriya Swayamsevak Sangh (RSS), which is an upper caste Hindu extremist organisation of which Mr Modi and the previous Prime Minister Mr Vajpayee were lifelong members. The RSS and its affiliates are merely interested in playing with people’s emotions and using religion to organise people, thus trying to divert attention from the agricultural crisis. For example, ‘Love-Jihad’ and the laws against ‘religious conversions’ are rooted as much in this as the Islamophobia which is now rampant. In fact, Islamophobia too took firm roots in Mr Vajpayee’s time at the top. He was not against Mr Advani’s polarising march towards Ayodhya for the demolition of Babri Mosque and BJP’s drive for political power, which ultimately culminated in the demolition of the Babri Mosque in 1992. Mr Modi was an earlier RSS leader, who became chief minister of Gujarat state; under his watch in February 2002 a massacre of thousands of Muslims, which continued for four days, took place in several districts of the state, including the capital city of Ahmedabad, and the police and security officials were either absent or joined the mob.

Aakar Patel, a well known Indian author, says that the BJP government wants to create a Hindu Rashtra (i.e. Hindu Nation), which is the core of Hindutva: “is purely about the exclusion and persecution of India’s minorities, particularly Muslims … that is all there is to Hindu Rashtra.” He adds Modi’s record, both as chief minister of Gujarat for 13 years and as India’s Prime Minister for 7 years, shows that Modi “encourages anti-Muslim prejudice”. He further points out that “India does not have a Muslim chief minister in any of its 28 states … this is the deliberate exclusion of 200 million people”. According to him, “whilst the BJP talks of appeasement of Muslims, the truth is that in almost every sphere Muslim representation is way below their proportion of the population. For instance, they should have 74 seats in the Parliament but only have 27. They are nearly 15% of India’s population but only 4.9% of state and central government employees, 4.6% of the paramilitary services, 3.2% of the elite administrative services such as IAS, IFS and IPS and perhaps as low as 1% of the army”. Commenting on India’s Supreme Court, he says: “In the Babri Mosque judgement, after accepting the mosque was wrongly and illegally demolished, the Supreme Court still gave the site to the people who demolished it.” (The Wire, 2020)

Furthermore, the BJP government’s determination to ensure that those who are accused of communal attacks against Muslims in the last February Delhi riots, which resulted in the massacres of Muslims, goes unpunished. Other recent unpopular polices includes the abrogation of Article 370 after brutally crushing political and civil society activity in the Jammu and Kashmir and the determination to push so-called illegal Muslim immigrants out of Assam and India. The government declared lockdown against COVID-19 without even realising that this would destroy hundreds of millions of workers livelihoods, and force more than 12 million persons to start walking or cycling  home from big cities to their villages thousands km away in the heat of summer. There is a lot of concerned both at international and national levels about the rise in divisiveness of the Indian society such as Citizenship Amendments Act, love-Jihad, beef lynching and the general attacks against Muslims. The government on the name of protection of cow which affects among other things besides eating habits but also the livelihoods of many Dalits and Muslims in hide and leather industry. The other, anti-conversion laws directed against inter-faith marriage has the primitive intent of maintaining the ‘purity’ of bold. This certainly will hold back investments. The problem is that these tensions may surface, but the most important thing is, how the government handles it. This needs to be tackled, if India wants to develop a decent society.

VI. Conclusion

This study has found that economic self-sufficiency and sovereignty in food production and the removal of poverty, which was emphasised by the leaders of developing countries at the Bandung Conference (1955), is still very relevant, and to achieve it, state involvement in the economy is very important and relying on market-forces as suggested by the multinational corporations and developed countries will only deepen the agrarian crisis further. Therefore, the developed countries’ agrarian model i.e. capital-intensive and labour-saving with average very large farm-size is not suitable for the developing countries.

In the US, for instance, the big retailers such as Walmart do not have stock limits. They also have adopted contract farming, and the US farmers on average receive a subsidy of US$ 62,000 annually. Then the question can be asked, if open markets are really that efficient, then why the US government pumps money into the agriculture sector. The developed countries pump billions of dollars into agriculture every year by way of direct income support or subsidies. The EU today is giving about US$ 100 billion of agricultural subsidies each year and about 50% of it goes as direct income support to farmers. Therefore, it is clear that agriculture is sustainable and viable in the developed countries not because the markets are efficient, but because of the government subsidies.

In fact, corporate industrialised agriculture could bring environmental and social devastation. There is a need to help ‘small-scale’ or family farming. The virtues of small-scale farming are that it is more labour intensive, provides greater employment and it is proven that it is socially more equitable and a more ecologically sustainable way of farming. Therefore, the priority of the developing countries should be to overcome food deficits and move towards self-sufficiency, to promote small family farms and to increase government investments in agriculture.

The neoclassical model i.e. ‘market solution’ for Indian agricultural development has problems, namely that prices for agricultural commodities will rely on the free-market and will be socially disastrous. Land-use would be left to the free market, not socially required. An inevitable consequence of leaving agriculture to the operation of the free-market would be a shift of land areas away from foodgrain production towards the production of vegetables and fruits that are demanded by consumers in developed countries. It will result in undermining the self-sufficiency in foodgrains that has been developed over the years and will make India food-import dependent and also increase hunger.

The destruction of self-sufficiency in foodgrains means that the country now would not produce the foodgrains it requires, but have to depend on food imports to meet domestic needs. Adequate quantities of foodgrains may not always be available in the world market when the country needs them; this is particularly important in the case of a large country like India. The real-life world market may be different from that presented by neoclassical economists, who assume that there are large numbers of buyers and sellers who have a totally impersonal relationship. However, the world food market depends upon the goodwill of developed countries like the US and the EU, who happen to be large food exporters. Therefore, for developing countries like India, state support is crucial for small farms, which is labour-using and labour intensive and hence creates more jobs. There is also a need to increase domestic food production and to strengthen food-sovereignty, while at the same time sustainability and ecological aspects should not be ignored. To achieve all these, the role of the state is very important, and market forces alone could not accomplish it.

In India, the BJP government suggests that farmers should move away from producing foodgrains towards other crops – this has also been suggested by developed countries in recent years. Developed countries have huge over-production of foodgrains, of which they have a surplus, and in the name of diversification it is suggested they should reduce foodgrains production. There seems to be a paradox here, despite the surplus food-grain production, still nearly a quarter of India’s population is malnourished.

Recently, millions of Indian farmers have marched and protested against new ‘Farm Laws’ in New Delhi, under these laws, big corporate investment and control will increase and gradually reduce state involvement in the agriculture sector. Hoarding at a large scale will be permitted and agricultural commodities such as food grains being stored has been legalised, enabling the manipulation of food prices for the benefit of big corporations, while the other two laws aim to eradicate MSP, and to promote contract farming. Finally, the ‘Farm Laws’ will make farmers more dependent on market forces and big corporations, and gradually state involvement in agriculture will be withdrawn. This market-driven policy will have long term disastrous consequences both for the environment and also for small and poor farmers in India and will also increase rural inequality and poverty.

About the Author

Dr. Kalim Siddiqui

Dr. Kalim Siddiqui is an economist, specialising in International Political Economy, Development Economics, International Trade, and International Economics. His work, which combines elements of international political economy and development economics, economic policy, economic history and international trade, often challenges prevailing orthodoxy about which policies promote overall development in less developed countries. Kalim teaches international economics at the Department of Accounting, Finance and Economics, University of Huddersfield, U.K.. He has taught economics since 1989 at various universities in Norway and U.K.


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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The Political Anthropologist.