The three farm laws passed by Parliament have evoked mixed reactions in Tamil Nadu. Chief Minister Edappadi K. Palaniswami, who calls himself a farmer, says the laws are farmer-friendly and contain what the Tamil Nadu government had initiated two decades ago. He says the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020, is akin to the Tamil Nadu Agricultural Produce and Livestock Contract Farming and Services (Promotion and Facilitation) Act, 2019. He also says the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, will lead to lower transaction costs for farmers.
On the other hand, many farmers’ organisations in the State and the opposition Dravida Munnetra Kazhagam (DMK), the Congress and the Left parties vehemently oppose the Acts. DMK president M.K. Stalin has accused the ruling All India Anna Dravida Munnetra Kazhagam (AIADMK) in the State of “betraying the farmers” by supporting the Bills in Parliament although that party’s Rajya Sabha member S.R. Balasubramaniam had opposed it. The Acts, he notes, are against concepts such as “Uzhavar Sandhais” (farmers’ markets that help them sell their produce directly to consumers) introduced by the DMK government in 1999. “It is a BJP conspiracy against the farm community, to which the AIADMK government in Tamil Nadu is a partner,” says Stalin.
Frontline spoke to J. Jeyaranjan, a social scientist researching on various aspects of the political economy of Tamil Nadu. According to him, the Acts will have a cascading effect on the State’s farming sector and its well-established social welfare schemes. The entire edifice of the State’s social justice infrastructure has been erected on schemes such as the public distribution system (PDS) and supply of subsidies and farm inputs besides free electricity. It is a food chain that should not be allowed to be snapped, Jeyaranjan feels. In this interview, he explains how the State studiously built a system of its own to tackle food scarcity and how it integrated the food chain to other social welfare schemes. Excerpts from the interview:
Tamil Nadu has been a welfare state for five decades. The State, which once faced acute food shortage, overcame it with diligent planning. A State that has to depend on its neighbours for water for agriculture has built an infrastructure that ensures food security for its people. Could you explain how the State achieved food security and how the recent farm laws would affect it?
The farm laws will affect the entire food chain Tamil Nadu has created over seven decades of meticulous planning and assiduous execution and which has ensured an equitable distribution of essential commodities to all its citizens. Opening up the farm sector to free market—from the present regulated one to an unregulated one—would not only affect the farm community, which would be exposed to the vagaries of the market, but also distance the state from its established responsibility as a welfare state. The laws favour big corporates in the name of free market. They [the Acts ] are silent on the minimum support price [MSP] and on how the procurement policies of the government would be in the future. These laws will destroy all protective and regulatory mechanisms.
Rice politics in Tamil Nadu
Rice, in fact, has been an integral part of political churning in Tamil Nadu since the late 1960s. Since the days of colonial rule, the State has seen recurring scarcity of essential commodities. There was no system in place to cover the entire population. The broad assumption was that only urbanites suffered from food shortage while rural people managed to live on local resources. This urban-centric colonial system continued even after Independence when the Congress ruled Tamil Nadu.
After Independence, the concept of welfare state emerged across India. The newly formed Union government had a huge problem on its hands—frequent, acute shortage of essential commodities across the country. During the 1960s, it decided to augment food availability and move towards self-sufficiency, which led to the Green Revolution. It augmented both the area [of cultivation] and the yield of foodgrains. Single-crop areas were converted into double-crop areas thanks to the introduction of short-duration varieties of crops and cropping intensity was increased. High-yielding varieties of rice and wheat were introduced. These measures led to increased production.
The policies of procuring the produce and offering MSP, incentives, loans, and so on, were formulated and integrated into the system. The augmented foodgrain market was regulated. Foodgrain was procured and stored to be distributed in times of distress. The Food Corporation of India [FCI] was established. Buffer stocks emerged as an important insurance against food shortages. The distribution of foodgrains through fair price shops was left to the States, resulting in varied levels of access for citizens.
By then State governments such as the one in Tamil Nadu had chipped in simultaneously to meet the challenges arising out of recurring famines and shortages of farm produce. Prior to the 1970s, the system of ration was in vogue only in Chennai and Coimbatore cities where ration cards were given to residents. The State faced recurrent rice shortages. The yield from the Cauvery delta was inadequate to meet the rice demands of the State and it had to depend on the allocations from the Central pool, which often were inadequate. More importantly, allocation from the Central pool became a powerful political tool at the hands of the Union government.
The Congress government that was ruling the State at the time faced severe criticism for not handling the recurrent food crisis properly. The Left parties took to the streets and staged several protests highlighting the food shortage. The fledgling DMK party saw a golden opportunity in the crisis and converted it into a major political issue. Using it as a platform, the C.N. Annadurai-led DMK party launched a scathing attack on the Congress governments at both the State and the Centre for making people suffer from hunger.
Steps towards self-reliance
Rice politics rewrote the political history of Tamil Nadu. The DMK offered the people of Tamil Nadu an election promise that if it was voted to power it would give three measures of rice for Re.1. No wonder, it swept the elections in 1967 and captured power defeating the Congress. But the reality struck when it took over the reins. An empty granary and an acute scarcity of rice and essential commodities stared at its face. It felt embarrassed as it could not fulfil its electoral promise of three measures for Re.1. The Centre turned down its demand to allot more rice and essential commodities.
Hence, the State had to content itself with the implementation of its popular rice scheme in a symbolic manner. In fact, on one occasion, when the food situation turned grim following a severe grain shortage, the then Chief Minister, M. Karunanidhi, rushed to Delhi and met the Central Minister Jagjivan Ram to request him to allot an additional one lakh tonnes of rice besides the usual allotment. This experience made him bitter. He realised that the State as an entity had to be self-reliant. Immediate steps were initiated to establish a system parallel to the Central scheme and on the lines of the FCI and its allied system of production, procurement, stocking, trading and distribution.
Direct procurement
Accordingly, the State floated its own version of the FCI known as the State Civil Supplies Corporation and engaged in procurement directly. It intensified the cropping pattern by introducing new short-term paddy varieties such as ADT 27. A comprehensive package (credit and in kind) was unveiled to farmers through its Primary Agricultural Cooperative Societies. Most of the costs of inputs, such as electricity or diesel pumpsets, fertlizers and pesticides, were met through short- and long-term loans.
Agriculture production got a further boost when in the late 1970s rural electrification was taken up on a massive scale, leading to a “pumpset revolution” in irrigation. Well irrigation became the important source of water in the State. Electricity was provided free for agriculture much later. Rice production got a further boost through well-fed irrigation which enabled farmers to expand their area of paddy cultivation.
Simultaneously the State expanded the PDS too, horizontally and vertically. Expansion and improvement of the PDS continued though all political regimes. Besides, the government enacted a series of measures to strengthen the system of farming, production, procurement, marketing and distribution. It even legislated on land reforms. However, unlike in Kerala where the reforms were implemented in letter and spirit, reforms in Tamil Nadu did not achieve their objective in Tamil Nadu. Many compromises were made. Big sharks escaped while lands of mutts and temples were exempted [from land ceiling limits]. In fact, no Chief Minister has ever dared to meddle with the PDS. Rather, they initiated measures to bolster it.
Karunanidhi prepared the road map for the PDS for the State. He formed the Civil Supplies Corporation with its warehouses and mills. All the households in the State were given ration cards. The cooperatives and the Civil Supplies Corporation were mandated to open exclusive ration shops across the State. When MGR [M.G. Ramachandran] took over [as Chief Minister], he gave an impetus to the existing PDS system. He continued to increase the number of shops. Whenever the Central pool allocation was insufficient, the required quantity of additional rice was sourced from open markets in neighbouring States. The subsequent governments also ensured that the system benefited the end user. The number of fair price shops has increased from around 500 in the 1970s to around 35,000 today. More than 90 per cent of the households in the State have access to the PDS, the highest in the country.
After globalisation, policies of subsidies were linked to political decisions. Targeted PDS was advocated as an efficient system of ensuring food security for the poor and vulnerable. The National Food Security Act [NFSA] also envisaged targeted PDS, while the State could successfully retain the universal public distribution. As a result, besides the Central subsidy, the State had to bear the extra cost for the universal distribution. Thus Tamil Nadu spends nearly Rs.6,500 crore every year on the PDS to sustain the universality of the programme.
Over a period of time, the allocations from the Central pool decreased enormously and with the implementation of the NFSA, it became rule-based as against the discretionary allocations earlier. The Union government allocated the required foodgrains to meet the PDS needs as per the NFSA rules. Additional grain required to run universal PDS is also sourced from the FCI at open market prices. Thus, universal PDS in Tamil Nadu crucially depends on the allocation from the Central pool of the FCI (both in terms of the quantity of grain and the subsidy under the NFSA as rice is provided by the FCI at the rate of Rs.3 a kg). Any disruption in the procurement, storage and allocation from the FCI’s buffer would seriously impair the universal PDS of the State.
Though the government at the Centre has claimed that it does not have any idea of withdrawing the MSP, farmers have expressed their anguish about the absence of any reference to it in the laws. Having already decided to allow corporate and big traders in production, trade, storage and pricing in the farm sector, the government still claims that it is farmer-friendly and will ensure better prices. Is it possible?
One may argue that given the Union government’s promise that the MSP and procurement will continue along with the changes advocated under the new rules, why should one worry about the FCI and its buffer and heavily subsidised NFSA allocation. The MSP as such is not backed by any law. The NFSA is not eternal. More significantly, while the MSP is a price-distorting intervention, it cannot go along with the free market. One cannot have both.
The market can only be either free or regulated. It cannot simultaneously be both free and regulated. Given the proclivity of the ruling dispensation towards “free market” principles in several spheres, the promise of continuing the MSP lacks credibility, sounds hollow and insincere. This is the greatest threat I foresee for the PDS in Tamil Nadu.
As MSP is an administrative decision by respective governments and has not been legislated, the farm laws conveniently ignore it. These laws push agriculture from the regulated market to an unregulated one. Thus it makes the very relevance of public welfare entities such as the FCI redundant. Already, direct cash transfers instead of rice through PDS are under experimentation and soon may be extended to other areas.
The MSP has played an important role for farmers. It has insulated them from price crashes during harvest seasons and exploitation of farmers during distress selling. In Tamil Nadu it has been a vital source of sustained income for growers, especially paddy farmers. Procurement by the government has sustained paddy growers for nearly 55 years despite all its shortcomings. They have tasted “free market” for all other produces. None of them has demanded the scrapping of regulated markets. Their complaints have always been that the state fails repeatedly to regulate the market adequately. Under the MSP, 22 commodities have been listed today of which three or four like paddy would fall under the major procurement category. All other commodities have been procured at specific places, not in all places, to date. The marketing Act also would become obsolete when you encourage the open market. Removing many commodities from the purview of Essential Commodities Act would lead to hoarding and hence promote black market.
There is an argument that the regulated markets or ‘mandis’ have a limited role to play in Tamil Nadu. Since the farm market is deregulated in the State, farmers and traders can trade directly, ensuring the market price. The system has been in vogue since 1991. Could you explain it in the context of Tamil Nadu?
You cannot force farmers to go in search of buyers. Agriculture is a State subject and to keep the price in favour of farmers at times of surplus and scarcity, the State has the responsibility to intervene in order to ensure reasonable price for them. The Agricultural Produce Marketing Act is not implemented uniformly across the country. It is weak in many States while it is strong in States like Punjab. The Act is not in force in States like Kerala. Diluting it further would remove the regulated market and expose farmers to corporate economic power. Besides, [Agricultural Produce Marketing] Committees and their mandis were established to regulate the market. Information Technology can be used in these establishments to operate anywhere. Buyers can source their supplies from farmers under these regulated markets. Tamil Nadu has 283 regulated markets under 26 market committees. The concept of mandis and the MSP and the intervention of the State must remain as ever to save farmers and final consumers from exploiters. But the “free market” peddled under the new law is utopian and exists nowhere.
Powerful interests capture the market and destroy free competition. Just remember what happened in the telecom sector in this country. No capital [investor] would be interested in the welfare of millions of small and marginal farmers of this country. They are there to make profit and also create imperfect market structures in the name of free market. Hence a regulated market structure should be retained to save farming and farmers. Hence these laws are anti-farmer.
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