The Kerala government’s policy interventions—expanding price support and ensuring direct procurement of farm produce—present an alternative course for agricultural policies in India

Kerala offers an alternative to the neoliberal logic that has driven the Narendra Modi government’s attempt to abandon state intervention and support to agriculture.

Headload workers unloading paddy sacks from a country boat at Nedumudi in Kuttanad, Kerala.

While much of the media’s attention has been focussed on the agitation at Delhi’s borders where the farmers have been protesting, there have been demonstrations and protests by farmers across the country as well. In Kerala, too, there have been numerous expressions of solidarity. The Left government in Kerala has announced that it will be challenging the Acts in the Supreme Court, contending that they violate federal principles enshrined in the Constitution.

Although the popular affirmation of solidarity from Kerala might appear surprising—because the State does not have any Agricultural Produce Market Committee (APMC) mandi s—there are good reasons for this reaction from the Kerala peasant. Although it is true that Kerala may not be affected much by the implementation of the three controversial Acts, the reaction in Kerala reflects the growing divergence in the agricultural policies followed by the State and Union governments. The recent policy interventions by the State government, in terms of expanding price support and ensuring direct procurement of farm produce, sharply illustrate this divergence, and thereby present an alternative course for agricultural policies in India.

Kerala’s agriculture is characterised by a predominance of non-food cash crops that account for more than half of the gross cropped area. Successive governments in the last two decades have increasingly focussed on improving food crop production in Kerala, partly owing to the concern of protecting rice-cultivating lands. But this policy has not come about without giving any consideration to the reality of rising costs and low profitability of food crops, especially rice. The policy of keeping rice-cultivating lands under cultivation has been combined with several incentives to help farming remain viable in Kerala. The current Left Democratic Front (LDF) government has further increased public support for agriculture in the last four years.

Price support

Price support is the most prominent support mechanism provided to rice growers. The periodically collected data under the Comprehensive Scheme for Studying Cost of Cultivation/Production of Principal Crops by the Union Agriculture Ministry, show that the cost of production of rice (that is the sum of all paid-out costs or Cost A2) was Rs.1,311 per quintal in Kerala for the triennium ending 2017-18 (three-year average for the agricultural years 2015-16, 2016-17, and 2017-18). The cost of production in Kerala is the second highest among 18 States for which such data is collected. Incidentally, researchers as well as peasant organisations have pointed out that official statistics underestimate the costs of production and that the actual costs incurred by farmers are often higher than the officially reported costs.

The high costs in Kerala are owing to various factors, chief among them being the high cost of hired human labour, which is still a major component in the cost of cultivation. Given the high production costs and inadequacy of a nationally representative minimum support price (MSP) that covers the cost of production in Kerala, the Kerala government has been consistently providing a State incentive bonus over and above the MSP set by the Centre. At present, this bonus is about half of the MSP set by the Union government.

The average cost of production of rice was Rs.1,616 per quintal in 2017-18, the latest year for which we have official data on costs. The MSP announced for 2017-18 was Rs.1,550 per quintal, evidently lower than the paid-out production cost in Kerala. However, with the bonus of Rs.780 per quintal announced by the Kerala government, the rice cultivator in Kerala earns a return of 44 per cent over the average cost of production per quintal. In the last two years, Kerala has annually procured around 80 per cent of the total production of rice under the decentralised procurement scheme, amounting to about seven lakh tonnes of rice a year. In contrast, in India as a whole, procurement is chiefly from two or three States, most notably Punjab, Haryana and Andhra Pradesh, and accounts for only about one-third of all rice produced in the country.

Kerala’s support for agricultural produce is not limited to rice. The State government recently extended the MSP regime to 16 vegetables, a first for such a policy in India. What stands out in the policy of state intervention is the method of intervening in agricultural markets. The Kerala State Civil Supplies Corporation (SUPPLYCO), along with different cooperative institutions and local self-government institutions, facilitates rice procurement. This significantly expands the capacity to procure agricultural produce, apart from making the system more democratic and ensuring greater operational transparency. The State government has further planned to empower cooperatives to directly procure rice in the upcoming marketing seasons. Similarly, the newly announced MSP for vegetables is planned to be implemented with the help of the strong network of cooperative institutions, including the markets set up by self-help groups of farmers.

Ensuring farming viability

It must be noted that Kerala’s interventions in agriculture are not confined to these two policies. There are challenges to be met in terms of further improving productivity and profitability in agriculture. However, the efforts by Kerala are directly opposite to the route adopted by the Union government which seeks to open up markets to private players by withdrawing from agriculture altogether. In pursuit of this comprehensive approach, Kerala is among the few States that have attempted to actually apply the recommendations of the National Commission on Farmers (NCF), popularly referred to as the Swaminathan “Committee” report since it was headed by the India’s best-known agricultural scientist, M.S. Swaminathan. The overall objective has thus been to extend the coverage of rural markets by investing state resources in new market yards and procurement centres.

A highlight of the policy regime in Kerala is to not leave scope for middlemen in the marketing channels. This is a direct rebuttal to Prime Minister Narendra Modi’s repeated justification of the new farm legislation—that its chief benefit that it would weed out the middlemen in the markets. Instead, Kerala’s approach empowers farmer cooperatives with state support to coordinate among the large numbers of marginal and small cultivators. This approach of attempting to offer remunerative, but stable, prices and incomes for farmers by furthering the state’s presence in the agriculture sector presents itself as a credible alternative to the policies pursued by the Centre. Indeed, such a course has been recommended repeatedly by several of the Union government’s own experts as a durable solution to India’s long and deep agrarian crisis.

Deepak Johnson is a doctoral candidate at the Economic Analysis Unit, Indian Statistical Institute, Bengaluru.