Farm Solutions: Swaminathan Report Is Done And Dusted, Past Its Sell-By Date

The report of the M S Swaminathan National Commission on Farmers is often used to claim that governments – especially the one headed by Narendra Modi – are fighting shy of giving farmers their due, but the reality is not quite anything like this. The focus of most opposition parties is on giving high minimum support prices (MSPs) for farm produce, when this constituted only a very small part of the report.

Two conclusions hit you in the face when you read the highlights of the report (read the main bullet points here):

One, many parts of the report are already being implemented, even if its in fits and starts.

Two, some of the recommendations are actually never going to be implemented, for they call for land reforms and land redistribution – something the farm lobby will never agree to.

A close reading of the report will tell you that significant parts of it already are being implemented, and some of the recommendations, if actually taken up for execution, will draw howls of protests from the lobbies that use farm miseries to promote policies that benefit only big landowners.

For example, today the dominant opposition theme-song is farm loan waivers, with Karnataka being the latest to hop on to the bandwagon, but Swaminathan’s recommendations did not call for outright waivers: instead, he wanted interest rate subvention schemes (at 4 per cent) on farm loans, a moratorium on debt recoveries and waiver of interest dues in distress spots, and that too only till repayment capabilities are restored. Today, it is fashionable to presume that only complete debt waivers are acceptable. Or else farmers will commit suicide.

Or take another bunch of suggestions in the report, which call for land reforms – something no one has the stomach for. These include:

- Distribution of ceiling-surplus and waste lands.

- Preventing diversion of prime agricultural land and forest to the corporate sector for non-agricultural purposes.

- Setting up a mechanism to regulate the sale of agricultural land, based on quantum of land, nature of proposed use and category of buyer.

The last two recommendations make little sense if you consider the point that farm nirvana depends on finding new job opportunities for surplus people on the land, and this calls for investment in industry and services. So, of agricultural land is not to be used for urban expansion and factories, you will not get jobs growth.

The bugbear will clearly be land reforms. The report points out that “in 1991-92, the share of the bottom half of the rural households in the total land ownership was only 3 per cent and the top 10 per cent was as high as 54 per cent” (see table below). While this data is old, one can be sure that the situation on the ground has not changed substantially. This means big landlords are the only ones to gain when MSPs are hiked, or farm inputs are heavily subsidised. Swaminathan would want big landholders’ excess lands redistributed to those with little or no land to till.

And yet, our politicians’ hearts bleed for farmers, when they know that the benefits will flow only to a minuscule minority of farmers.

Coming to the issue of MSPs, this is what Swaminathan recommended, inter alia:

- Improvement in the implementation of MSPs by including crops other than paddy and wheat. Also, millets and other nutritious cereals should be permanently included in the public distribution system.

- MSPs should be at least 50 per cent more than the weighted average cost of production.

- Availability of data about spot and future prices of commodities through the Multi Commodity Exchange, the NCDEX and the APMC electronic networks covering 93 commodities through 6,000 terminals and 430 towns and cities.

- State Agricultural Produce Marketing Committee Acts (APMC Acts) relating to marketing, storage and processing of agricultural produce need to shift to one that promotes grading, branding, packaging and development of domestic and international markets for local produce, and move towards a single Indian market.

Some of these reforms are already underway, including the eNAM national e-marketplace, and higher MSPs for produce other than paddy and wheat. The Food Security Act also allows coarse cereals to be provided at the super-subsidised price of Re 1 a kg, and if at all there is any foot-dragging on creating a national marketplace, it is at the state level, where vested interests and middlemen want to delay the abolition of the APMCs and barriers to free movement of farm produce.

Swaminathan also called for crop insurance with reduced premiums, and this is exactly what the Pradhan Mantri Fasal Bima Yojana is about – though it has limitations still. If crop-cum-livestock insurance is offered, the scheme would be much better. So, we have half a Swaminathan recommendation implemented, not the full thing.

Swaminathan also called for a national food security scheme. He wanted a “National Food Guarantee Act continuing the useful features of the Food-for-Work and Employment Guarantee programmes. By increasing demand for foodgrains as a result of increased consumption by the poor, the economic conditions essential for further agricultural progress can be created.”

This is exactly what we have between the Right to Food Act and the Mahatma Gandhi National Rural Employment Guarantee Scheme.

Suggesting measures to prevent farmer suicides, the report had the following measures, among others, to suggest:

- Provide affordable health insurance and revitalise primary healthcare centres. The National Rural Health Mission should be extended to suicide hotspot locations on a priority basis.

- Restructure microfinance policies to serve as livelihood finance, ie credit coupled with support services in the areas of technology, management and markets.

- Provide for a social security net with provision for old age support and health insurance.

Now, isn’t Ayushman Bharat about providing affordable health insurance to the absolute bottom of the pyramid? Aren’t Mudra and Stand-Up India loans meant to provide livelihood finance to the poor? One can say that these measures are yet to reach all the poor, but policies are clearly in place for heading in the direction recommended.

A caveat is in order: the Swaminathan report was delivered in bits and pieces in the 2004-06 period, and to believe that it still holds answers to farm issues a dozen years later is foolish. There have been dramatic reductions in the number of people dependent on farming for livelihoods, from nearly 60 per cent to well under 50 per cent today. So, solutions today need to address the problems of today, and not what was evident in 2004.

Willy-nilly, both the United Progressive Alliance and the National Democratic Alliance governments have started addressing farmers’ issues in fits and starts, and Swaminathan should not be used as stick to beat every government with.

In the ultimate analysis, solutions to the problems of farmers do not relate to farm policy, but jobs policies. When 15 per cent of GDP feeds 48 per cent of the population, the obvious point is that poor farmers and the landless need jobs, not farm subsidies or higher MSPs. The latter help only the top 5-10 per cent of farmers with high land-holdings.

With the Modi government’s recent decision to raise MSPs on paddy by Rs 200 a quintal for this kharif season, we have reached the limits of solutions dependent on artificially inflating the prices for farm produce. Any further movement along this path will be disastrous not only for consumers, but also farmers.

Harish Damodaran, writing in The Indian Express last year, pointed out that MSPs for 14 crops were already Swaminathan-compliant, so the answers do not lie in further inflating MSPs. The Swaminathan report is done and dusted substantially; the real issue is to devolve farm policy down to the states and stop looking to the Centre for solutions that need to be local.