The surprisingly overwhelming response to my previous column (“Farm fresh from Argentina”, 24 March) has amply demonstrated that readers are acutely concerned about the state of our agriculture, because many see it as headed towards a real crisis. Some pointed at the archaic laws that govern land lease and sales and others at the continuing ban on inter-state movement of agricultural produce as major impediment to the modernization of the sector, which are preventing it from benefiting from economies of scale and scope. These are surely valid issues. But the way to overcome these constraints is to facilitate the entry of private, cooperative or commercial investors in any segment of agriculture. These investors will generate the impulses to change the ground realities of archaic laws, the ban on inter-state movement, the tyranny of petty babudom or the dysfunctional working of the entire range of service providers who see their mandate not as providing a particular service but as a licence for generating rents.
In my experience in villages around Delhi, one cannot hope to have an improved supply of electricity for the water pump by installing a captive step-up transformer or to get a “crop loan” sanctioned or even a sale deed registered despite “connections” and the “computerization” of land records, without paying a “reasonable bribe”. To add insult to injury, there is simply zero concern among rent collectors about any accountability or fear of being apprehended. A clear distinction is maintained between the de jure and de facto, and you are constantly reminded that de jure is only dikhane ke vaste (for appearances only). Try and follow rules, and you get only grief. I am quite convinced that this malgovernance in rural India generates the widespread feeling of gross injustice that feeds the Naxalite and other forms of militancy, whose avowed goal is to overthrow such an exploitative state.
Can this chasm between de jure and de facto that has managed to choke off progress in agriculture be eliminated or minimized? The Naxal way out, though glamorous and romantic to some of our urban chic, is doomed to failure. Then there are the well-meaning and sincere civil society organizations that are fighting heroic but localized battles. The hope is that these “fireflies” will be connected and brought together to create a large enough impact. Unfortunately, I have not seen that happening. Perhaps Arun Maira, who coined the term fireflies, can connect them now that he is in a position to do so. Then there are the microfinance guys who rely on social collateral and relatively high rates of interest to try and generate incomes and raise productivity. Yet even the largest of these, such as BRAC and Grameen Bank in Bangladesh, whose efforts are praiseworthy, have so far apparently been unable to make a big dent on rural poverty and stagnation in agriculture.
These efforts do not appear to be a substitute for real commercialization of agriculture and converting the “peasant” into a viable, globally competitive farmer, whose self interest in bringing in new technology and fresh investment coincides with fragmented landholders and rural wage earners.
If such commercialization can be achieved in agriculture, the government’s role will switch from being a supplier of services and inputs to regulation and supervision. This will be liberating and hugely productivity enhancing as experience in other sectors has shown. Civil society organizations will also be far more effective in ensuring that the government and large corporate entities do not collude and connive against the small landholder and wage earners as they will have a much more visible and larger target for their actions rather than the ubiquitous babu or the patwari against whom any opposition is but in vain.
So my suggestion is to start with the other end of the spectrum and encourage modern retail organizations and companies to establish direct supply links with farmers. The ideal will be to replicate the Coop experience in Scotland and parts of Europe where farmers have gotten together to achieve the desired direct connectivity to the market rather than work through layers of intermediaries.
It has been pointed out to me that the National Dairy Development Board experiment with organizing small oilseed producers in Gujarat, on similar lines as dairy farmers, had failed. It would be useful to look at the reasons for that failure and draw the necessary lessons to make it work in the present conditions, which may be different. And we should also consider allowing and encouraging foreign multi-product retail companies to establish their agro-procurement operations for the Indian domestic and export markets. They could bring with them much needed investments in logistics, new technologies and the capacity to fend off the babu.
The small farmers’ interests against those of large retailers can be protected by a vigilant civil society and a robust regulatory mechanism. This will liberate us from the situation where agriculture is starved of investment and new technologies, and wilts as a result of stifling and all-pervasive bureaucratic intervention.
Rajiv Kumar is director and chief executive of the Indian Council for Research on International Economic Relations. These are his personal views. Comment at email@example.com