Get Instant Loan up to ₹10 Lakh!
End brinkmanship and go for a win-win on farm laws
Let’s help create conditions for both sides of this standoff to adopt strategic thinking to their mutual benefit
Protests, negotiations and differences in opinion are the hallmark of a democracy. But sometimes, these protests take the form of an undesirable zero-sum game because of brinkmanship. This refers to a slow-burn strategy by an opponent who pushes you to the ‘brink’ of disaster by increasing your risk of losing everything. The term attained a public profile during the Cuban missile crisis of 1962, when the US and Soviet Union were on the brink of a nuclear war. This strategy is pursued in various contexts, such as wage negotiations and trade wars. Both parties may relentlessly pursue this strategy until one of them finally succeeds in getting its way. But at what cost? It might be too late before both parties realize that the size of the pie has diminished considerably after accounting for various losses, be it in terms of production days, property, impact on people, etc.
The bone of contention: Much has been written about India’s new farm laws, their merits and demerits. To summarize, yea-sayers argue that the state-run mandi system is fraught with cartelization and lack of price transparency. The new system will open the market for farm produce to private players, improve agri-infrastructure, minimize the role of intermediaries, offer farmers better prices, reduce wastage and unnecessary stockpiles held by Food Corp. of India, and help us fix environmental imbalances. Naysayers argue that the problem is not one of markets, but of “access” to markets in the form of transportation and logistics and availability of liquidity—how quickly the produce can be converted into cash. Given the vulnerability of farmers to market volatility, they need wider and more reliable access to minimum support prices. Other important details include the asymmetric nature of contracts between corporations and small farmers, and a need to provide safeguards for contract farming.
Negotiations: The government has had several rounds of discussions with farmers. With no solution in sight, protests are slowly taking the form of a zero-sum game, wherein the success of one is the failure of the other. It is uncertainty over when these negotiations will end that pushes either party to resort to brinkmanship with the attitude that ‘this will hurt you more than me’. For example, farmers may feel they have less to lose and that their cost of waiting, protesting day after day, is less than it is for the government. Negotiations often fail because of unclear information on (and poor understanding of) what the long- and short-term gains and losses for both parties are. In this context, talks between farmers and the government should be seen through the strategic lens of game theory, which analyses the interaction between stakeholders (or players) with distinct interests in terms of their action choices, the outcomes thereof, and their related pay-offs.
Thinking Strategically: First and foremost, each stakeholder should list out the available alternatives to the negotiation terms, and select the best among them should the talks fail. In the parlance of game theory, one needs to apply the principle of ‘BATNA’, or the ‘best alternative to a negotiated agreement” if negotiations do not work out. For example, what could be a better alternative to walking away from a deal (or negotiated agreement): Going to court, a hunger strike, heightened protests, or public demonstrations of anger? Each party must evaluate if the current deal is better than its BATNA or best alternative to it. If yes, the deal must be accepted. If not, both can look for a mutually acceptable zone, instead of prolonging the negotiations because of the time value of money. While making an offer, one must keep in mind all possible outcomes, the passage of time, and how it may impact the size of the eventual pie.
Take the example of successive rounds of negotiation between two persons on how to judiciously divide a piece of ice-cream cake. Thinking ahead, one knows that in case of a delay, the cake will perish, and each party will get less than what it could have if they had both agreed to an equal split. Therefore, rationality dictates that both parties be fair and transparent at the outset.
The key to strategic thinking is to look forward and reason backwards (i.e., backward induction). The introduction of farm bills, for example, called for a long-term outlook on how other stakeholders may react. A sign of good governance and leadership is its ability to think ahead and make credible commitments. For success, credibility must be built into the government’s actions. This can be done through an assured framework for private participation in agriculture. For example, in Kenya, to assist small farmers, the government has recommended a sub-sector industry forum to collectively mobilize resources to address critical infrastructure bottlenecks in the dairy sector. In Uganda, its tobacco law has been amended to protect tobacco companies as well as farmers. Specialized non-government organizations help in resolving disputes and developing good work relations between farmer groups and agri-businesses.
Equitable outcomes require multiple rounds of discussion in multiple forums to transform the standoff into a positive-sum game. This is where intellectuals and agricultural experts need to step in. They can help create conditions for a win-win result by conducting discussions and debates in public forums such as universities, industry associations and think-tanks. It can be achieved. This, indeed, is the strength of democracy.
Madhuri Saripalle is area chair (economics), IFMR Graduate School of Business, Krea University
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
MoreLess
First Published:24 Feb 2021, 10:31 PM IST
- Top Gainers
- Top Losers
- 52 Week High