Who Really Benefits From Agri-Corporatisation?

We are often advised that corporatisation will automatically take care of ills of agriculture (e.g. low productivity, lesser influence of middlemen). But who is driving the corporatisation agenda into Indian agricultural system? Consumers? No. Producers? No. 

The government’s primary economic function is to maintain competition. Instead, the top priority of the government has become to promote economic growth. Corporate interests have entered every aspect of agriculture — from the making (influencing) of laws to the delivery of basic public services. The corporations have gained so much influence in certain machinery of the government that not only does it fail to ensure competition; government at times has become a tool for corporate exploitation of both people and resources.

 
To cite the example of Bihar in maize: In December 2009-10, the state had to step in with distributed assistance to farmers. The state exchequer had to take on an extra burden of 61 crores, which it had to pay as compensation to farmers using private hybrids, on account of “non-formation of grain”. This is the first time a chief minister has dared to expose a large body corporate that in connivance with GEAC (Genetic Engineering Approval Committee) & ICAR began trials even before the environment ministry’s clearance. 

On the other hand, the “so called” success of BT Cotton in the states like Gujarat has been over emphasized by the political class. In the interlocked agricultural market, if individual commission agents at times have hijacked the chain in past on delivery side, it is more likely that institutionalised middleman with their stranglehold over the ability to influence policymaking will prove to be a curse both on supply and delivery side. 

As a consequence of farm politics, some commodities are more heavily subsidised than others. Majority of all food/farm subsidies goes to wheat, rice, sugar and that too in limited pockets of a few states. 

All over the world, some of the most blatant conflicts of interest in politics have occurred among politicians and others who serve in important agricultural policymaking positions and has substantial interest in doling out the subsidy baggages to the pockets of influence. They put the economic interests of corporate lobbyists ahead of the public interests of society in general. In certain cases, these influential persons have also become business partners of the corporate.

Past experience shows that big food retail has neither benefited the farmer nor the consumer. Contrary to popular belief, the big retail has not helped in creating jobs either. If the supermarkets were so efficient for the farm economy then why is the US providing massive subsidy to its farmers? 

In corporatised food value chain, the individual nutritional (protein, carbohydrate, vitamin etc.) components are highlighted over balanced diet (dal, roti & subzi). Problems of obesity, diabetes, hypertension, heart problems, and food-related cancers have become epidemic with growing corporate control of the US food system. Let us protect India from these. 

Published in The Economic Times

Bihar now a trusted source of maize

Bihar, which a few years ago was more in news due to the fodder scam, is now known for being one of the trusted sources of maize origination. Productivity of maize in Bihar is 2,541 kg/ha, which is far greater than the all-India average productivity of 1,907 kg/ha. Bihar’s maize, which is primarily a rabi crop, has been a success sector mainly due to the quality of the produce as well as a simplified tax structure compared to other states. Both traditional and hybrid seeds are grown in the state and are increasingly replacing up-land rice in the kharif season and wheat in the rabi season.

With rich water resources and available irrigation in winter and summer seasons, irrigated area under maize increased and so have the yields. For the last two seasons, increased participation of national players and a few multinationals has led to a structural change in the maize ecosystem in Bihar. Earlier, procurement was done by three Kolkata-based traders with a long deferred payment condition of 45 days. However, with a broad-based participation, improvement in overall payment conditions to producers has taken place and more transparent price discovery is already happening.

It is important that the state government continues with the efforts of having more secured enabling environment and also insulates the industry from kneejerk reactions, which some of the other states have sometimes resorted to. Any slippage on this account would lead to the underpinning being shaken in the maize sector. The differential (the spot market price minus the market support price) has increased from`100 to `1,600/mt (currently spot prices at `10,000/mt). This has led to higher farm-gate realisation in all the states including Bihar.

While a number of national and regional players are trying to set up the starch and feed industry, it would be more important if the state government acts in a rational manner rather than with a fear of price rise and pursues a consistent policy. This would enable Bihar to steal a march over the other states.

The National Commission on Farmers had found that the main anchor states of our food security system — Punjab, Haryana and Western Uttar Pradesh — are in a state of ecological and economic crisis. The “Alternative Fertile Crescent” has a large untapped yield reservoir, particularly Bihar, Eastern UP, Chhattisgarh, Orissa, West Bengal and Assam. This region has a well-endowed water resource. The commission recommended that the region can become another fertile crescent, if a synergetic package of technology, services and market opportunities are introduced. Bihar seems to be better positioned than any other state in the eastern crescent.

While the lack of market infrastructure and market information system is said to have dogged Bihar during the last few decades, an improvement in the environment has lead to creation of more feed processors showing interest in the state and a few starch manufactures have already started setting up units in Bihar. The value chain is being increasingly integrated in the state, new traders and players have already become active and the processors are trying to set up units.

The state will no longer remain only a sourcing destination but will be an important region of value chain in the maize industry. The state needs to guard itself from short-term reactive actions, greed of the petty local political interests and local-level officials who are disconnected with the overall development pursed by the policy makers of the state.

Published in The Economic Times 26 July, 2010