On the Farm Bill and the protests at IISc
Before we go ‘you do not have to be a farmer in order to support one,’ like the ‘Students with Farmers’ protestors at the Indian Institute of Science (IISc), Bengaluru, are, we must ask ourselves why we are not engaged in agriculture in the first place. The reason is clear – across much of the developing world, poverty rates in villages are consistently higher than those in cities (World Bank 2011: 117). Due to this, our ancestors, about less than a hundred years ago, migrated from villages to cities in search of an easier, better life. And why shouldn’t they? Life in a village is hardly easy and, quite simply, you would not want to live in a place that is not serviceable by Amazon and Flipkart, let alone one that lacks 24/7 water and internet. This pattern of migration has only since increased and shows no signs of abating (World Bank 2011).
The migration of our ancestors from villages to cities (or from farms to firms, as World Bank puts it) was made possible by industrialisation, which opened up jobs for these migrants, which consisted of your and my forefathers. This pattern of migration can be witnessed globally – it is from relatively un-industrialised countries like India, Nigeria, Brazil, Romania, Hungary and Yugoslavia that people migrate to the USA, UK, France, Germany, Japan, Australia in search of jobs. It is outside the US Embassy that you see a large queue of prospective migrants applying for VISAs. You do not see such a large queue outside the embassy of North Korea, an unindustrialised country, do you?
Even within India, it is from unindustrialised states such as Uttar Pradesh and Bihar that people migrate to megapolises like Delhi, Mumbai, Chennai and Bengaluru to work as taxi drivers, maid servants, street hawkers, delivery boys etc. How many Mumbaikars or Bangaloreans have you seen trying to find work as Ola drivers or Amazon delivery boys in Patna? Every day in India, thousands migrate from villages to cities and, therefore, take their first step towards economic mobility and even freedom from caste discrimination (Aiyar 2015). Adani, Ambani, Birla provide much needed employment for these young boys and girls. Boycotting or – god forbid – banning Adani or Ambani, as some of these delusional protestors argue, will simply throw many of these out of jobs (Powell 2014: 4) and they will be forced to go back to the back-breaking work of their villages. This is something even left wing economists whose hearts bleed for the poor have begun to acknowledge (Krugman 1997). Furthermore, would it not be hypocritical on our parts to say that we are going to enjoy the comforts of a city, while they are supposed to work in farms to feed us and not look towards the glamour of a city?
More importantly, it is not even a question of just Adani or Ambani. Or of Coca-Cola or McDonalds or Adidas or Nike or Airtel or Vodafone or Microsoft or Apple or Samsung or Google. The truth is that there is hardly anyone of us here who has not yet reaped the fruits of global capitalism. These firms are where they are today because they have a business model that works, and there is no denying that these firms and the constant competition between Apple-Google-Microsoft or IndiGo-Vistara-SpiceJet have made our lives immeasurably easier and affordable. Would you want to live in pre-1991 India where the only telecommunications provider was BSNL and it took bribing one government official and another for years to get a telephone connection? Where the only television channel was Doordarshan? When the only airline was Air India? Or when the only car was the HMT Ambassador, and you had to wait for eight years to get one? The only shoes were Bata? Or would you like to live in India today, where you can easily get a SIM card or a car by putting money on the table and do not need the government’s permission to do so?
Ironically, but unsurprisingly, even these ‘students with farmer’ chaps campaigning against those ‘big fat greedy capitalist imperialist pigs’ used Microsoft Word on a Lenovo PC to type their protest statement that you see stuck on walls, used Gmail to email it to the a xerox shop, which then used a printer manufactured by capitalists like Hewlett-Packard or Canon to print it. At each step in the process, they used the fruits of capitalism. Even online, they are using Facebook – again, an organisation headquartered in capitalist USA – to spread their message. I doubt if these protestors will shed off their smartphones and Adidas shoes and go khadi full-speed. If only we did not have such an attitude towards industrialists, all these companies would have been Indian companies, generating revenue for Indians. The difficulty of becoming an entrepreneur in India only made the bureaucrats stronger and forced producers and revenue generators to migrate to more business-friendly countries.
Make no mistake about it: never in history has a departure from market forces to centralised economy (something these protestors argue for) benefitted agriculture. On the contrary, agriculture is one of the worst affected sectors of economy in the event of a transition to a centralised, government-controlled economy. Stalin’s Collectivisation in 1930s USSR, that continued till 1950s, meant that everybody, including farmers, lost private property rights ‘for the benefit of all’ and were forced into collectivised farms. While earlier food surpluses were channelized in the market, Collectivisation meant that the state coerced farmers to surrender their agricultural surpluses and machinery to the state, causing huge famines in what is now Ukraine in 1932-3 (Fitzpatrick 1996: 3-18). Similar abolitions of private property and Collectivisation measures made Tanzania go from a food exporting country to a country of acute shortages and malnutrition (Samoff 1981). In Venezuela, Hugo Chavez’s regime (1999-2013) completely eliminated private players from all sectors and nationalised agriculture, farm-to-city supply chains, electricity, water, healthcare, supermarket – everything (di Martino 2019) (again, something that the ‘Students for Farmers’ are arguing for). Subsidised products – and not free market – compelled people to hoard food, thereby causing shortages (Otis 2020) and record-breaking levels of inflation (Forero 2019). With price mechanisms and market forces absent, agricultural production in Venezuela shrank by 75% even as the population grew by 33% in just twenty years. This inevitably gave way to black marketing, then rationing and then violence. Chavez, while taking on Presidentship of Venezuela in 1999, had screamed ‘socialism or death!’ Well before he died, he had successfully delivered on both.
And neither are industrialisation and agriculture antithetical to each other. In fact, agriculture in itself is an industry in its own right. Verghese Kurien, the milk-man of India, has repeatedly stated in his autobiography how Anand Milk Union Limited (Amul) depended on machinery from Larsen and Toubro, and that he insisted on an Indian manufacturer at hand for the purpose. And how the existence of a large city like Mumbai was key to Anand’s success. He asserts consistently that agriculture is a business in its own right and has to be run as such (Kurien 2005: 44, 56, 144, 186). In North Korea, lack of privatisation precluded technological innovation, which meant that the country did not reap any benefits from the Green Revolution and depended on just increasing work hours of farmers. In Mozambique, on the other hand, the agritech industry is poised to catalyse the country’s transition from a largely agrarian economy to an industrial one. This also assists the diffusion of technology in its villages (Grabowski 2018) and allows farmers to access markets in cities themselves without depending on middlemen.
It is commonplace to hear about bribing government officials to procure passports, PAN cards, ration cards needed to avail various government services, including the Public Distribution System (PDS). Like in Venezuela, people working for the PDS know they are government employees who are receiving regular salaries, so they feel free to hoard (Chidambaram 2020). Any subsidies or foodgrains that they get to cover the shortfall are simply pocketed or pilfered by them for their own benefit (The Hindu 2020). On the other hand, when was the last time you heard of BigBasket refusing to sell you oranges or Croma refusing to sell you smartphones to create shortages and inflation? That is because BigBasket knows that if it ceases to sell, consumers will simply buy from some other source (Grofers or Amazon or just the local bazaar). Do you really think if MTR decided to close shop, the price of masala dosas will shoot up across Bengaluru? No, because there are other sellers of dosas. When MTR resumes business, they will have to sell masala dosas at the market rate, just like everyone else!
Do realise that Reliance Fresh or Grofers or BigBasket or Amazon or even the farmers who come to cities directly have invested a lot of money to transport food items from villages to cities and refrigerate them while paying for the electricity. Additionally, they have to pay monthly salaries to their employees who consist of not just delivery boys but also high-level managers who earn more than you. Hoarding food, a perishable commodity, will lead to the depreciation of the very product for which they have made those investments. Doesn’t make sense, right? Would you pay ₹10 for a paracetamol tablet that expires in six months from now, or ₹30 for a paracetamol tablet that is expiring one month from now?
Shortages and shortages-induced-inflation occur not when there are multiple channels of distribution, but when there is just one. As with the MTR example above, these tactics do not work when there are multiple players in the sector and your survival depends on selling your products at the right time (for e.g. Apple will not hoard the latest iPhone because Samsung will come with something more advanced in another six months, making the current iPhone model redundant). They work only when you know your survival does not depend on your business and you are getting a sarkari salary no matter what, and competitors are absent. All political parties know that repealing the Agricultural Produce Market Commodities Act (APMC) is necessary to give farmers the freedom to trade, something Kurien advocated (Kurien 2005: 144) and that, in turn, is necessary for Indian economy. The Indian National Congress (INC) that is siding with the farmers at the moment had also included the revocation of APMC in their manifesto (Indian National Congress 2019: 17). In fact, many of the farmers participating in protests right now are large farmers who also doubled up as middlemen and will lose their hegemony over the supply chains once the APMC is repealed.
All in all, privatisation does not just mean Ambani or Adani, it means as much you and I as consumers and producers. We do not need to kick Ambani or Adani out, instead, we need more industrialists to give Ambani and Adani (or whoever you hate) a good run for money. It is more and more competition that will create a fair ground for both consumers (us) and producers (here, farmers). The ‘Students with Farmers’ might be well-intentioned, but they are heavily myopic and misdirected. They are advocating the very practices that have historically brought corruption, artificial shortages and inflation! We might need to have a compulsory module in economics or economic history for all students at IISc at this rate.
A version of this article appeared in The Financial Express as ‘A Tale of Two Countries‘ on Wed 24 Feb 2021.
References
Aiyar S. 2015. Capitalism’s Assault on the Indian Caste System: How Economic Liberalization Spawned Low-Caste Dalit Millionaires. Policy Analysis 776: 1–16. https://www.cato.org/sites/cato.org/files/pubs/pdf/pa776_1.pdf.
Chidambaram P. 2020. Hoarding government, starving people. The Indian Express. https://indianexpress.com/article/opinion/columns/p-chidambaram-food-distribution-hunger-coronavirus-lockdown-6379259/.
di Martino D. 2019. How Socialism Destroyed Venezuela. Economics21. https://economics21.org/how-socialism-destroyed-venezuela.
Fitzpatrick S. 1996. Stalin’s Peasants: Resistance and Survival in the Russian Village after Collectivization. Oxford University Press, London, UK. https://global.oup.com/academic/product/stalins-peasants-9780195104592?cc=us&lang=en&.
Forero J. 2019. Hyperinflation Shatters Venezuelan Manufacturing. Wall Street Journal. https://www.wsj.com/articles/hyperinflation-shatters-venezuelan-manufacturing-11551798001.
Grabowski R. 2018. Deindustrialisation in Mozambique: the role of agriculture. Canadian Journal of Development Studies 39(4): 569–585. https://www.tandfonline.com/doi/full/10.1080/02255189.2018.1467829.
Indian National Congress. 2019. Manifesto, Lok Sabha Elections 2019, Indian National Congress. https://manifesto.inc.in/pdf/english.pdf.
Krugman P. 1997. In Praise of Cheap Labor: Bad Jobs at Bad Wages Are Better Than No Jobs at All. Slate Magazine. https://slate.com/business/1997/03/in-praise-of-cheap-labor.html.
Kurien V. 2005. I Too Had a Dream. Roli Books Pvt Ltd, New Delhi, India. http://library.lol/main/89D61B34F62DB9DD30B4D1775AAFFD0C.
Otis J. 2020. Venezuela’s Food Chain Is Breaking, and Millions Go Hungry. Wall Street Journal. https://www.wsj.com/articles/venezuelas-food-chain-is-breaking-and-millions-go-hungry-11601544601.
Powell B. 2014. Out of Poverty: Sweatshops in the Global Economy. Cambridge University Press. https://www.cambridge.org/core/books/out-of-poverty/0CD8DA1E9854012B7ABDE016960F09AA.
Samoff J. 1981. Crises and Socialism in Tanzania. The Journal of Modern African Studies 19(2): 279–306. http://www.jstor.org/stable/160638.
The Hindu. 2020. 388 quintals of rice meant for PDS seized in raids. The Hindu. https://www.thehindu.com/news/national/karnataka/388-quintals-of-rice-meant-for-pds-seized-in-raids/article32835957.ece.
World Bank. 2011. From Farm to Firm. http://documents1.worldbank.org/curated/ar/547481468330918163/pdf/622590PUB0farm0476B0extop0id0186230.pdf.