Sharp cuts in investment in farm land development, irrigation and extension services vital for growth of agriculture in the last two decades have brought down agricultural production, including foodgrains to less than the rate of growth of population in India. This has also led to a fall in the earnings of small peasantry and farm worker.

The policy response of UPA government - I and II has been very poor in respect of, in particular the role of the small farmer in increasing production and productivity in agriculture. The partial and badly implemented reforms of land ownership and social relations in rural India, which were carried out in the fifties and the sixties of the last century after direct colonial rule ended in India have been attempted under the UPA dispensation to be wound up and reversed. The transition of India from feudalism to capitalism in India has indeed been grotesque.

The “viable” farmers, rich lords on agricultural land and only a part of the middle farmers which constitute hardly 10 per cent of farmers in India have been helped to increase agricultural production by subsidised fertilisers and credit. This has since early nineties led to the bulk of incremental production of foodgrains and other agricultural commodities even as production and productivity of 90 per cent farmers have been left to the vagaries of nature which has left their livelihood at subsistence level.

This has resulted in hunger and malnutrition for large segment of rural and urban population of India. The gains that arose from whatever improvements in production and productivity in agriculture took place have been monopolised in their entirety by the rich farmers and only marginally by the middle farmers. The opportunity for small farmers and agricultural workers to work on small parcels of land has been shrinking even as their number has been increasing, their access to credit from commercial banks too has been restricted. In the given socio-economic and political conditions in rural areas, the small farmers remain the most hapless victims of private money lenders while landlords have become prosperous economically and politically powerful.

It is, however, a misconception that small farming in India is less efficient than capital - intensive cultivation on large farms. The fact is - and this has been established by expert studies - that production per hectare by labour-intensive farming by small farmers with family labour in India is more than what big commercial farms yield per hectare. But official policy has been promotion of agriculture based on application of imported labour-saving technologies, especially from the USA. The Prime Minister, Mr. Manmohan Singh, actually entered into a deal with President Bush of the USA on agriculture on this basis at the same time as he signed the nuclear deal with him. It is indeed not fortuitous that even food security has been derided till recently by the votaries of reforms to advocate “contract' farming by business corporations in India.

Any idea of extracting surpluses from the agricultural sector for exports to earn foreign exchange to finance imports, largely to meet elitist consumption demand and strengthen internal and external security in India for the entrenched socio-economic order is not only vain but also perverse. The export of agricultural commodities has been carried on with gay abandon as logical and necessary. The agricultural development strategy has achieved only partial success by way of what is called Green Revolution - I in so far as it helped import substitution to some extent in the case of foodgrains. Those who boasted of food self-sufficiency having been achieved ignored the fact that a large part of the Indian population continued to suffer from malnutrition and even starvation deaths because the farm sector in India has been developed with the aim not for the consumption of the people in India but for producing marketable surpluses for domestic and foreign markets. Commercial consideration rather than livelihood has been the primary policy priority. In this scheme of things, prices of agricultural commodities has been constantly rising in the reform era.

The concept of incentive prices for farm commodities, to begin with, was related to the cost of their production plus a reasonable margin of profit for the producer. This was aimed at protecting the interest of the farmer as well as the consumer mainly in urban areas and industrial workers in conditions of comparative scarcity and pressure on prices of basic wage goods in the domestic market. This also called for public distribution system foodgrains at subsidised prices. But subsequently, the concept of incentive price began to be related to what is called parity of prices between farm produce and industrial manufactures and further on to export prices. Minimum support prices fixed by the Government, on this basis have resulted in a position in which the gains of production and productivity in agriculture tended not to be shared by the producer with the consumer. The upshot has been that the structure of relative prices in the domestic economy, including that of the price of labour, i.e. wages, has been grossly distorted.

The Agricultural Prices Commission, when it was set up as an export advisory body, was mandated to recommend a set of prices for selected farm products based on independent studies of the cost of their production, fair return to the farmer and fair prices for the consumer. But APS under pressure of farm lobbies has tended to go for upward revision of procurement prices of farm prices before rabi and kharif harvests, which have been further hiked for political considerations by the Governments at the Centre and in the States.

The procurement of post-harvest foodgrains and other farm commodities by public agencies on minimum support prices fixed by the government comes from poor and middle farmers with no or little bargaining power. But big farmers command the large part of the marketable surpluses and play in the open market in collusion with the traders. It is not without reason, therefore, that the big farmers and those articulating their interests raise the cry of remunerative prices as a ploy to line up the support of all segments of farmers behind them even while they seek opportunities in the open market for making high profits. The opposition of the big farmers and their organisations to any restriction on private trading in foodgrains and other farm commodities testifies to this position. The big farmers are not interested in remunerative prices worked out on cost-plus basis. What they want actually are prices which they can extract from consumers by rigging the open marked in collusion with traders. The upshot is boost for food inflation which has upset the balance of the economic growth process. This is evident enough with the novel phenomenon of agricultural prices pushing up the prices indices, retail as well as wholesale, in a condition of industrial recession. The social impact of this is devastating. It means that market-driven economic growth is further sharpening the disparities in the incomes in the entire economy, and even lower middle class is also being pushed down so that mass poverty in India is increasing. (IPA Service)