India’s Farm Subsidies Lead to Waste but Support Millions

BHAGWANPURA, India – The farmer sat in the house his grandfather built and thought about the economic ruin.

Jaswinder Singh Gill had plowed 20 years of savings from a previous career as a mechanical engineer into his family’s 40-acre property in the northwest Indian state of Punjab, just a dozen miles from the Pakistani border. For 15 years he has been extracting rice from the sandy, loamy soil with the help of generous government subsidies in the hope that one day his son and daughter will become the sixth generation to work the land.

Then suddenly India changed the way it farms. Prime Minister Narendra Modi passed new laws last year that would reduce the government’s role in agriculture to repair a system that has resulted in huge rice surpluses in a country still struggling with malnutrition.

But the laws could make Mr. Gill’s farm and many others who like them untenable. They would diminish the role of government-run grain markets, which farmers believe would ultimately undermine the price subsidies that make their work possible. If so, the livelihoods of millions of people who depend on the land could be at risk.

At 56, Mr. Gill doesn’t know what to do next. “How can a man start over at this age?” he said.

Mr Modi’s campaign sparked one of the largest and thorniest conflicts of his seven-year tenure.

Farmers from Punjab and other countries camped outside the capital New Delhi for four months in protest. The country’s Supreme Court has suspended the laws while figuring out what to do next. The government has occasionally blocked protesters from internet access and tried to suppress criticism online.

At the center of the dispute is the subsidy system that the government, economists and even many farmers agree to. But Mr Modi’s rush to reshape it – his political party got the laws through parliament in a matter of days – could devastate much of the country where farming remains a way of life.

“Agriculture in India needs change,” said Devinder Sharma, an independent economist in Chandigarh, the capital of Punjab, “but this is not the way to go.”

Almost 60 percent of India’s 1.3 billion people make a living from agriculture, although the sector only accounts for around 11 percent of economic output. For many, getting another job is not an option. Manufacturing has shrunk slightly since 2012, government figures show, while the workforce has grown.

“Our potential non-agricultural workforce is growing very rapidly,” said Jayan Jose Thomas, economist and professor at the Indian Institute of Technology in New Delhi. “They are all looking for jobs.”

Officials at the New Delhi Department of Agriculture did not respond to requests for comment.

The current Indian system is undoubtedly out of date. It was introduced in the 1960s to prevent famine by encouraging farmers to grow wheat and rice. It contained government-set minimum prices that helped farmers sell what they grow for a profit.

‘You produce as much as you can. Work hard, ”said Gill, the farmer, citing government instructions. “They made a solemn guarantee that they would keep every single grain.”

Prices are set in government-run markets known as mandis, where farmers and buyers can come together for a fee, where grain is sun-dried, stored and sold. The fees go towards rural infrastructure projects, farmer pensions, and programs that provide free technical advice on issues such as seeds and fertilizers.

The system, along with improved techniques, increased use of machinery and fierce competition, increased revenues. As a result, India has too much wheat and conventional rice to fill more than 200,000 shipping containers compared to basmati rice. Subsidized rice is sold on the world market, which creates problems within the World Trade Organization.

At the same time, according to the Global Hunger Index, almost 190 million people in India are undernourished. India’s surpluses are grown in the wrong places and the public food ration system cannot get all of the grain to those in need before it rots. The government is not buying enough nutritious crops such as leafy green vegetables, lentils, chickpeas and sorghum to encourage farmers to grow.

The imbalances don’t end there. Price supports help smallholders stay in business, but most don’t cultivate enough land to make a profit, leading to debt and suicides.

The subsidies encourage farmers in Punjab, a relatively dry area, to grow conventional rice, which requires a lot of water. Irrigation of rice and wheat depletes the area’s water table, according to India’s Central Groundwater Board.

Mr Gill once tried to grow basmati rice instead. It’s tastier and more nutritious than traditional rice, uses less water, grows faster, and sells in the international market at a premium. However, the state pricing rules do not apply to basmati rice. When he was selling the basmati rice, Mr Gill said he was understaffed by a private buyer.

Under Mr. Modi’s plan, corporate buyers would play a much bigger role in Indian agriculture as farmers would have more power to sell their crops to private buyers outside the Mandi system, which would increase farmers’ incomes and boost exports.

The protests sparked off because many farmers fear that the laws will ultimately kill both the subsidies and the Mandi system. The new laws would also make it difficult for farmers to take their disputes with buyers to court.

Farmers point to efforts in Bihar state 15 years ago to liberalize agriculture. Supporters say it boosted growth, but some Punjab economists and farmers consider it a failure. Some farms in Bihar deliver their crops to Punjab’s Mandis at guaranteed prices, while many of those who lost their farms became migrant workers in Punjab.

The change in farm laws is an example of how Mr. Modi has a penchant for quick, dramatic moves that have messed up the country. Punjab farmers and local officials want slower changes and a shift in subsidies to support different crops. In interviews, farmers in Bhagwanpura, with a population of 1,620, said they feared losing their farms and having no other work.

“I’m not afraid of hard work,” said Rajwinder Kaur, 28. “I’ll do any job, but there isn’t any.”

Ms. Kaur, a widow, said her family lost most of their farm because her late husband had to feed his drug and alcohol habits. It’s only half an acre, compared to India’s average of about two and a half.

Ms. Kaur said that she and her two children can barely eat with the income from her grain sales. A relative pays for a child to attend a local Catholic school. She negotiates with the school to waive fees for the other.

Much of the revenue goes towards paying off their $ 4,100 debt on seeds and fertilizers.

“I pay back every six months,” she said, “but interest never goes down.”

If she loses her farm, “I’ll have to beg,” she said.

Many of the farmers who joined the protests have left family members to tend the land. Others are pooling their money to support the protests.

“We believe that the struggle of Punjab is everyone’s struggle,” said Gurjant Singh, the village chief, “and if everyone does not contribute to this cause, the protest will not be successful.”

Mr Gill borrowed his 17-foot articulated truck and took turns donating money and grain to those who took turns. For him, defending the farm is a family matter.

His grandfather built the farmhouse after the bloody partition of Pakistan from India forced him to flee Pakistan in 1947. The 1960s subsidies brought prosperity to the farm and made it the largest land holding in this corner of Punjab.

Since taking over the farm in 2005, Mr. Gill has poured his savings into a smart irrigation system, built a crop removal machine, and invested in a pair of John Deere tractors.

As he spoke, prayers from a Sikh Gurdwara or Temple roared through a loudspeaker over Mr. Gill’s wheat fields.

“Work hard, worship the Almighty, and share the benefits with all of humanity,” said Gill. “We are taught this every day in the Gurdwara.”

His fears about the future shouldn’t hinder his work.

“What’s going on here is inside of me,” he added, touching his heart. “I should keep it in me.”

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