During the initial four days of April, 2011, when the entire nation was reeling under the intoxication of the semi-finals and finals of the Cricket World Cup, when the prime minister, president, ministers and bureaucrats were gripped in its fever and cricket was indiscriminately splashed across the media (which can now be considered blind and anti-people), the Government of India issued Circular 1 of 2011 relating to its Consolidated Foreign Direct Investment Policy, opening up the floodgates for 100% FDI in the agricultural sector. Usually our government takes such decision when our society and media is busy with some kind of mania.

Any foreign company can now exercise direct control over the production, research and development of seeds, plants, flowers, vegetables, tea, mushrooms and other agro­ products. Animal husbandry and pisciculture have also been included in its purview. The government will now provide exemptions in import-export taxes and duties to profit making companies, allowing them to play around with whatever is left of India’s agricultural resources (its land, seeds, agricultural techniques and produce, horticulture, floriculture, pisciculture, animal husbandry, etc).

Even without this policy of 100% FDI, 225 thousand farmers have already committed suicide. Now this number will increase unimaginably. The suicide rate will now climb because local producers of coconuts, tea, mushroom, fruits, flowers as well as those in dairying and fish production will now have to compete with large corporations with ample economic resources who are being protected by government policy and international financial institutions.

The multidimensional corporate threa

In India, there has always been a close relationship between farmers and their produce, with the network of wholesale Krishi Upaj Mandis (state controlled agricultural produce markets) serving their needs for the past four decades. Over the past 10 years companies like ITC and Cargill have set up their own parallel network for purchasing agricultural produce directly from these producers. Economists like Montek Singh Ahluwalia feel this gives farmers a better system of services that fetches them better prices. He is among those who think that it is better to set up a parallel system if the government system does not work rather than improve it.

On April 4, a farmer died in a krishi upaj mandi in Raisen district of Madhya Pradesh. He had been waiting eight days to sell his produce but couldn’t do so because he did not have the requisite gunny bags. The tension proved too much for him to bear. In majority of mandis, long queues of farmers waiting to sell their produce can be seen all across. In Madhya Pradesh, a crisis of packing bags (Baardaana) is created every year. State allocates 6.7 million bags for packing agriculture products in mandis, but only 3 million are used and this results in long waiting lines of farmers. This increases the cost of production, as transportation expense goes up every day.

The situation in mandis is far from satisfactory nowadays. It has become a very important uncomfortable place for farmers. Farmers are often not paid for up to 8 to 10days after selling their produce. That’s why they are now looking to other avenues. The question is why isn’t it possible to set up an effective payment system in mandis? The answer may be found in the way they function. For example, mandis demand six types of documents from farmers who come to sell their produce. Is this necessary? Should the system be so complicated that it drives farmers to desperation? On 7April 2011, because of untimely rains, 1000 metric tons of grains got wasted as it was lying in open. The point is why all mandis have no proper shelter facilities.

It is such factors that are weakening the mandi system, creating an environment in which private companies flourish. Today, three companies have captured 30% of the market even as the government is slowly moving towards dismantling the mandi system.

Eagle eyes on systems

Companies like ITC and Cargill treat farmers with a modicum of respect today because they know the mandi system is still available as an alternative. Once the system degenerates, they will begin to bare their fangs, showing their true colours.

Our analysis tells us that large corporations have infiltrated and taken control of every facet of agriculture (resources, production, marketing, supply, even consumer behaviour and consumption patterns). Till now they were involved in producing canned goods and packaged food but the situation is changing and they are now taking control of the production of raw materials. They produce groundnuts, tomatos, potatos, chilli, rice, fruits etc. As a result, farmers can no longer decide what they want to grow and it is becoming increasingly unclear what kind of protection the government policies will provide for them.

This is not the end. They have also almost controlled 37% of supply and marketing chains, which gives them a authority to decide who will sell and what! The corporate infiltration covers the entire value chain right down to the consumers. Retail giants like Carrefour, Wal Mart, Reliance, Bharti Enterprises, Future Value Retail and Spot Hypermarkets have formulated plans to add another 510 supermarkets and malls to their already extensive retail network.

This is, indeed, the irony of the situation today. One cannot get a few hundred square feet of land in Delhi, Bengaluru, Kolkata, Mumbai and 2 other cities to build a house but according to a Knight Frank India report ‘India Organises Retail Market 2010’, these cities will make available 55 million sq ft of land between 2010 and 2012 for the retail trade. Where will this land come from? Obviously by displacing slum and pavement dwellers!

The Political Economy of Organic Food

One new development in the agricultural sector is the growing interest in organic farming as the chemicalization of agriculture products moves apace. In India, organic produce has traditionally reached people directly from the farms, coming into the markets with labels like local tomatoes or local bottle gourd. However, this is no longer the reality.

As the demand from consumers for unadulterated and chemical-free food gains momentum, giant global multinational corporations are taking control of organic farming and the trade in organic foodstuffs. The argument they offer is that it doesn’t matter who owns the proprietary right to this market, given the growing dangers of large-scale chemical use in agriculture.

These mammoth, financially strong corporations know that the market for organic foods is growing rapidly. According to the Organic Trade Association, it had already grown to US$ 28.4 billion in 2009. That’s why these corporations took over as many as363 small local production units across the world from 1997 to 2007. For example, Coco Cola has taken over Honest Tea.

This underlines the growing dangers of economic colonialism in food trade as the market for organic foodstuffs continues to expand.

The danger is magnified because it is no longer possible to trust these corporations considering that it is they who, to a large extent, are responsible for the presence of dangerous levels of pesticides in cold drinks, the use of unacceptable chemicals in canned foods and the spraying of endosulphan in agricultural fields, no monitoring of dangerous chemicals usage in agriculture field etc. The world can no longer believe these companies that are poisoning our grain and food in their willingness to go to any length to earn a profit.
That’s why, as a matter of policy, most of them have continued to trade in the local brand names of the companies they take over to ensure that their tainted reputations do not impact on their new trade in the market. Muir Glen and Cascadian Farm are being run under the name of Small Planet Foods, which is in reality a General Mills company. But people still remain skeptical about whether such companies will actually make organic food available to them.

We firmly believe that it is essential to stop the entry of multinational companies into this sector as farmers increasingly move from chemical-based farming to organic farming as a long-term solution. Farmers are switching over to organic farming and it is gaining momentum, as seen from the example of Andhra Pradesh, where farmers in 23districts have switched to organic farming but there is no policy to protect them from corporate giants.

However, till now, there is no policy formulated to protect these farmers from the predations of monster corporations. In such a scenario, the most important thing we need to remember is to ensure that the production of foodgrains remains decentralised, people-oriented and transparent, especially since 67% of India’s population depends on agriculture. It is a matter of survival of moral policies and attitude in agriculture sector.

What’s required today is to develop a complete organic farming ecosystem that produces a diverse range of food-grains, conserves livestock resources and incorporates traditional practices, nutrients and organic insecticides.

It is doubtful that multinational companies would be interested in developing such an ecosystem. Instead, there is every fear that they will use genetically modified seeds and continue using chemicals in some form or other. They only believe in manipulations and corruption in practice and in policies. These are the new fears facing organic farming in today’s world.

Agriculture for Money, not for Food Justice

Now foods corporates are looking towards ensuring their monopoly over all section of agriculture system. The food production system is important in the administration of food security. As important is the market system. In India, 29 million people are engaged in food and related material trade. They do not trade for profit alone but play a central role in ensuring ‘access’, which is a vital element in the concept of food security.

However, predominantly food-trading companies are now seeking to establish their collective authority over this ‘market to get control over accesses. They include Wal Mart, Reliance, Bharti Enterprises, Glaxo SmithKline Consumer Healthcare, Nestle, CavinCare, Field Fresh Foods, Del Monte, Buhler India, PepsiCo and Coca Cola. According to a new report from market analyst RNCOS, India’s food market is growing 7.5% annually and will be worth US$330 billion in 2013.
The Agricultural and Processed Food Products Export Import Development Authority (APEDA) estimates that India’s exports of agricultural products could touch US$22billion by 2014. The country’s exports of flowers, fruits, vegetables, animal products, processed foods and fine grains were worth US$7,347.07 million in 2009-10.

The Indian government is spending Rs 1.5 lakh crore to usher in a second green revolution through food processing. According to India’s Minister for Food Processing Industries Subodh Kant Sahay, the government will invest US$21.9 billion in this sector over the next five years. As far as foreign direct investment is concerned, it is expected to rise to US$264.4 million.

These astronomical figures are like a time bomb, with the potential to wreak devastation.

Market analysts predict that the share of the food processing sector will in all probability rise from the current 6% to 20%, taking India’s share in the global food processing market from 1.5% to 3%.

Initially big food companies took control over research and development of seeds and pesticides. In fact they were successful enough in grabbing India’s best agriculture universities and institutions; now they directly farm lands in hundreds of thousand hectares and producing what they need for processing and packaging; they have marketing and supply chain, that ensures their access directly to consumers, so how they control the consumer science as well. Now look at their reach in the India’s government system. The 18 officers of big companies like Coca-Cola, PepsiCo., Nestle, ITC, Hindustan Unilever, Marrico, Britania, etc have been appointed in the scientist panel of Food Security Standards Authority of India. These panes are empowered to suggest policies and amendments in system relating to Functional Food and Nutrition Products, Sampling and Analysis, Flavoring, Pesticides and Antibiotic components in Food, Labelling, Advertisements and Claims etc. You may like to imagine what kind of systems and regulations would be framed and enacted and who will benefit from them!

Farmer’s agriculture Vs Corporate agriculture

However, the focus of this new green revolution is not the farmer and his field but multinational corporations, to whom the government is progressively handing over control of natural resources and the production system. The government wants to create a suitable environment for these companies and financial institutions through its massive investment and other concessions.

Just eight companies (Cavin Care, Nestle, Glaxo SmithKline, Yum! Restaurants India, FeelFresh Foods, Buhler India, PepsiCo and Coca Cola) will be investing US$1,200 million in the food production industry over the next two years. In addition to other exemptions, they will enjoy 100% exemption from tax on profits for the first five years and 25% exemption for the next five years. Excise duty will be reduced by 50%. In fact, the budget decided these benefits for them even as all concessions and subsidies to farmers were withdrawn.

India’s Planning Commission and economic advisors have been playing the role of agents of these multinational companies, deciding that the country will industrialise its agriculture through their intervention within 10 years. That’s why it permitted the demand of other companies to purchase foodgrains directly from farmers in 2005, as a result of which the Indian government ended up importing 5.3 million tonnes of foodgrains first time in last 10 years from Australia, Canada and Ukraine at twice the price to meet the country’s needs.

Over the past four years, prices of foodgrains have risen 70% to 120% in the open market but the government has raised the minimum support price for farmers by only20% during this period. It has failed to formulate any policy for controlling prices despite knowing that it is the agents and traders who are cornering the benefits of rising prices. Instead, it lowered the poverty line so it can trim the public distribution system, thereby lowering the quantity of foodgrains it needs to buy in the open market.

This move gave companies the licence to purchase foodgrains from farmers at arbitrary prices. These foodgrains are being exported or used for food processing. The priority is obvious - to shift wheat from traditional usage for making chapattis to producing bread, noodles, biscuits and canned foods.

In addition, approximately 10 lakh hectares of the most fertile land have been diverted to cultivation of flowers and fruits for juice extraction, pleasure drinks and liquor production.

In Madhya Pradesh, three companies have unobtrusively entered into contract farming agreements for potato cultivation to manufacture chips and tomato and green chilli cultivation for sauce and chutney production. This has led to a sharp decline in diversity of farming. In Jhabua, a tribal district in MP, farmers have been enticed into such cultivation to the extent where they are using 600 to 800kg of chemical nutrients for every acre of tomato cultivated, completely destroying the fertility of their fields.

Under the policy of whittling down subsidies, the subsidies given for urea and DAP have been discontinued. Diesel prices are also escalating while electricity tariffs have risen 190% over the past five years. As a result, production costs of wheat have risen to Rs 1,650 per quintal while the minimum sup ort price remains pegged at Rs 1,120 per quintal by the Indian government in 2011. For pulses, the support price is Rs 32 per kg when the cost of pulses in the market has risen to Rs 60 to Rs 90 per kg.

Which makes one wonder whether the government isn’t the prime cause of farmer suicides?

In the decade of the 1990s when the policies of economic liberalization were initiated, the farm sector availed of government subsidies to the tune of Rs 220,000 Crores. Over the past 20 years subsidies have been progressively scaled down, totalling less than Rs 100,000 Crores in 2011, even as the government made provisions for giving loans totalling Rs 375,000 Crores during the year.
Leave alone its reluctance to subsidies the farm sector, the government in its wisdom isn’t prepared to accept that it is equally important to give subsidies to consumers. This would encourage farmers to intensify farming, reduce their production costs and make agricultural produce available to consumers at reasonable prices to fulfil their basic needs. We can see the consequences of not doing so – increasing production costs, increase in farmer indebtedness and uncontrolled price increases. Farmers are committing suicide and consumers are victims of starvation.

The government’s approach is reflected in the statements put out by its ministers. Minister for Commerce Kamal Nath said the shortage of foodgrains was the result of Indian people eating more, the Minister for Agriculture Sharad Pawar (who is more interested in cricket) said it was not his responsibility to bring down food inflation Minister for Finance Pranab Mukherji said it is not in our hands to bring down prices and Prime Minister Manmohan Singh said the Supreme Court should refrain from telling the government to distribute million of tonnes of foodgrains rotting in government godowns among the poor because this is a policy issue (in other words this would cause a loss to companies trading in foodgrains and the government does not want this to happen).

Were they all trying to collectively deny the direct link between government policy, farmer suicides and 76% of the people living in starvation conditions?

The corporate in retails

Small retailers are also affected, their livelihoods jeopardized in these markets where almost everything is now being made available in canned form of so-called high quality.T his system ensures that a powerful group now decides what consumers should eat and drink. Both farmers and consumers are helpless in the face of this planned trade conspiracy. Its impact on farmers is becoming all too evident, which is why 48% of farmers say they will leave farming if an alternative presents itself because not only are they not earning a decent living now but the possibility of doing so in future also seems remote. And the government is beginning to look like their enemy in this entire process.

The politics of GDP

These days our government is totally caught up in singing just one tune -of 8%, 9% and10% growth in gross domestic product (GDP). It finds pleasure in singing this tune because achieving this growth rate is not a difficult task. But the problem is that the process is proving dangerous as well.

The easy part of the equation is that whatever is bought or sold involves an exchange of value, which puts money into the government treasury and benefits the people, leading to their progress, or so the government says. What doesn’t bring in money is useless for GDP.
Let’s examine the proposition, as seen from the government perspective, a little more explicitly. Forest, land, water, mineral products, mountains are all our resources. As long as forests are left untouched GDP does not grow. When the government or a company fells the forests, wealth accumulates. When water bubbles in brooks it has no value for the government. But when a law limiting its use by people is passed and when control is given to a company in exchange for a hefty price then GDP grows, even if the woes of people increase in the exchange. When people are healthy, the development visualized by Montek and Manmohan Singh doesn’t take place, but when people fall ill, GDP grows.

If this is the kind of development they desire and work towards achieving, it means the forests cannot be saved, nor the rivers or mountains, nor the mineral resources and land, nor the health of the people.

Over the past 10 years the government has sold 10 lakh hectares of land. It has also sold a big chunk of its ownership in the companies it owns – meaning the public sector. The railways have sold their lands, trees and minerals, which were the traditional wealth of forest communities. They have given permission to mine coal, bauxite, iron, stone and marble, leading to lakhs of acres of land being rendered useless for years to come. In the process, diseases like tuberculosis and silicosis flourish, claiming thousands of lives.

It’s on the back of such exchanges that we have been able to achieve 9% growth in our GDP.

The obvious downside of this growth rate is its negative impact on farmers and farming, although the government refuses to acknowledge the existence of any problem in the sector. Instead, it says we can target 6% growth in agriculture by displacing people from their villages and land and opening the doors to large corporations who can contribute better to achieving this growth rate. The irony is that the government in its wisdom believes this move will improve the condition of farmers.

Agriculture will continue to experience the damaging impact of policy formulations and planning for a long time to come. And so will the people.

In closing, pause awhile to cast a glance at the following information:

1. Chennai-based Cavin Care is investing US$109.50 million for cold drinks and salted snacks production.
2. Nestle is investing US$50.49 million for a food products R&D facility in Manesar.
3. Glaxo SmithKline is investing US$64.87 million on a milk products unit. This is the company that produces Horlicks.
4. Yum! Restaurants India (which runs the Pizza Hut, KFC and Taco Bell restaurant chain franchises) is investing US$100 million to open 1,000 restaurants by 2015.
5. Del Monte and Bharti Enterprises are collaborating with Field Fresh Foods to invest US$25.93 million for an R&D facility in Hosur, Tamil Nadu.
6. Farm implements company Buhler India is setting up a production unit at a cost of US$22.55 million with an expected turnover of US$225.49 million in 2014. Where and from whom does the company hope to achieve such huge profits?
7. PepsiCo will be investing US$500 million over the next two years for its F&B trade.
8. Coca Cola will set up a bottling plant in Karnataka with a total capital outlay ofUS$120.75 million.

These are just eight examples which will see a total investment of US$971.54 million (Rs 45720 Crores) over the next two years. This investment will cause even further distress and damage to farmers, small retailers and the village economy.

And what does the government plan to do?

It will provide an impetus to contract farming to help these companies, having already announced that food processing is a tax-free sector. It also plans to set up 30 large food processing parks -which are basically special food zones like the special economic zones (SEZs). Companies investing in the food processing sector will enjoy 100% tax exemption for the first five years and 25% exemption for the next five years. The excise duty on canned goods has been lowered from 16% to 8%.

Ernst & Young says in its report ‘Flavours of Incredible India’ that the food market in India will be worth an estimated US$181 billion by 2015, growing to US$318 billion by2020.

It should also be noted that over the past 15 years, 13,000 small units manufacturing salted snacks and ready-to-eat foods in cities and villages have downed their shutters.

Sachin Kumar Jain