For the developing countries like India, state support is crucial for small farms, which is labour-using and labour intensive and hence creates more jobs.
In the US, for instance, the big retailers such as Walmart do not have stock limits. They also have adopted contract farming, and the US farmers on average receive a subsidy of US$ 62,000 annually. Then the question can be asked, if open markets are really that efficient, then why the US government pumps money into the agriculture sector. The developed countries pump billions of dollars into agriculture every year by way of direct income support or subsidies. The EU today is giving about US$ 100 billion of agricultural subsidies each year and about 50% of it goes as direct income support to farmers. Therefore, it is clear that agriculture is sustainable and viable in the developed countries not because the markets are efficient, but because of the government subsidies.
In fact, corporate industrialised agriculture could bring environmental and social devastation. There is a need to help ‘small-scale’ or family farming. The virtues of small-scale farming are that it is more labour intensive, provides greater employment and it is proven that it is socially more equitable and a more ecologically sustainable way of farming. Therefore, the priority of the developing countries should be to overcome food deficits and move towards self-sufficiency, to promote small family farms and to increase government investments in agriculture.
The neoclassical model i.e. ‘market solution’ for Indian agricultural development has problems, namely that prices for agricultural commodities will rely on the free-market and will be socially disastrous. Land-use would be left to the free market, not socially required. An inevitable consequence of leaving agriculture to the operation of the freemarket would be a shift of land areas away from foodgrain production towards the production of vegetables and fruits that are demanded by consumers in developed countries. It will result in undermining the self-sufficiency in foodgrains that has been developed over the years and will make India food-import dependent and also increase hunger.
The destruction of self-sufficiency in foodgrains means that the country now would not produce the foodgrains it requires, but have to depend on food imports to meet domestic needs. Adequate quantities of foodgrains may not always be available in the world market when the country needs them; this is particularly important in the case of a large country like India. The real-life world market may be different from that presented by neoclassical economists, who assume that there are large numbers of buyers and sellers who have a totally impersonal relationship. However, the world food market depends upon the goodwill of developed countries like US and EU, who happen to be the large food exporters. Therefore, for the developing countries like India, state support is crucial for small farms, which is labour-using and labour intensive and hence creates more jobs. There is also need to increase domestic food production and to strengthen food-sovereignty, while at the same time sustainability and ecological aspects should not be ignored. To achieve all these, the role of the state is very important, and market forces alone could not accomplish it.
In India, the BJP government suggests that farmers should move away from producing foodgrains towards other crops – this has also been suggested by developed countries in recent years. Developed countries have huge over-production of foodgrains, of which they have a surplus, and in the name of diversification it is suggested they should reduce foodgrains production. There seems to be a paradox here, despite the surplus food-grain production, still nearly a quarter of India’s population is malnourished.
Recently, millions of Indian farmers have marched and protested against new ‘Farm Laws’ in New Delhi, under these laws, big corporate investment and control will increase and gradually reduce state involvement in the agriculture sector. Hoarding at a large scale will be permitted and agricultural commodities such as food grains being stored has been legalised, enabling the manipulation of food
60 The World Financial Review January - February 2021