Farm Laws: Winners, Losers And The Future

The long term collateral impact of the biggest sustained protest in contemporary history is yet too early to be assessed. Prime Minister Modi, whose public persona was crafted as a tough leader who never does a U-turn, has been forced to do just that by the relentless farmers of Punjab, Haryana and Uttar Pradesh. They had more to lose from these laws than Modi did with a U-turn. He has repealed the laws to every one’s relief, except the arm-chair warriors around him who wanted him to stand firm against his own citizens.

What was also remarkable was the unity of the farmers’ leadership. Sikh leadership rarely remains united beyond a few months. The Punjab-Haryana leadership in association with the inspiring and formidable Rakesh Tikait of UP also managed to de-communalise the struggle despite several attempts by the Government to make it appear a Sikh separatist campaign. Astute and intelligent leadership has emerged from this movement. The one to watch.

It will remain to be seen what happens next in the talks. Will the leadership remain focussed and united? Will it successfully continue to be a one purpose campaign, keeping away opportunist politicians eying the potential vote bank?

While the immediate win is obvious, it’s the collateral impact of the protest that could be even more powerful. Struggles in the Punjab have often shaped the course of events in South Asia, sometimes the world. The cracks in the Mughal Empire were first split open in Punjab in 1710. Within 20 years the Mughal Empire began to unravel. It was the fall of the Punjab in 1847 that led to consolidation and expansion of the British Empire. It was the five year sustained protest movement in Punjab in 1920s for regaining control of Gurdwaras that started the collapse of the British Empire. The British invited the Congress in 1932 to talk about possible transfer of power. Why Congress and Gandhi dillydallied for another 15 years has not been looked at by historians. Once India became free, the rest of the British Empire fell apart like dominoes.

It was the communal violence in Punjab in 1947 that continues to dominate geo political issues in South Asia. And it was the Punjab Sikh agitation against Indira Gandhi’s Emergency in 1975 that weakened her and the Congress. It started the rise of the alternatives. It was the Sikh uprising after 1984 invasion of Golden Temple that led to final disintegration of Congress, rise of BJP and Hindutva.

The Punjab rarely gains much politically from its struggles but creates waves that quantumly precipitate other upheavals in South Asia and the world.

What will this movement precipitate? It is possible that a coherent federal Indian movement might arise as a collateral from the weakening of BJP. It is possible that the ‘small farms’ issue could become internationalised and small farmers around the world might rise against the encroaching corporate agri business. It could be the beginning of dismantling of stranglehold that global corporate sector has on power. Struggles from Punjab influence events in many ways and the consequences of this struggle remain uncharted yet.

Equal winners in the struggle were the women of India. The women of Punjab, Haryana and UP have shown a strength, resilience and daring that is an inspiration to the world. They stood shoulder to shoulder with the men and many times endured far more. They refused to go back to the villages and instead brought their children and grandchildren with them. They dared the Government and refused to bow.

It is difficult yet to predict the personal and political impact on the Indian Prime Minister Narendra Modi. People who have met him personally often say that he is a pleasant, charming and a warm person who empathises with the concerns of others. But the BJP electoral machine had built him as an Indian Thatcher, decisive and never taking a U-turn.

Margaret Thatcher, the British Prime Minister who destroyed the coal mines and the Unions, is famously remembered for her rhetoric, ‘You turn, the Lady is not for turning’. Yet in her reign, she did many U-turns, most infamously in the very unpopular poll tax. Similarly Modi has done a few U-turns, with the repeal of Farm Laws as the most spectacular one in full public gaze.

Nevertheless, it is not appropriate to say he lost. He bowed to democracy. He is a leader of a democracy. When he sensed that that the protestors were gaining increasing support from Indians from all corners of the country, he did the decent thing. He ignored his image makers and took a personal decision. He decided to repeal the laws. He may initially have stood his ground against the farmers, but ultimately he defied those who ‘made’ his public persona.

ALSO READ: Farmers Protest – Solution Lies With Canada Sikh MPs

The greatest losers in this have been Canada and Australia and their big Agri businesses assisted by WTO rules set by western powers. It was Canada and latterly Australia that have relentlessly been gunning at the MSP (minimum support price) for farm produce in India. Australia brought a formal complaint against India in 2019 with Canada joining the ‘arbitration board’ to decide whether India has broken World Trade Organisation rules by given 150% MSP (or MPS in WTO language) for wheat and 185% for Sugar Cane.

The Indian Government was under immense pressure to scale down MSP to a mere 110% or bring in the private sector. Both Canada and Australia were drooling when farm laws were introduced and Modi stood firm. They are of the opinion that due to miniscule profit margin under WTO rules and free market, small farmers  will stop growing wheat and other food grains thus pushing India to buy these products from Canada and Australia instead. They had the GDP obsessed IMF on board too. India is a huge potential market for the mega farms of both countries. It was no surprise that Sikh MPs in Canada maintained a studious silence on the Punjab Farm Laws.

If Modi decides to stand by Indian farmers and accepts their demand for MSP to be legislated at 150% or more, this will be a great blow for the 30-year campaign by Canada and recently by Australia to break into the Indian grain market.

With growing dissent within the WTO for its pro-western and pro-corporate orientation, this protest may spur India to lead the developing countries and force change in WTO.

Perhaps the greatest winner of the protest and the Modi U-turn is India’s otherwise dysfunctional democracy. Often appearing to be faltering and surviving in Intensive Care, India’s democracy has in fact shown itself to be adaptable and a great survivor.  Despite many hiccups, election violence, wannabe dictators, it has shown its resilience time and time again. It broke Indira’s Emergency and it has forced BJP to repeal the laws.

Whatever happens next, whether the BJP starts to lose grip of near total power or federalism emerges as the way forward, democracy will survive in India for long time to come. It will make and break leaders. It is the wider collateral impact on the world that is to be watched from this protests.

Farmers Protest: Solution Lies With Canada Sikh MPs

It is intriguing that Canada, a country with a large and powerful Sikh population, has largely been silent on the Farmers dispute in India. Beyond an early statement by Justine Trudeau that farmers should have the right to protest, there has been almost no comment by him or the many Sikh MPs in his party.

They have excused themselves by saying that it is ‘an internal matter of India’. Internal issues of other countries have not stopped the messianic Prime Minister of Canada from making statements on many other countries. Canada has also legal-napped one of the most powerful CEOs of the 5G Chinese company Huawai, risking the lives of some Canadians who are now detained in China. So why has the ‘internal matter’ of India been such a hurdle.

It appears that Canada has been relentlessly raising the issues of subsidies for agriculture produce in India at the World Trade Organisation, even in 2020 when the farmers protest were well advanced. Canada, Australia and USA wanted the Minimum Support Price to stop or reduced dramatically.

The World Trade Organisation is an extremely important body that regulates rules of trade between countries. Countries have agreed to abide by the rules and further to accept the judgements by its Dispute Settlement Body.

The WTO has rules on subsidies on farm produce just as it has on agriculture trade between countries. The rules are that Governments should not distort the market. WTO does not like Governments subsidising agriculture produce. Subsidy for agriculture produce is called MPS in WTO terminology, meaning Market Price Support.  It tolerates some possible minimum distortion to the market. It is called ‘de minimis’. Developed countries are permitted up to 5% subsidy over the cost of production. It goes a bit further for developing countries to whom it permits 10% subsidy over the production costs. Beyond 10% is considered as ‘market sin’ in the eyes of WTO.

What WTO does not do of course is insist on the maximum profit margin that traders (corporations) can make in the market. The system favours corporate and capitalist system.

India on the other hand has Minimum Support Prices (MSP) that gives up to 50% more than production of costs. This is not acceptable to WTO and many of its members, especially the very rich countries such as Canada, Australia and USA.

Canada has been raising issues around subsidies since 2002 if not earlier. It is still complaining at WTO meetings on Agriculture that India’s subsidies regime is far beyond permissible levels. It did this on 28th July 2020, when it said, ‘In its 2018/2019 domestic support notification, India reported support for rice in excess of its de minimis level for rice. By doing so, India breached WTO domestic support commitment to limit its support for rice at 10% of its value of production. Please indicate what concrete steps India is taking to rectify the situation and fulfil its WTO domestic support commitment for rice in the future.’

In 2019, both Canada and USA raised objections to MSP, mentioned as MPS (Market Price support). They said in the conclusion that ‘It appears that India provides market price support for pulses in excess of what it has reported to WTO.’

India’s defence has been that it is not giving more than the 10% subsidy. It calculates the subsidy rather creatively when responding to WTO. That does not impress the countries who raise the question.

In 2018, the United States even accused India of sort of cooking the books. It said that while in its annual notifications, India reports that it is not subsidising more than the permissible percentage, it (the USA) has seen plenty of evidence in the open source internet that India is subsidising by far more.  By a counter-notification it said ‘that India substantially under-reported its market price support (MPS) – government purchases of farm goods at guaranteed prices – for wheat and rice in its 2010-11 and 2013-14 notifications to the WTO’. The United States produced a table accusing India of pushing MPS upto 84%.

Table introduced by USA in its counter-notification

Apparent MPS as a percentage of the value of production for rice and wheat Commodity

CommodityMY2010/11MY 2011/12MY 2012/13MY2013/14

India defended itself by refuting these. While till then the objections have been in form of verbal and written statements, Australia moved an official notification in 2019 for dispute settlement by targeting Sugarcane, because India had admitted to slight increased MPS. The dispute is listed as DS 580. The dispute was supported by Brazil. On 22nd July 2019, Australia asked for a dispute Panel to be set up. This then becomes an official process of looking into what WTO calls market distortion. Australia would have done this with consent of Canada and USA as usually happens in these international arenas. Canada may have deliberately kept its name out of the official complaint as that would have exposed its hypocrisy. Canada is among some of the countries who have put their names to be in the panel to examine the dispute!

Indian subsidies have been under intense pressure. The WTO news briefing of 26 June 2019 states that India received most questions on Agriculture subsidies at the WTO. The list of questions are also on WTO site.

It would appear that India has been under a lot of pressure at the World Trade Organisation to put an end to the MSP that Punjab and Haryana farmers are protesting to have put in law. The pressure increased in 2019. The complaints have been led by Canada, Australia and USA mostly with Canada having started as long ago as 2002 and still raising issues in 2020. The evidence is all over at WTO website.

What is further intriguing is why PM Modi has been silent on this. Why didn’t he square with the farmers that their country, India, is under a great deal of pressure to reform farm produce subsidies instead of his government accusing them of being anti national. He or at least MPs from his party could have turned to all those Sikh farmers trekking on tractors to Delhi, that they would be best advised to call their relatives resident in Canada to ask their ‘Apne MPs and ministers’ why Canada is pushing India to stop giving MSP to farmers in Punjab!

Breaching WTO rules in one field and refusing to abide by adjudications can have implications in other sectors of trade. Despite sovereignty and all that power countries claim to have, international institutions can still influence domestic policies to a great extent.

The Government is in a fix. If it agrees to WTO ‘de minimis’ rule then MSP will have to come down to 10% above costs and not the 50% as it seems to be now. Farmers will lose a lot of money and many pushed into poverty. The alternative is to sell in the open market and have an income support system as is permissible under WTO. This has been proposed by the Modi Government.

Modi Govt is in a fix over WTO ‘de minimis’ rule

By taking away the current MSP, Mandis will not be able to sustain themselves. Mandis and Artiyas take some 7% of the price which a farmer sells at. This 7% of 150% production cost and 7% of 110% production cost lead to vast differences in revenue for the state governments. So the Indian Government proposed the private sector to come and compete. They can buy at 300% above or 50% below production costs as they want.

Why has PM Modi not put the cards on the table to the farmers is a mystery. Why weren’t they invited to a dialogue where facts and pressures explained and the two sides to have worked a mutually agreed solution. Perhaps Modiji is too proud to appear weak in front of the international community and his own citizens. Having promoted a rhetoric of India as superpower etc and himself as an invincible leader, it would have appeared a bit weak to say the WTO now decides what sovereign Bharat can do with MSP?

Perhaps the details of the talks between farmer leaders and Modi Government are not known fully. But it seems a bit of transparency, rather than unconvincing salesmanship on how the new laws will make farmers into ‘millionaires’ might have led to a different dynamics of the year and half of protests and led to a better solution.

It seems the farmer protests are directed at the wrong target. It doesn’t appear that the Government of India has much scope to manoeuvre. It can either appease the farmers and breach international trade agreements with knock on effects on an already weak economy, or it can implement WTO rules as demanded by Canada, Australia and USA.

Farmers will be better making angry calls to their relatives in Canada, to all those self bloated Sikhs who think they own the Government in Canada, and ask them why are Sikh ministers and MPs pushing for removal of MSP in Punjab and Haryana.

Farmers would be better protesting outside Canadian High Commission than on roads

It is in the end the inaction if not co-option of the Sikh MPs of Canada that is driving their relatives in Punjab into poverty. It is these MPs who bear most responsibility and perhaps the banner of hypocrisy as they gingerly join protests in Canada against Farm Laws, but support their Government to push for end to MSP at WTO.

It is one thing to rhetorically claim to own levers of power, but it is another to be able to exercise power. Why don’t Sikhs in Canada ask Harjit Sajjan, the defence minister to walk into Trudeau’s office and demand Canada lay off the WTO pressure?

The protesting farmers also need to call their relatives in USA and Australia to lobby their governments to back off. If Sikhs in USA have any influence, then this is the time to show. Otherwise like many other times American Sikhs engage in more gas and tamasha than substance.

But most appropriately, it would be better if farm leaders also explain to the many farmers who is really behind all their problems. They would be better advised to protest infront of Canadian and  Australian High Commissions and US embassies rather than Singhu border or Indian Parliament. But then they also want visas to go and settle in these countries. Modi is an easier target.