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(Bloomberg) -- As India’s virus numbers swell and the economy stumbles, Prime Minister Narendra Modi has another crisis to deal with: Tens of thousands of angry farmers vowing to camp outside the capital for months.The farmers -- mostly from Punjab, often called India’s bread-basket -- want him to repeal three laws passed in September that allow them to sell crops directly to private firms instead of licensed middlemen at state-controlled markets. While Modi has said the laws will help them earn more cash, farmers fear those companies won’t give them minimum prices set by the government.“Modi has joined hands with private companies -- he is trying to grab our land through private firms,” said Sukhvinder Kaur, 65, who joined the protest along with 10 other women from her village in Punjab state, about 500 kilometers (310 miles) away. Braving Delhi’s cold winter, the women sleep on a truck bed, bathe on the side of the road and eat food at a makeshift community kitchen.“We are not ready to go back home unless these laws are scrapped,” Kaur said. “We are ready to sacrifice our lives -- even ready to die.”The protest sites on the Delhi border that popped up about a week ago have turned into semi-permanent camps featuring almost a festive atmosphere, with some leaders saying they have enough supplies to stay put for six months. Tractor-trolleys loaded with blankets, mattresses, vegetables, gas cylinders and utensils showed they’ve come prepared for the long haul.The sheer determination of the protesters may test Modi’s reform credentials like never before. While his popularity has withstood one of the world’s worst Covid-19 outbreaks and demonstrations earlier this year against a religion-based citizenship law, the farmers represent potentially a huge constituency: Some 60% of India’s 1.3 billion depend on agriculture in one way or another.What’s more, some members of India’s large diaspora have taken up the cause. Canadian Prime Minister Justin Trudeau angered India’s government when he backed the protesters after police initially used tear gas and water cannons to prevent them advancing into Delhi. This week a convoy of about 20 vehicles slowly lapped Australia’s national capital Canberra with signs saying “We support Indian farmers” and “No farmers, no food.”Modi has stood his ground, using a monthly radio address on Nov. 29 to say the laws gave farmers “new rights and new opportunities” -- including a provision that called for disputes over payment to be settled within a month. He listed examples of farmers who benefited from the law and also reached out to the Sikh community, which is the largest religious group in Punjab.With a solid majority in parliament and national elections not due until 2024, Modi’s immediate risk is limited. So far the protest is mainly contained to farmers in Punjab, which is controlled by the opposition Congress party, and Haryana, which is ruled by Modi’s Bharatiya Janata Party. But the opposition is looking to pounce by labeling the government as anti-poor.“When you play a card that is high stakes like the farmers’ laws, it can very well backfire,” said Rahul Verma, a researcher at the Delhi-based Centre for Policy Research who has written a book about ideology in Indian politics. “If this one spreads to rural areas, it has a cost.”Several experts and economists say the new measures have the potential to modernize Indian agriculture, which has been hampered by low yields and inefficient smallholdings. Yet it will take years before private investment comes in and creates supply chains that will better align producers with consumer demand, according to Ashok Gulati, an agriculture economist at the Indian Council for Research on International Economic Relations.“If the government goes back on this reform, Modi’s credibility will be over,” Gulati said, adding that it would be like “rolling back” the measures that opened India’s economy in 1991. “Even then, so many had opposed the move.”Prior to the passage of the laws, India’s system for buying and selling crops had remained largely unchanged since the 1950s. Back then, state governments -- which have constitutional powers to regulate farming -- sought to prevent farmers in remote areas from exploitation by setting up markets with licensed traders and transparent sales.Over time, the licensing system turned into a monopoly in many states, with traders organizing to prevent new entrants and stifle competition. The central bank had cited agriculture cartels as a key reason for several spikes in inflation, particularly when onion prices soared.Some farmers like the system, however. Although the middlemen are able to make big margins buying low from farmers and selling high to retailers, the farmers trust them more than private companies. Not only can they get a buyer at a guaranteed minimum price, but the traders also act like a bank by advancing cash whenever needed to buy goods like fertilizer.Palwinder Singh, who grows rice, wheat, potatoes and sunflower seeds in Punjab, said he grows potatoes under a contract with a multinational company that fixes prices before the crop is planted. He said the company always buys from him if the price of potatoes climbs in the market, but when it can get them cheaper elsewhere then some of his crop is rejected due to quality issues.“The same thing will happen to us if we deal with private companies,” said Davinder Singh, another farmer who grows rice and wheat in Punjab. “If we surrender we will become daily wage workers.”Small and marginal farmers with up to two hectares (five acres) of land account for about 86% of all cultivators in India but own just 47% of the crop area. While the government declares a minimum support price for more than two dozen crops that it uses while making purchases for its food program, traders and companies aren’t legally obligated to pay that amount to farmers.Several rounds of talks between farm leaders and government ministers have so far failed to resolve the deadlock, with the protesters insisting that a special session of parliament be called to repeal the laws and make it mandatory for private companies to pay the minimum prices. The next talks are set for Saturday.“We can’t allow private companies to make purchases and do contract farming -- we don’t trust them,” said Harbhajan Singh, a 55-year-old from Punjab who has grown rice and wheat for the past 25 years. “We won’t move out of here until the three laws are rolled back.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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