Why are Indian farmers so infuriated with Reliance’s agritech plans? | ZDNet
You may have noticed that India has been engulfed by unprecedented, massive protests against its government.
Hundreds of thousands of farmers have been amassing across the country to say no to the country’s three new farm laws that, farmers say, threaten their livelihoods. Even global celebrities Rihanna and Greta Thunberg have taken notice and tweeted their support of the protests.
But this has only enraged the government and its band of vocal celebrity supporters across the Bollywood film industry and cricket establishment. A few weeks ago, Prime Minister Narendra Modi’s Hindu nationalist government did something to further terrify the ordinary Indian — it arrested and jailed two twenty-something, innocent, and relatively unknown women for supporting the farmers.
One of them had merely re-tweeted a Greta Thunberg tweet in support of the farmers that included a “toolkit” — an MS Word document containing hashtags and simple directives that are de rigueur for campaign mobilisation. The other, meanwhile, was brutalised when she was thrown in jail.
What could induce a government to behave with such brutality and impunity against its most defenceless citizens? Crony capitalism, say India’s farmers. They think these farm laws have been created primarily to benefit Reliance head Mukesh Ambani and Gautam Adani, both of whom are known to be close to Modi.
So much so that over a thousand of Reliance Jio’s telecom towers have been badly damaged in northern India and over two hundred thousand Reliance Jio subscribers have jumped ship to other carriers despite Reliance stating that it has no interest in corporate farming.
Despite the uproar across India regarding these laws, everyone in India does wholly agree — a rare thing in and of itself — that farming does indeed desperately need a reboot.
67%, or over 700 million people, in India rely on agriculture to earn a living directly or indirectly, which includes 125 million farmers in addition to sharecroppers and landless labourers.
88% of these farmers are small and have marginal production, using less than one hectare of land. They live below the poverty line and are hugely vulnerable to the whims of weather, prices, pests, finances, and middlemen.
Moreover, while feeding the country, agriculture isn’t exactly powering India’s economy. It makes up only 15.6% of the country’s GDP.
Welcome to the high-stakes transformation of Indian agriculture.
Historically, India’s agriculture has complicated recent roots in the British colonial enterprise, where it was initially harnessed to largely grow cash crops for the Raj, causing starvation [PDF] in the countryside. Decades after, there was the Green Revolution in the ’60s, when Indian agriculture got turbocharged to make India finally food independent, but at a large cost.
Now, the marriage of capitalism and technology hopes to finally consecrate the re-engineering of a sector that badly needs it. Yet, vast segments of the population think that the way it is being architected will plunge many farmers into the abyss.
THE NEW LAWS OF THE LAND
The gist of these three new controversial farm laws is this: It allows farmers to sell their products directly to corporate players in a parallel, private market instead of state-government controlled wholesale markets, called Mandis.
These state Mandis until now had provided assurance to farmers through enforcing a negotiated price for their crops, called a minimum support price (MSP), which often acted as a lifeline when prices fluctuated.
The new laws also allow corporations to perform contract farming with their pick of farmers and permits private players to hoard essential commodities.
With the stroke of a pen, Modi’s central government effectively removed farming from the ambit of the local state government and ushered it into its own arms.
The business community has said the laws can only help farmers by improving things like supply chain continuity and trade flows, the development of agricultural and food processing infrastructure, and farmer realisations and market linkages.
Especially thrilled, is India’s rapidly growing e-grocery industry, whose gross merchandise value doubled in 2020 to $1.9 billion, thanks to the pandemic.
BigBasket, now majority-owned by conglomerate Tata Group, Reliance’s JioMart, Grofers, Amazon Pantry, Flipkart Supermart, Dunzo, and others, could all benefit hugely from these laws as, according to an industry consultant, it will be easier to control costs regarding procurement all the way to delivery.
Then, there’s agritech, farming’s alluring new frontier, where technology and data will supposedly work miracles in empowering farmers.
Here, venture capitalists and entrepreneurs in India want to develop an agristack, which is a digital spine with interlocking components that feed into each other and link to India’s enormous National ID digital database that already has every citizen’s face and fingerprint on it.
Within this agristack, all participants would apparently be able to interact to avail of or supply the best, most competitively priced and valued information, machinery, credit, seeds, fertiliser, advisory services, procurement of yields, finance and other market linkages. It is also a treasure trove of data.
These new laws, say proponents, are an inextricable part of that vision.
ALARM BELLS RINGING
Farmers have not bought into this, however.
It hasn’t helped that the new laws were rammed through Parliament without the usual debate or discussion sessions and that it occurred in the middle of a brutal pandemic. There was also mysteriously no consultations with any stakeholder group.
Now, there is widespread alarm that with the parallel private market created for all agritrade, alongside zero taxes being levied on corporates, farmers will not be cushioned by the MSP in bad times.
It doesn’t matter that 90% of trade already is private, as defenders of the laws rightly point out, or that the wealthy farmers in Punjab are the main benefactors from the MSP, or that the sector has become addicted to its relentless gorging on free water and free electricity.
In a poor industry where livelihoods are at stake, the MSP had basically acted as a public good and helped prevent price gouging in the private market for the most disadvantaged.
Prime Minister Modi has insisted, however, that the MSP will remain in place. Yet, absent in the new laws is anything that formally blesses its continued existence.
A basic requirement for any government concerned about the welfare of the little guy would be how his or her rights are protected. Yet, under the new laws, contracts in the parallel market are not legally enforceable, says John Dreze, prominent Indian agricultural economist.
Dreze and other world-renowned economists wonder if it is even feasible that farmers in India who have less than two acres of farming land, which comprised more than 80% of the nation’s farmers, even have the wherewithal to be able to arbitrate a dispute with a large corporation.
Will the tribunal be free of paid-off corporate actors? What kind of individual bargaining power will these impoverished farmers have at the end of the day? These are other looming questions that haven’t been addressed.
BIGGEST IS BEST
Then, there’s the Reliance angle. Many private corporations are either getting ready to or have already made deals with farmers. So why pick on Mukesh Ambani and his company?
Indian farmers view Reliance’s decision to neatly put all the pieces of its food retail empire into place before the laws were announced as more than eyebrow raising. Reliance has vehemently denied any association with the farm laws while insisting that it has never entered into contract farming and doesn’t plan to do so down the line.
That may, in fact, be the case, but the timeline of its deal making seems more than fortuitous. It started with the launch of its agritech app Jio Krishi in February 2020.
There is not much detail available out there on Reliance Jio Krishi, except of its plan to “help farmers decide the right time to sow, irrigate, and fertilise their crops” and develop a “12-hour delivery cycle from harvest to your dinner table”.
After the Jio Krishi announcement came a series of masterstrokes. In April 2020, Reliance sold Facebook a 9.9% stake of Jio Platforms, its digital umbrella propped up by Reliance Jio, for $5.7 billion. Soon after, it sold Google a 7.73% stake for $4.5 billion.
Then, in May 2020, it launched the fulcrum to its food business, the grocery outfit JioMart.
By working with Facebook, Reliance supercharged JioMart, which is attempting to stitch India’s 12 million neighbourhood grocery stores, called kiranas, together digitally and become their hyper-local Uber.
Facebook also owns WhatsApp, India’s largest messaging service with 400 million customers, which will allow JioMart to essentially piggyback onto WhatsApp to expand its influence in the next six months.
Together, they have a lock on 750 million customers at the very least and will be well on their way to dominating the e-grocery market in a few years.
This emerging grocery sprawl is, of course, in addition to Reliance becoming India’s largest telecom outfit, largest broadband company, largest retail network, largest grocery retailer, one of the largest entertainment and media empires, which includes business news, largest music streaming service, and the largest oil and petroleum refinery.
It would, however, be unfair to single out Mukesh Ambani for wanting to become supersized when the whole world is controlled by massive tech monopolies such as Google, Facebook, Amazon, and Apple to name just a few.
Amazon, after all, wants to gobble up everything it touches, including India’s retail industry. And Walmart, which owns Flipkart, isn’t exactly rolling over and playing dead. Both are racing to wrest advantage from Reliance, first in retail and now in food.
Even many of Ambani’s domestic competitors, like the Tatas, have been monopolies for decades. A mere 20 companies in India account for 70% of all corporate earnings.
THE TELECOMMUNICATION SECTOR’S BUST
Still, every farmer will point to Reliance’s career in telecom as proof of what is coming.
When Mukesh Ambani decided to enter India’s telecommunications sector to jumpstart his digital domination dreams, the industry was one of the most competitive and vibrant in the world with eight companies across the consumer segment.
Reliance Jio demolished it virtually overnight by luring consumers with super-cheap voice and data services that Ambani said would be free for life. Consumers benefitted enormously from astonishingly cheap data. However, this led to the majority of players going out of business almost immediately.
This is what makes India’s farmers deeply suspicious — they fear being lured by attractive corporates prices at first, only to see them plummet in the future. Meanwhile, safety nets like the local Mandis and MSPs will have long since evaporated, having not been enshrined to exist under the new laws.
ASLEEP AT THE WHEEL
Yes, farming desperately needs a reboot and yes, these new laws also need a more transparent and inclusive path towards a re-formulation if the government will allow that. That much is clear.
The reason, however, to be most alarmed by any plan hatched by the Modi government, especially one that seeks to effect such massive change, is whether the in-house brains trust has the goods to be able to conceptualise them properly in the first place.
The following statistics are extremely worrying:
India went from an economy firing at 13.3% GDP growth in real terms in 2010 to 4.5% today, according to a recent Scroll report, and even this, many economists say, is overstated thanks to the boosting of GDP figures by 2.5 percentage points by the government.
A Harvard-trained economist in Modi’s party has even said that the figure could actually be closer to 1.5%, which would be an unthinkable calamity for an economy that absolutely has to grow.
Other statistics corroborate this free fall. Noted commentator Aakar Patel pointed out that India has registered a quarterly sequential decline in growth since January 2018. That makes it 39 months of negative growth, quite a feat for Modi, who has marketed himself as a business-and-jobs powerhouse.
India’s farmers are a savvy bunch and they, as you can see from this photo, are eager to point this out.
Modi’s flagship program to drive manufacturing, Make in India, has actually seen the manufacturing industry’s share of India’s GDP fall from 15% to 14% since 2014, says another report — crushing news for a country that has an urgent need to accommodate the 12 million new youth who enter the economy every year.
According to information services group VC Circle, there has been no growth in exports in over six years, and farm incomes in real terms have fallen instead of being on track to double by 2022, despite Modi’s promises.
Meanwhile, as Patel points out in his piece, Mukesh Ambani’s wealth rose 350% in 2020 and Gautam Adani’s rose over 700% in just the last year.
So, the big question now is, considering the above report card, would you put the turnaround of your vast and complex agricultural industry, with over 700 million lives at stake, in the hands of this government?
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