The Great Grain Robbery by Agribusiness MNC's
The Great Grain Robbery by Agribusiness MNC's
Wheat is called "Kanak" or gold in India, both because fields of wheat look like fields of gold as the "Rabi" (Winter) crop ripens in North Indian farms, and also because wheat is the farmers gold in the land of the 'roti' and 'chapatti'.
As the wheat ripened in 2006, India's harvest of wheat was hijacked by global corporation with help from the Government. The hijack occurred through a two pronged strategy of capturing India's wheat market domestically and through imports.
Dismantling Market Democracy, Creating Market Dictatorship
The domestic market has also been hijacked by global corporations through deregulation.
MNC's are now making direct internal assault on domestic markets by manipulating the government to impose changes in the APMC (Agricultural Produce Marketing Cooperatives) Act of different states.
Agriculture, under the Indian Constitution is a state subject. However, the center is using funds as a conditionality to force states to change marketing laws. As a report in Indian Express titled "Centre to States : Reform only then you get money for improve farmers markets" (Indian Express, 21.10.2004) states -
"For the first time a central scheme has been linked to the progress a state has made on reforms.
The Cabinet today cleared a programme that would make available money for developing and strengthening agricultural markets in the country. But it is only for those states that have made certain changes the center has been asking for over two years".
These changes driven by trade liberalization benefit MNC's but remove protections to prevent exploitation of farmers. The changes are a combination of more freedom for MNC's operations and more centralized control over indigenous, domestic trade and marketing by state bureaucracies. The changes replace democratic structures by state structures, which then create rules that favour MNC's, and displace local traders while also leaving MNC's free to exploit small famers.
The old Agricultural Produce Marketing Acts were designed by states and their main objective was to ensure farmers get a proper price and traders and brokers are not free to exploit producers by buying their produce at a lower price. The "mandis" (markets) governed by the Acts also offered farmers transportation, storage, grading, besides guaranteeing a just price.
The markets and mandis were governed by elected market committees with predominance of agriculturalists for the management of the market.
Agriculturalists in the old acts were defined as those "whose livelihood depends solely on farming".
The "model" act that the center is imposing on the states, replaces the elected committees having predominance of farmers with a Chief Executive Officer, appointed by the government. Other members will also be appointed by the state.
The definition of agriculturalist has also been changed. Whereas earlier it was those who depend on farming as a livelihood, in the model act "Agriculturalist" means a person who is a resident of the notified area of the market and who is engaged in production of agricultural produce by himself or by hired labour or otherwise".
The most significant changes in the marketing law is the removal of regulation of MNC's for location of purchase, price and volume. The APMC acts prohibited purchase from producer by traders outside the "mandi" or market yard. In the "mandi" or market yard the sale of agricultural produce was only by open auction, commission agents were barred from auction on behalf of the producers, payments had to be made the same day, or a penalty interest of 1% per day for five days was imposed. If payments were not made, licenses were cancelled. The mandis also gave facility for storage of agricultural produce in case of non-sale.
The marketing laws were thus primarily laws for prevention of exploitation of farmers. That exploitation happens inspite of the law is part of the corruption that seeps through our society and needs to be addressed. However, amendments in the Marketing Acts are designed to remove legal instruments for preventing farmers exploitation. In affect, the model act is an act to legalize exploitation by removing all regulation on price and volume of purchase. By having many traders, and a ceiling on volume traded, monopolies could not emerge in mandis. The model act promotes the creation of monopolistic buying by agribusiness. Giant corporations can now set up private markets, not regulated by the market committee. Act 5(1)(iii) of the Model Act allows :one or more than one private yards / private markets managed by a person other than a market committee". This is how ITC has set up its e-chaupals in Madhya Pradesh against which there are protests and statewide strikes. Nothing in the law exists to prevent ITC to buy cheap from farmers after one or two years of getting them hooked into a dependency on seeds and chemicals from the ITC chaupal. Since input costs have out stripped prices of produce, without market regulation agribusiness corporations will make profits selling costly seeds, buying cheap farm produce, and locking farmers in debt. This has been the process by which the small family farmer has disappeared in U.S.A, Argentina, Europe.
The Act regulates trading through mandis but allows corporations free to determine terms of trade. 40(1) has an exemption for agribusiness which states "provided further that it will not be necessary to bring agricultural produce covered under contract farming to the market yard / sub market yard / private yard and it may be directly sold to contract farming sponsor from farmers fields". While local traders will have to buy through open auction in mandis, but MNC's have freedom to fix prices. Local traders cannot engage in wholesale transactions but agribusiness can buy any amount from farmers anywhere [41(3)]. Local traders have to pay upto Rs. 2 for every hundred rupees of the price as market fees. There is however no market fees for agribusiness buying in private yards. This unequal taxation was granted to the East India Company through the Farukhsheer Firman of 1716, called the Free Trade Treaty of that period which destroyed local trade and local manufacture. Reforms of today as reflected in the "Reform" of the Agricultural Marketing Laws, has a built in inequality - freedom from regulation and taxes for MNC's, state regulation and taxes for local traders.
This is a recipe for destroying local markets, and through market destruction, destroying local production. India produces thousands of crops on millions of farms. Agribusiness trades in a handful of commodities. Their monopoly on our markets implies destruction of diversity and displacement of small producers and traders.
The new act has contract farming built into its structure. The Model Contract Farming Agreement refers to corporations as "contract farming sponsor". Contracts oblige farmers to produce, but do not oblige corporations to buy. In case of a dispute, farmers cannot seek justice from courts. As the Section-IX on "Dispute Resolution Mechanism states.
"In majority of cases, it is highly unlikely that a sponsor will take legal action against a small holder for a breach of contract. The costs involved are inclined to be far in excess of the amount claims, and legal action threatens the relationship between the sponsor and all farmers, not just those against whom action is being taken. Action by a farmer against a sponsor is similarly impossible. As neither side is likely to seek a legal remedy through the courts, it is important that quick and easy ways of resolving disputes are identified in the agreement".
The Model Act puts a bar to civil suits (Act 105) Article 89 states "No court shall take cognizance of any offence punishable under this Act or any rule or any bye-laws made there under except on the complaint made by the collector or chairman, vice chairman, chief executive officer of the market committee or of any person duly authorized by the market committee in this behalf".
In other words, the farmers are disenfranchised of all legal, civil rights. This is a system of slavery. This is corporate dictatorship, implemented by a corporate state. This spells the end of democracy.
The APMC Act was aimed at preventing hoarding and price fixing. Changes in the Act allow corporations to buy directly from farmers at prices and in quantities unregulated by the APMC Act. They also pay no taxes. Meantime, local traders and the government agencies have to buy in 'Mandis' where price and procurement is regulated and marketing taxes are imposed. This is creating an uneven playing field with local traders and public agencies being squeezed out of the domestic market.
Dismantling Food Security
Corporations have bought wheat above the Minimal Support Price (MSP), the government announced price, in this harvest season. Without any control on hoarding they have mopped up 90% of the wheat harvest for export and left a hole in the government procurement system. India's carefully built food security system which was based on the dual objective of protecting small farmers livelihoods through price regulation, and the food rights of the poor through the Public Distribution System is under attack. India has created a network of 500,000 fair price shops to provide affordable food. However this food security and food sovereignty network is being deliberately dismantled. In 2001 - 2002, wheat production was 69.8 million tonnes and procurement for food distribution was 20 million tonnes. In 2006, inspite of production increasing to 71.5 million tonnes, procurement has dropped to 9 million tonnes.
While wheat farmers have received more than the MSP this year, when government procurement is dismantled, the corporations will have a market monopoly and will drop farm prices. Wheat prices will also fall for farmers as imports increase. 100,000 farmers in India have already committed suicide alive to falling incomes and increasing debts. Further, agribusiness which is a wheat trader is also an input supplier. Farmers will be forced to buy costly seeds and fertilizers and pesticides and sell cheap produce, deepening the agrarian crisis, rural indebtedness and farmers suicides. Meantime wheat and atta is going out of the reach of the poor. And the growing gap between farmers price and what consumers pay will translate into corporate super profits.
Having created a scarcity in the public distribution system, the government is now proposing to increase food prices and reduce ration quotas even for the households blow the poverty line. As it is, 90 percent of the rural poor spend 60 percent of their income on food, and recently UNICEF has reported that one third of the worlds mal-nourished children are in India.
The corporate hijack of India's wheat will push more children to hunger, and even starvation, and more farmers to suicide.
It will also lead to a massive wheat swap - with global corporations exporting, Indian wheat subsidized by India's tax payer and importing U.S and Australian wheat, subsidized by U.S and Australian taxpayers and making super profits both ways, while wheat producers and the poor suffer. The Government has subsidized wheat exports, which have registered a five fold increase in the first five years of this decade. In 2001, when the economic cost of wheat to FCI was Rs. 8300 per ton, the market price was Rs. 7000 per ton, Cargill bough wheat from FCI at Rs. 4200 per tonne, giving the corporation Rs. 4100 subsidy per tonne. Subsidies are thus fattening Cargills profits while the poor starve. Even in 2005, FCI has sold wheat to private corporations inspite of dwindly stocks.
By selling wheat to corporations below the price paid by the poor, the Food Corporation of India has run into huge loses, further rendering India's Public Distribution System non-sustainable.
Wheat - Output, Price Support and Trade
(Rs/qtl) Output Procurement- Import Export
(In million tonnes)
1998-99 510 66.34 12.65 1.81 -
1999-2000 550 71.29 14.14 1.37 -
2000-01 280 76.37 16.35 - 1.11
2001-02 610 69.68 20.63 - 2.65
2002-03 620 72.77 19.05 - 3.68
2003-04 620 65.80 15.80 - 4.07
2004-05 630 72.10 16.80 - 1.71
2005-06 640 72.00 14.79 - Na
2006-07* 700 - Na 3.50 na
*The MSP includes the bonus of Rs. 50 per quintal, and the exports include tenders
(Ref : M. Raghavan, "Wheat Imports : Food Security or Politics", Economic and Political Weekly, Vol. XLI, No. 21, May 27, 2006, p.2058)
Importing Ecological & Health Hazards and Rural Unemployment
India did not need to import wheat this season. We had produced enough for our needs. The imports were part of a commitment made to the U.S to open up India's market for U.S agribusiness. However, the quality of the U.S wheat was so bad that the first tender for imports of 500,000 tons went to the Australian wheat board.
The government now wants to import another 3 million tonnes and has diluted the health standards to allow pesticide laden, fungus and pest infected wheat shipments.
The imported wheat contains wheat rust which has caused havoc in Africa. It contains pesticides like Fenitrothion, the pesticide content was 0.25 ppm, around 50 times more than the permissible level. Fenitrothion is highly toxic to insects and humans. In addition Carboryl, the pesticide that led to the death of thousands in Bhopal because of a gas leak has also been allowed. Other pesticides include hydrogen phosphide in organic bromide, Phosphamidon and Dithiocarbamates. The imported wheat contains 14 weeds, 11 of which are exotic to India. The weed parthenium which came with PL 480 wheat shipments in the 1960's has become an invasive species and taken over millions of acres of productive land.
The imported wheat also contains myco toxins such as aflatoxin and Dcoxynivalenol. The existing standard of 1000 parts per billion has been changed to 2000 parts per billion to suit the U.S wheat trade. A study reporting human food poisoning by infected wheat containing deoxivalenal in India showed a range of symptoms including abdominal pains, dizziness, headache, throat irritation, nausea, vomiting, diarrhoea and blood on the stool.
The imported wheat also contains ergot fungus. Ergotism is a form of fungal poisoning caused by the ingestion of the ergot fungus.
In its latest tender for 2.2 million tonnes of wheat, the government is totally bypassing the plant quarantine order. 31 exotic weeds, which could become invasive species banned in earlier orders have been allowed. The argument that the wheat is for consumption and hence will not be sown, and hence the zero tolerance exotic weeds will not create a second partenium disaster is totally flawed. Given the seed famine created by corporations like Monsanto, farmers could easily save some wheat to plant. In our recently organized Bija Yatra through the suicide belt of Vidharbha, Andhra Pradesh, Karnataka, there was huge demand for the seeds we were distributing. And in Mexico, where GMO corn was not allowed domestically, but GMO corn was being imported as food, poor peasants had planted the GM corn and now the corn in the center of diversity is contaminated.
The government has even allowed import of poisonous weeds like Argemone mexicana and Lathyrus sativus. Seven percent of foreign matter is also allowed.
Indian people's health is being sacrificed to create markets for U.S agribusiness. As an official stated "till now our objective was to block imports, for which stiff quarantine norms were effective non-tariff barriers. But this no longer the case, we hope the latest relaxation will widen bidder participation" ("Wheat Tender By Passes Plant Quarantine Order, Business Line, Wednesday, June 14, 2006, p.8)
India's food sovereignty is being given up to hand over India's food system to global agribusiness.
The corporate hijack of wheat is a recipe for increasing farmers suicides, inviting famine and public health and environmental hazards.