4.6. Globalisation, Liberalisation and Rural Society

The policy of liberalisation that India has been following since the late 1980s have had a very significant impact on agriculture and rural society. The policy entails participation in the World Trade Organization (WTO), which aims to bring about a more free international trading system and requires the opening up of Indian markets to imports.

Liberalisation refers to the removal of government restrictions, usually in areas like trade and business. Starting in the late 1980s, India began following liberalisation policies, which opened up the markets for competition with international products. This meant Indian farmers had to compete with farmers from around the world, which changed the landscape of agriculture in India significantly. The entry into the WTO signifies India's commitment to follow global trade rules, affecting how agriculture is managed and structured within the country.

Think of a local market where, until recently, only domestic vendors could sell fruits and vegetables. Now, imagine foreign vendors beginning to sell their exotic fruits. Initially, local vendors might find it difficult to compete with these new, potentially cheaper options. This is similar to how Indian farmers had to adjust to imported products.

After decades of state support and protected markets, Indian farmers have been exposed to competition from the global market. For instance, we have all seen imported fruits and other food items on the shelves of our local stores – items that were not available a few years ago because of import substitution policies.

With liberalisation, the Indian government reduced its protectionist policies that had been in place for years. Farmers began to experience direct competition from imported products, leading to a shift in what was grown locally. The availability of imported goods changed consumer preferences and pricing, often forcing local farmers to innovate or face financial hardship. Singled out examples include fruits and vegetables that were previously unavailable in India but became common due to reduced trade barriers.

Imagine you're a traditional spice vendor in a local market, and suddenly, large supermarkets start importing spices from around the world at very low prices. You may need to adjust your business strategy by offering unique blends or higher quality products to survive. This reflects the challenges faced by farmers adapting to liberalised markets.

In some regions such as Punjab and Karnataka, farmers enter into contracts with multinational companies (such as PepsiCo) to grow certain crops (such as tomatoes and potatoes), which the companies then buy from them for processing or export.

Contract farming involves an agreement between farmers and companies where farmers agree to grow specific crops based on the company’s guidelines in exchange for a guaranteed market and price. This can provide a stable income for farmers but also comes with risks as they become dependent on the company, which can lead to issues if the market shifts or the contract terms change.

Consider a bakery that contracts with a local farm to supply wheat. If the flour prices rise, the bakery may switch suppliers, leaving the farm struggling with unsold wheat. Similarly, farmers contracted by companies face the risk of losing their crop sales if corporate needs change.

The spate of farmers’ suicides that has been occurring in different parts of the country since 1997–98 can be linked to the ‘agrarian distress’ caused by structural changes in agriculture and changes in economic and agricultural policies.

Over the years, the economic policies that have favored global trade and reduced governmental support have led to severe distress among farmers. Many farmers find themselves heavily in debt due to increased costs of cultivation combined with unstable prices for their crops. This distress has tragically resulted in a rising number of farmer suicides, highlighting a desperate situation that stems from liberalisation policies and market pressures.

Think of a water source that has gradually been drying up due to climate change and overuse. Farmers increasingly struggle to grow their crops, facing the choice between sinking more resources into uncertain endeavors or abandoning their fields altogether. This pressure reflects the dire circumstances leading many farmers to take drastic actions due to overwhelming financial stress.

Another, and more widespread aspect of the globalisation of agriculture is the entry of multinationals into this sector as sellers of agricultural inputs such as seeds, pesticides and fertilisers.

Globalisation has allowed multinational companies to establish a strong presence in Indian agriculture, primarily through providing agricultural inputs. Farmers become increasingly reliant on these companies for seeds and chemicals, which can raise their operational costs significantly. This dependency can limit farmers' autonomy and lead to financial instability, especially when input prices increase or when there's inconsistent availability of high-quality products.

Imagine a town where all the grocery stores are owned by a single chain. Residents become dependent on this chain for their daily food needs. If higher prices are imposed or certain items become scarce, the community struggles to adapt. In the agricultural sector, similar dependencies can leave farmers vulnerable and at the mercy of market fluctuations.

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