Globalisation, Liberalisation, and Rural Society

The Opening of Indian Agriculture to Global Markets

The policy of liberalisation, pursued since the late 1980s, has deeply reshaped rural India. At its core, this policy required India to join the World Trade Organization (WTO), which pushes for freer international trade. For decades, Indian farmers had operated in a protected environment — the state supported them, and markets were closed to most foreign goods. Liberalisation dismantled much of that protection, exposing farmers to direct competition from the global market.

You can see the result in any local store: imported fruits and food items that simply did not exist a few years ago because of earlier import substitution policies. A more dramatic example is India’s decision to import wheat — a reversal of the long-standing policy of self-reliance in food grains. This decision brought back painful memories of the early post-Independence years, when India depended on American food aid. These are not isolated events; they are signs of a deeper process: the globalisation of agriculture, meaning the incorporation of agriculture into the larger global market. This process has had direct, often harsh, effects on farmers and rural society.

Contract Farming: A Double-Edged Sword

One visible form of globalisation in agriculture is contract farming. In regions like Punjab and Karnataka, farmers now enter into agreements with multinational companies such as PepsiCo. The company decides which crop to grow (for example, tomatoes or potatoes), provides the seeds, other inputs, technical know-how, and often even the working capital. In return, the farmer gets a guaranteed buyer — the company promises to purchase the entire produce at a pre-determined fixed price.

Contract farming is now common for specialised, high-value items: cut flowers, grapes, figs, pomegranates, cotton, and oilseeds.

The downsides of contract farming are significant:

• Greater insecurity: Farmers become dependent on the company for their livelihoods. If the company changes its terms or withdraws, the farmer has no fallback.
• Diversion of land: Land that could grow food grains is shifted to export-oriented products like flowers and gherkins. This reduces the land available for basic food production.
• Loss of indigenous knowledge: Contract farming disengages many people from the production process. The farmer’s own traditional knowledge of agriculture becomes irrelevant because the company dictates every step.
• Ecological unsustainability: These crops are usually elite, high-value items that require heavy doses of fertilisers and pesticides. This makes the practice ecologically unsustainable in the long run.

The Entry of Multinationals as Input Sellers

Another, even more widespread aspect of globalisation is the entry of multinational companies as sellers of agricultural inputs — seeds, pesticides, and fertilisers. Over the last decade, the government has scaled down its agricultural development programmes. The old 'agricultural extension' agents, who used to advise farmers, have been replaced in the villages by agents of seed, fertiliser, and pesticide companies.

These company agents are often the sole source of information for farmers about new seeds or cultivation practices. Naturally, their interest is in selling their products, not in giving neutral advice. This has led to:

• Increased dependence on expensive fertilisers and pesticides.
• Reduced profits for farmers, as input costs eat into their earnings.
• Heavy debt, as farmers borrow to buy these costly inputs.
• An ecological crisis in rural areas, caused by overuse of chemicals.

Farmers' Suicides: The Human Cost of Agrarian Distress

The most tragic consequence of these changes is the spate of farmers' suicides that has been occurring across different parts of the country since 1997–98. These suicides are directly linked to what is called 'agrarian distress' — a crisis caused by structural changes in agriculture and shifts in economic and agricultural policies.

The key factors behind this distress include:

• Changed pattern of landholdings (fragmentation and marginalisation).
• Changing cropping patterns, especially a shift to cash crops.
• Liberalisation policies that exposed Indian agriculture to global competition.
• Heavy dependence on high-cost inputs.
• Withdrawal of the State from agricultural extension, replaced by multinational seed and fertiliser companies.
• Decline in state support for agriculture.
• Individualisation of agricultural operations — farmers now bear risks alone, without community or state safety nets.

According to official statistics, between 2001 and 2006, there were 8,900 suicides by farmers in just four states: Andhra Pradesh, Karnataka, Kerala, and Maharashtra. …