Few changes in Bihar after APMC abolition

The passage of farm reform bills by Parliament has turned the focus on poll-bound Bihar. The three reforms are deregulation of agriculture commodities from the Essential Commodities Act (ECA), imposition of stock limits only during emergencies and giving marketing choice to farmers and allowing private participation.

Fourteen years ago, Bihar became the first state in India to roll out one of these reforms – the abolition of the Agricultural Produce Marketing Committee (APMC), which was meant to enable private companies to buy directly from farmers and ensure a better deal for the latter. But the results have been a mixed bag at best, despite the fact that Nitish Kumar, who is known to flaunt his administrative capabilities, has been chief minister for most of the period since 2006. 

Unlike Punjab and Haryana, where farmers have taken the lead in protesting against the farm bills, Opposition leaders are in the forefront in stoking unrest among farmers in Bihar. This is because nearly two-third of Bihar’s total population of about 110 million is dependent on agriculture for livelihood, with most of them being small and marginal farmers. 

Also, agriculture is the backbone of Bihar’s economy, employing 81 per cent of its workforce and generating nearly 42 per cent of the state’s gross domestic product, reveal state government figures. 

Siraj Hussain, farm expert and former Union agriculture secretary, says that the Bihar government had not done enough to ensure that farmers are able to sell their produce at Minimum Support Price “While several eastern states have geared up their procurement machinery, Bihar has unfortunately not been able to develop its co-operatives, which are primarily responsible for procurement in the state.” 

A 2019 study by National Council of Applied Economic Research (NCAER) has found that, despite the repeal of the APMC Act, private investment in the creation of new markets and strengthening of facilities in the existing ones did not take place in Bihar, leading to low market density. Further, the participation of government agencies in procurement and the scale of procurement of grains continued to be low. 

Better price

So, will the politics of farm bills work in Bihar? The ruling Janata Dal (United)-BJP alliance’s pitch is that Bihar was the first state to repeal the law, despite such a move implying an annual loss of Rs70 crore. But it brought an end to exploitation of farmers and corruption at agriculture markets, or mandis, which helped in farmers getting a better price and freedom from commission agents. “It is (through a) direct marketing module approach that ITC, makers of Ashirwad flour, is procuring 200,-300,000 tonnes of wheat yearly directly from farmers,” says BJP’s Sushil Kumar Modi, who is Bihar’s deputy chief minister.

Today, mandis have been replaced by roadside wholesale markets that have come up in every part of the state. Here, farmers sell their produce without any regulatory protection –but to anyone they want, unlike in the APMC system, where they were bound to commission agents or arthiyas. The local municipal bodies, which have set up these markets, charge 1 per cent of the selling price each from the farmer and the buyer as a facilitation fee. Earlier too, under the APMC Act, farmers had to pay 1 per cent tax. 

Recent reports from Bihar suggest the abolition of APMC, which is seen as a positive development by famers only to some extent. Farmers can now bargain with the buyers without having to go through a commission agent. They are free to sell – although this doesn’t guarantee cartelisation by the buyers. Earlier, commission agents used to control the price. Now, traders from other states do. 

This agricultural season has also seen a lower volume of grains being procured by the government at the Minimum Support Price. According to the Food Corporation of India data, only 5,000 tonnes of wheat was procured from Bihar in 2020-21 against a revised target of 700,000 tonnes. In 2019-20, the state agencies procured 3,000 tonnes of wheat.

The state government, however, claims that procurement of wheat was low as market price was better than the MSP (of Rs1,925 per quintal). Many buyers like those from biscuit and flour industry are buying wheat directly from farmers.

Farm union leaders, on the other hand, say that farmers in Bihar sold grains (wheat and maize) at much less than MSP, whereas farmers in Punjab and Haryana got MSP for wheat. This is primarily because the number of procurement centres in the state dropped to 1,619 in 2019-20 from 9,000 in 2015-16. And therein perhaps lies a tale.