It's time to revisit repealed APMC and the lost cause of fair crop procurement in Bihar
In Bihar as well as in the country, the need of the hour is to revisit the old decisions and make course corrections
Without offering an effective alternative plan, the Nitish Kumar-led government in Bihar repealed the state's Agricultural Produce Market Committee (APMC) in 2006. The stated aim to allow crops to be freely traded in the open market proved disastrous as the Minimum Support Price (MSP) to the farmers remained elusive after a brief respite provided by the Primary Agriculture Credit Society (PACS) and no alternative mechanism that could have mitigated the void created by a sudden and surprising decision.
In the recently-held Assembly election in Bihar, the MSP turned into a key plank of anti-incumbency. Possibly so, as the centre’s proposed farm bill — Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 — disrupted the APMC at a national level, leaving farmers jittery about their future with the monopolistic advent of private mandis and no assurance on MSP.
As per an official estimate of the Union Ministry of Consumer Affairs, Food and Public Distribution out of the 389.92 lakh metric tonnes (LMT) wheat that various government agencies purchased by June 2020 — Bihar’s contribution was at a shockingly low level of 5,000 LMT. In comparison to states like Punjab, Haryana, Madhya Pradesh and Uttar Pradesh — the formal crop procurement in Bihar was abysmal. Against the government MSP for wheat of Rs 1,760 a quintal, the farmers were forced to sell their produce in the unorganised private market at steep discount of Rs 600 to 700 per quintal. Ironically, with a weaker APMC and no guarantee for MSP, the rest of the country is about to face a complex quagmire like Bihar.
One could ask why the private sector weakened the APMC structure across the country. Why aren't farmers being given the advantage of perfect completion by creating a level playing field for APMC and fixing responsibilities for private institutional crop procurers? Perhaps, India could do better with the old rules in the 21st Century rather than through the burden of new laws. As a monumental blunder, what Nitish did in Bihar way back in 2006 is now being expanded on a much larger scale by the Central government. A wrong precedent seldom creates avenues for course-correction.
After 14 long years since the leadership in Bihar rescinded the APMC, it couldn’t open up even the private mandi (grain market). As of now, Bihar has only one functional mandi at Gulab Bagh, Purnea — and that too is an underutilised facility. It could be a startling revelation for someone with faith in Bihar's cooperative sector that in the entire state only 1.14 lakh farmers are registered with PACS.
With a lack of transparency, faulty credit process, patronising culture and highly-politicised inner world, the PACS are the primary unit where the dream of agrarian emancipation dies. What trickles down makes up the cooperative societies and banks — the zones of political domination with feeble capacity to support the targeted beneficiaries in both rural and urban areas. While the cooperative structure is in a deep shambles in Bihar, the encouraging examples are quite a rarity in other parts of the country. In the wake of economic reforms started in early 1990, the cooperative movements have had not broadened their horizons. For Bihar and the rest of the country, it should be introspected upon and dealt with.
For this year, Bihar’s state cooperative department has set a target to procure about 30 LMT paddy from farmers at the MSP of Rs 1,868 per quintal. The targeted procurement of paddy stock in the current year is almost a quarter of overall expected paddy production in state. According to the cooperative department, there are 104.32 lakh land holdings in Bihar. However, despite the clamour, only 4,09,368 farmers had registered themselves for paddy procurement in 2019. The figures are rather more distressing this year as till the first week of December, only 1,14,284 farmers had applied for paddy procurement.
Shouldn't one wonder where the agricultural reform in Bihar is? The state is otherwise known to be a predominantly agrarian state with about 97 percent of the farming comprise small farmers with farming as a desperate way to secure a most basic living.
As per the Food Corporation of India (FCI), merely 0.05 LMT wheat was procured from Bihar in 2020-21 against the revised target of seven LMT. In 2019-20, the state agencies procured even less — just 0.03 LMT of wheat. Reportedly, the official view on this was sceptical. It stated that since the market price was better than the MSP, so the farmers opted accordingly. In reality, the farmers in Bihar are not known to be benefitted either by the fair market price or MSP system for their crops. The situation worsened for them as in the post-2006 phases, the state did little to go beyond tokenism to uplift the procurement, market linkage, regulation and value-add propositions. More often than not, to meet with the urgent needs, the farmers in Bihar have to majorly under-value their crops.
What should be in reckoning that MSP is a sort of luxury in the state of Bihar. If it is to look on the states’ performances, we can see the high variations. The states like Punjab and Haryana have been doing traditionally well with the MSP, though in recent years, a few other states, including Madhya Pradesh, have emerged. Certainly Bihar’s performance in the agriculture and food processing has been dismal, with the persisting ambivalence of the state government towards the progressive reforms, the sector's fortunes have gone downhill.
Noticeably, the Model APMC Act 2003 enabled the states to amend their respective APMC Acts for offering choices to the farmers for selling their crops. The Act made unprecedented provisions like direct purchase, contract farming and private wholesale markets (non-APMC). The states responded proactively on that amended their Acts and broadened their choices in the primary sector, and notwithstanding the spirit, the outcomes achieved were far from satisfactory. The contract farming found just a few takers, the direct purchase option was availed in modest ways by food processors, exporters, traders and supermarkets — and the private wholesale markets proved a damp squib.
At a time when the APMC was a much-needed big push of reform, Nitish's government opted for the easiest choice and closed it down forever. No thought was given to revive it besides implementing the finer elements of the Model APMC Act, 2003. Consequently, the state of Bihar had lost the existing APMC infrastructure and capabilities. Before doing away with APMC (or Bajar Samiti), Bihar had 95 — a majority of them were equipped with covered areas, godowns, administrative blocks, weighbridges, processing and grading units and overall logistics.
In 2004-05, the State Agricultural Board’s revenue was Rs 60 crore and expenses stood at Rs 52 crore for meeting operational requirements. Today, the tumbledown Bajar Samitis in Bihar are the places for recollections of opportunities foregone without a visionary plan to reform the state’s bread and butters sector — agriculture and food processing.
A report published by the National Council for Applied Economic Research (NCAER) in 2019 says that with the abolition of APMC in Bihar, crop prices have witnessed higher navigations than earlier. An already-struggling farm community in the state felt its heat with fewer options to improve the commercial interface and gain — besides moving their occupation as a full-time option instead of something linked with disguised unemployment.
As past promises were not kept when APMC was repealed with an assurance to end the intermediary between the farmers and their crops, it is now becoming increasingly difficult for farmers to believe in plans. The outbreak and persistence of a global pandemic like COVID-19 has altered the pace of every walk of life. A large numbers of migrants who suffered immensely during the prolonged lockdown phase were from the farm community and for them, the much touted farm bill is another jolt to their livelihoods.
Whether it is APMC or MSP, Bihar’s farmers have been largely bereft of their advantages. The cases of Punjab and Haryana are markedly different as both the states have been better placed than most other states including Bihar on these two counts. Hence, the stir against the farm bill 2020 from primarily these two states should be seen in perspective — not as a ‘political conspiracy’. Both the states have been the largest farm labour employers owing to their early exposure with the Green Revolution in 1960s and 1970s.
Bihar made a different turn with a non-responsive political system of last many decades has alienated its farm population. With small land-holding and lack of a support system, the youth in Bihar had long negated the farming as a career option. They are the faceless migrants and their choices are limited unlike the policymakers, still they believe in the democracy and accept its terms.
In Bihar as well as in the country, the need of the hour is to revisit the old decisions and make course corrections. This is not the time to burden the farmers with a new Act that is neither reform-oriented nor altruistic for masses. Even without subduing the existing provisions, the private sector can play a big role in making the agrarian economy, richly diverse and competent. Here the serving government at the centre can act on its old and forgotten adage: Minimum Government, Maximum Governance. This can’t be ensured by making the government institutions, redundant. The governance has to work ultimately.
The author is a policy analyst and columnist
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