Bihar scrapped APMC Act, mandi system 14 years ago; here’s what it did to farmers
Fourteen years after Bihar became the first state in India to abolish the Agriculture Produce Marketing Committee Act in 2006, enabling private companies to buy directly from farmers, the results have been a mixed bag.
The agriculture markets have been replaced by roadside wholesale markets that have come up in every part of the state, and where farmers sell their products without any regulatory protection — but to anyone they want unlike in the APMC system, where they were bound to commission agents.
The local municipal bodies, which have set up these markets, charge 1% of the selling price each from the farmer and the buyer as a facilitation fee.
“Government should abolish municipal tax from small vegetable farmers and allow them to sell products for free in municipal areas,” said Bijay Kushwaha from Parhuti village of Bihar’s Kaimur district.
He said that under the APMC Act, also farmers had to pay 1% tax. When asked what has changed since the APMC law was abolished, he said farmers can now bargain with the buyers without having to go through a commission agent. “We don’t feel cheated.”
Anil Kumar from Sakra village of Muzaffarpur district in the eastern part of the state said that farmers are free to sell — although this doesn’t guarantee cartelization by the buyers.
“Earlier, commission agents used to control the price. Now, traders from other states do. Nothing has changed since the Act was repealed. Farmers fight their own battle and there is no government protection,” said Shekhar Mehta, a farmer from Navhatta in Saharsa district.
The passage of two farm reform bills by Parliament on Sunday has brought the focus on Bihar. A third bill is awaiting clearance by the Rajya Sabha. One of the bills allows farmers to operate outside the purview of APMC. And another allows them to strike contract farming deals with businesses.
“Bihar was the first state to repeal the law even though it meant an annual loss of Rs 70 crore. But it brought an end to the exploitation of farmers and corruption at mandis. This helped in farmers getting a better price and brought freedom from commission agents,” said Bihar’s deputy chief minister Sushil Kumar Modi on Monday.
A study by Jaipur-based National Institute of Agriculture Marketing in 2011-12 said that despite repealing of the APMC law the state’s agriculture infrastructure had not developed in the absence of private firms.
The study recommended markets to be developed in the public-private partnership model through a regulation to be enacted by the state government. “The private sector will operate and maintain the market. The user charge may be levied for the services provided in the market,” the study said.
It also said that the market information system had been dismantled with the abolition of the APMC Act, which is effective in the rest of the country because of the mandi system. The study also suggested the formation of farmers associations for better marketing of the produce.
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 website, only 0.05 lakh metric tonnes (LMT) of wheat was procured from Bihar in 2020-21 against the revised target of 7 LMT. In 2019-20, the state agencies procured 0.03 LMT of wheat.
Bihar co-operative minister Rana Randhir Singh claimed that procurement of wheat was low as market price was better than the MSP (of Rs 1,925 per quintal). “Many buyers like those from biscuit and flour industry are buying wheat directly from farmers,” the minister said.
“Farmers are not getting remunerative price for their produce. This year farmers sold grains (wheat and maize) at much less than MSP whereas farmers in Punjab and Haryana got MSP for wheat,” countered Kaimur District Kisan Majdoor Sangh president Vijay Bahadur Singh.
This is primarily because the number of procurement centres had reduced from about 9,000 in 2015-16 to 1,619 in 2019-20, and the farmers are dependent on buyers from other states. About 80% of the foodgrains disbursed under the Public Distribution System in Bihar is procured from other states.
Former agriculture secretary Siraj Hussain said the state government had not done enough to ensure that farmers are able to sell their produce at MSP. “While several eastern states have geared up their procurement machinery, Bihar has unfortunately not been able to develop its cooperatives which are primarily responsible for procurement in the state.”
“It is (through a) direct marketing module approach that ITC, makers of Ashirwad flour, is procuring 2-3 lakh metric tonnes of wheat yearly directly from farmers,” Sushil Modi said. Agriculture minister Prem Kumar added that Bihar farmers were getting a good price and with the new farm reform law, they will get a better price.
The opposition feels otherwise. “It (APMC Act abolition) has hardly helped in improving the farmer’s condition. Instead, it has led to a continuous rise in prices and consumers are still facing its impact. Farmers are not getting any benefit too,” said senior Congress leader, HP Verma.
“In 1968-69, wheat was sold at Rs 76 a quintal while the salary of a schoolteacher was Rs 70-80. That meant a teacher would not be able to buy a quintal of wheat from his one-month salary. In the past five decades, a teacher’s salary has climbed to average Rs 70,000, but wheat price is only around Rs 2,000 a quintal,” Sharma said.
Agriculture experts said the procurement rates of paddy and wheat in Bihar were roughly eight and one respectively. “Famers have become compromising in Bihar since the average local holding size is 0.9 hectare. Farming is not entrepreneurship, but a source of livelihood,” said agricultural expert Ranjan Sinha.
Sinha added that the scrapping of the APMC Act did not largely impact the Bihar farmers since a majority of them are marginal and small farmers.
“A majority of farmers skipped mandis in the past and are doing it today as well. Why would they go there when they don’t have any surplus produce?” asked Sinha.
He said the marketing committees were the centre of corruption and the government did the right thing by repealing the Act. According to him, just one per cent of farmers in the state come under large category while only three per cent fell in the middle category.
Several farmers said they did not get the cost of their produce, making it difficult for them to repay the loan. “I invested Rs 12,000 in farming this season but got only Rs 8,000 after selling paddy. I incurred a loss of Rs 4,000,” said Naresh Murmu, a farmer from Jamui district.
He sold 10 quintals of paddy at Rs 1,050 a quintal against the MSP of Rs 1,868.
Another farmer, Somnath Singh from East Champaran, said they run into huge losses every year since there is no unity among farmers and because they lack awareness about the farm laws.
“Earlier, we would get a good price for our produce but the situation has deteriorated after the abolishment of the APMC Act. The PACS simple refuse to buy our produce citing moisture; even if they procure them, they take months to pay the dues,” said Singh.
Lack of storage facilities has dealt another blow to farmers who are compelled to dispose of their goods. “We sold potatoes and onions roughly between Rs 8-10 per kilogram to the local businessmen who are now selling our produce at Rs 50 and Rs 70 respectively. This happened because we have no space to store our produce,” Singh said.
Kishore Jaiswal, the convener of Pragatisheel Krishi Manch, said the scrapping of APMC Act in Bihar has very systematically reduced the then infrastructure of market yards and a major facility to farmers to get a good rate for their produce. “Farmers are just battling for survival,” he said.
But this has happened in a state where more than 70 per cent of the population is engaged in agricultural operations. According to a report of Bihar Economic Survey, economic activities in Bihar are closely linked to the development of agriculture and allied sectors for its significant links with food and nutritional security.
Not only does this sector augment food supply, but it also generates employment opportunities, improves livelihood opportunities, and causes poverty alleviation.