Bihar Exhibits What Occurs if Agri-Commerce is Left to ‘Free Market’


What the Narendra Modi authorities just lately did by way of passing legal guidelines to decontrol agricultural commerce, Bihar chief minister Nitish Kumar had completed 14 years in the past, in 2006. Quickly after changing into chief minister in alliance with Bharatiya Janata Get together (BJP), he scrapped Bihar’s Agricultural Produce Advertising and marketing Committee (APMC) Act. It was declared that this might result in elevated non-public funding in agricultural infrastructure, higher costs for farmers and an finish to middlemen – all of which Prime Minister Modi can be repeating now for the brand new legal guidelines. However what has been Bihar’s expertise?

Virtually 80% of foodgrain wanted by the state’s individuals is now introduced in from different states. Farmers’ are invariably pressured to promote their produce at costs a lot beneath authorities declared Minimal Assist Costs (MSP). There may be excessive diploma of value volatility. Authorities procurement is shockingly low.

Wholesale markets for foodgrain and fruit and veggies are privately run, with none required infrastructure, with farmers on the mercy of cartelised massive merchants. Bear in mind, that about 91% of Bihar’s farmers are small and marginal. So these circumstances are catastrophic for them. And, with the state’s financial system largely depending on agriculture, the misery of farmers perpetuates the state’s financial backwardness.

No Procurement, No MSP

The charts beneath present in stark type, the dire situation of state procurement of rice and wheat. In no 12 months has procurement of rice been greater than 20% of the manufacturing, principally it has been far much less. Because of this solely a really small fraction of farmers get the MSP. The state authorities mounted MSP for rice at Rs 1,815 per quintal however farmers have been pressured to promote to merchants at solely Rs 1,350 to 1,400 per quintal.

“We by no means get the advantage of MSP for paddy due to sluggish procurement by authorities companies and plenty of paperwork and delay of fee by PACS (Main Agricultural Credit score Society) ”, Fazlu Khan, a farmer of Raghunathpur village in Aurangabad district instructed NewsClick correspondent Mohd Imran Khan.

For wheat, the circumstances are worse: there have been a number of years when there was zero state procurement, as proven in chart beneath. Raghuvendar Singh, a marginal farmer of Izarta village beneath Paliganj block in Patna district, instructed NewsClick that he was pressured to go for misery sale of wheat this 12 months too.

“I offered wheat at Rs 1,800 per quintal, though MSP is Rs 1,925. This isn’t the primary time and I’m not alone — farmers hardly get the correct charge for his or her rabi and kharif produce,” Singh mentioned.

Bihar whaet

One other massive crop in Bihar is maize. Within the present 12 months, farmers reported getting a value of Rs.1,000-1,300 per quintal whereas the official MSP was mounted at Rs.1,850.

In accordance with stories, the variety of government-run grain procurement centres has gone down from about 9,000 in 2015-16 to just one,619 in 2019-20. This was the direct fallout of the ‘free market’ strategy and the pondering that farmers will promote their produce to the best bidder. In follow, this has meant that farmers are simply promoting to merchants who principally supply costs beneath MSP.

In actual fact, it has additionally been reported that massive firms that use wheat for making and promoting flour or flour merchandise, like biscuits, are shopping for wheat – principally beneath MSP. Consumers from different states congregate in Bihar as a result of they get wheat at decrease costs. Bihar deputy chief minister and BJP chief Sushil Modi proudly mentioned: “It’s (by way of a) direct advertising module strategy that ITC, makers of Aashirwaad flour, is procuring 2-3 lakh tonnes of wheat yearly immediately from farmers”.

Deregulated Fruit & Vegetable Markets

Bihar is the nation’s third largest producer of fruit and veggies (F&V) after Uttar Pradesh and West Bengal. Farmers may have benefitted from authorities regulation and monitoring. However the absence of wholesale markets and chilly chain infrastructure – that non-public sector was presupposed to arrange — and a ‘free market’ strategy signifies that poor farmers must shortly get rid of the perishable produce to whoever buys it at no matter value.

In accordance with Sukhpal Singh, professor at IIM Ahmedabad writing in Hindu Businessline, non-public merchants arrange roadside wholesale markets in all main fruit and vegetable pockets of the state, charging 2% price from farmers and lot-based price from patrons. There are not any weighing scales or bridges, no sheds or data, no regulation of high quality or costs. Though Singh says that farmers are pleased they don’t have to move their produce too distant, they’re paying charges which weren’t charged in earlier APMCs, and costs are decided by merchants. In case of any dispute or malpractice, there isn’t a redressal.

Value Volatility & Decline of Agriculture

This free-for-all, jungle raj that Nitish Kumar and his ally, BJP, launched in Bihar – and that’s now sought to be imposed throughout the nation – has led to fairly the reverse of the claimed advantages. Persistent value uncertainty and wild swings in costs supplied, have led many farmers to wreck and subsequent decline in productiveness. They’re unable to put money into agricultural inputs or turn out to be indebted attempting to lift assets. Floods are an annual downside in Bihar, particularly north of the Ganga, and this solely provides to insecurity and swings in agricultural output, as will be seen within the first chart’s rice output figures.

In a research revealed in November 2019, the Nationwide Council of Utilized Financial Analysis (NCAER) identified that agricultural development decelerated to a mere 1.3% each year within the interval 2012-13 to 2016-17, in contrast with 3% in 2008-09 to 2011-12, and a pair of% in 2000-01 to 2007-08. That is what the report needed to say in regards to the causes of this disaster:

“Regardless of the abolition of the Agricultural Produce Market Committee (APMC) Act in 2006, non-public funding within the creation of recent markets and strengthening of services within the current ones didn’t happen in Bihar, resulting in low market density. Additional, the participation of presidency companies in procurement and the dimensions of procurement of grains proceed to be low. Thus, farmers are left to the mercy of merchants who unscrupulously repair decrease costs for agricultural produce that they purchase from farmers. Insufficient market services and institutional preparations are chargeable for low value realisation and instability in costs.”

One other research on Bihar’s post-APMC abolition situation was executed by the government-run Nationwide Institute of Agricultural Advertising and marketing (NIAM) in 2011-12. It got here to the slightly reluctant conclusion:

“The step to maneuver in direction of the free market regime from that of regulatory mechanism has been taken in a proper spirit to make the system extra environment friendly and congenial to the farmers. Nonetheless, the identical has created a vacuum when it comes to institutional mechanism for administering the functioning of markets. The small-scale farmers haven’t any alternate channels of promoting besides to make use of the present dealer dominated system.”

Within the coming Meeting elections, there are persistent stories of widespread farmer misery and discontent, together with with the proposed new farm legal guidelines. Chief Minister Nitish Kumar has been pressured to say that he received’t implement these legal guidelines in Bihar, though the APMC abolition half is already a fait accompli within the state. This fireplace-fighting by the ruling Janata Dal (United)-BJP alliance signifies the extent of farmers’ anger, which may have a decisive impression on the election outcomes.

(Mohd Imran Khan contributed to this story from Patna)



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