Nitish Kumar’s Govt Scrapped APMC Act 14 Years Ago But Farmers In Bihar Still Languishing

Replying to a debate on the motion of thanks in the state legislature, Bihar chief minister Nitish Kumar in his 74-minute-long speech on February 23 spoke about various achievements of his government in different fields. In that long list of achievements, he included the Agri ‘reforms’ brought about by his government in the state.

It was in the year 2006 when Nitish Kumar’s government abolished the Agricultural Produce Market Committee (APMC) Act and ended the mandi system in the state of Bihar.

The Janata Dal (United) (JDU) leader on February 23 dismissed the opposition’s accusations that the abolition of the APMC Act in Bihar has negatively impacted the farmers. Kumar, who has sworn in as the state’s CM for seven times in the past two decades, not only refuted the opposition’s claim but also tried vindicating his Agri ‘reforms’ by stating that the state of Bihar made the highest ever paddy procurement of 35.59 lakh metric tonne in the current season.

Kumar has on multiple occasions backed the new farm laws passed by the central government that have been seeing vehement protests across the country. One of the laws— Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill—passed by the Centre deals with the APMC Mandi. The law seeks to provide a free market to farmers and get rid of middlemen dictating the price.

In November last year, he said, "As you all know, we had abolished these (APMC mandis) way back in 2006 and introduced a system for procurement through PACS (Primary Agriculture Credit Societies)".

What Happened In Bihar After APMC Mandis Were Shut Down In 2006?

14 years ago when Kumar’s government repealed the APMC Act in Bihar, it replaced the mandi system with Primary Agriculture Credit Societies (PACS), designated to procure food grains from farmers at Minimum Support Price (MSP). The PACS function as cooperative institutions at the panchayat level in Bihar that procure the farmers’ produce for the Public Distribution System (PDS) at MSP and sell it to the Food Corporation of India, State Food Corporation, or to private wholesalers.

While Kumar has on multiple occasions cited the success of his experiment in Bihar, accounts from the farming community in Bihar paint an abysmal picture.

Farmer leader in Bihar and convenor of Kisan Majdoor Swaraj Samiti, Dhananjay Singh Madhu said, “There used to be some competitive pricing earlier but now there is none. With APMC mandis running in the state, farmers and buyers had a dedicated place to buy and sell the products which the state lacks now”.

According to a 2019 report by the National Council of Applied Economics Research (NCAER), about 97% of farmers in Bihar have small and marginal landholdings. The removal of APMC mandis has affected these small farmers the most.

Former director of AN Sinha Institute of Social Studies, DM Diwakar, says, “When APMC mandi system existed, Bihar had Krishi Bazar Samitis even at sub-divisional levels where even small farmers could sell their produce and receive MSP, with the system gone now there is no such place for small farmers.”

Professor Diwakar says that PACS lack a storage facility which poses a hurdle for small farmers who cannot hold their produce for very long.

“During the mandi system, farmers could pre-sell their produce and receive advance payments,” said 65-year-old Dev Kumar Singh who is a farmer belonging to the Fatuha town in Patna district.

With the existing system in Bihar, farmers can either sell their produce to PACS which promises MSP, or to private procurers which offer much less than MSP. However, both act to the detriment of farmers.

Selling their produce at PACS should ideally fetch farmers MSP, however, the NCAER report says, “Unfortunately, even at PACS, farmers reportedly received a price much lower than the MSP and payments are not made in time after selling their produce at PACS. Farmers mentioned that non-availability of a fair price is the most important constraint in expanding agricultural output.”

“The cheque written by PACS will be for MSP, but the farmers will tell that they received less than MSP. The discrepancy is never on record but it exists,” says professor Diwakar.

The PACS are fraught with problems that leave small farmers at the mercy of private traders and commission agents. Several farmers and farm leaders allege that small farmers rarely sell at PACS because of reasons like lack of storage facility and delay in payment. The farmers also say that it is mostly the middlemen who get exclusive access to PACS.

Dharamveer Paswan, a 35-year-old farmer from Lahladpur village in Bihar, who mainly grows wheat and paddy told Outlook, “I was told to register for PACS which I did but when I approached PACS for procurement, people at PACS refused to take and mockingly asked, ‘Are you the Prime Minister?’.”

On being asked if he tried to sell his produce again at PACS, he said, “What to try when we can see PACS is buying from people who are not even farmers”.

“I had no option but to sell to private traders at a loss. I sold my harvest of paddy for Rs 1500 per quintal while the MSP was fixed at Rs 1,868 per quintal”, Paswan added.

40-year-old Saroj Kumar Singh from Fatuha district in Bihar says it’s very difficult to sell at PACS. “Only middlemen get to sell at PACS. They lie to small farmers that the procurement limit is reached and tell them that payment will be delayed. It is because of this reason small farmers sell their produce to private traders at much lower prices.”

“The middlemen buy paddy at say Rs 1200 per quintal from farmers and then sell it to PACS at MSP which has been fixed at Rs 1,868 per quintal. So, it is the middlemen which are benefiting from PACS, not farmers,” added Singh.

For selling their produce at PACS, farmers are required to register using land and identity documents. A sizeable number of farmers in Bihar cultivate on unofficially leased lands which excludes them from registering for PACS, whereas, APMC mandis did not require documentation for space which meant small farmers cultivating on leased lands could also sell at the mandis.

The woes of farmers in Bihar do not end here. Whether selling to PACS or private procurers, farmers face deductions in payment and extra charges at various steps.

Arif Hassan Khan who belongs to the Samastipur district in Bihar and shares his land with his brothers said, “Firstly, there’s no certainty when will PACS pay for the harvest, payment can take months. Secondly, PACS always deducts 5-10% in payment citing moisture content in the crop.”

Bihar Kisan Manch president Dhirendra Singh Tuddu said, “For every quintal of produce, private procurers ask for 1 kg extra crop citing a loss during transportation. The farmers even bear the cost of transportation and sacks that are used to carry the crop”.

APMC mandis were abolished in Bihar with the expectation that it will drive private investment in the agriculture sector which will improve the condition of farmers, however, the findings of NCAER are not in conjunction with the expectations.

“Despite the abolition of the Agricultural Produce Market Committee (APMC) Act in 2006, 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 continue to below. Thus, farmers are left to the mercy of traders who unscrupulously fix lower prices for agricultural produce that they buy from farmers”, states the report.

Professor Diwakar says, “PACS is a cooperative but the way it is being run the benefits are reaching only some middlemen while the ordinary farmer is still languishing”.