Historically, Land reform is a form of agrarian reform involving the changing of laws, regulations, or customs regarding the ownership of the land. Reforms such as these may be proclaimed by a government, by interested groups, or by revolution. In recent decades the concept has been expanded in recognition of the political role of land and agriculture in development.
In 2006, the Agriculture produce Market Committee (APMC) act was revoked in Bihar.Durnig that time it was believed that introduction of APMC act will ensure a massive growth in the agricultural sector of Bihar and leading the state to become an agricultural hub of country.
Infrastructure Of Bihar’s Agricultural Market
After the inhibition of APMC act , Bihar’s agricultural market was inefficient to attract any investment in the farm sector. As part of the reformation, the Bihar State Agricultural Marketing Board and all APMCs across the state were scraped. As a result of APMC act, the agricultural marketing system under certain rules have been replaced under one board with different types of markets. As the managing boards and the staffs were deployed, still there exist whole sale markets in the streets of Bihar where all the major fruits and vegetables were grown without any infrastructure .This leads to the rapid increase of private and uncontrolled markets, hat means does not bear any infrastructure for weighing, sorting, grading and storage. These private markets also charge a small amount of fee from traders and farmers. These untrusted traders illegally transport feasible quantity of farm products to other states that assures a minimum support price (MSP). So farmers came under the mercy of these illegal traders .These untrustworthy traders fix a vey smaller price for the farm products they buy from farmers.
Impact Of Agricultural Reforms In Bihar
Before the prohibition of APMC act, Bihar had 95 market yards, of which 54 had infrastructure such as covered yards, godowns and administrative buildings, weighbridges, and processing as well as grading units. In 2004-05, the state agricultural board earned ₹60 crore through taxes and spent ₹52 crore, of which 31% was on developing infrastructure. With no revenue to maintain it, that infrastructure is now in a crumbled condition. Also, no major private investment has come in.
In a study of agriculture in Bihar last year, the National Council for Applied Economic Research reported increased unstability in grain prices after 2006, which negatively affected the crop choices and decisions of farmers to adopt improved cultivation practices. It concluded that Bihar’s repeal of the APMC system and consequent increase in price volatility could be one of the reasons for low growth of agriculture in the state. Most of the farmers surveyed reported high storage costs at private warehouses. Further, the need for immediate cash meant that they were forced to sell at whatever prices private traders offered. Recent field studies have also reported traders and farmers both being charged market fees in private unregulated markets, even though infrastructure for weighing, sorting, grading and storage is missing.
After repealing the APMC act , there are also startling changes occured in Bihar. First, there was a change is the system of decentralised partial procurement of cereals, particularly rice. In Bihar, even though procurement took place, it was mostly below MSP. Hence, relative to states where price was closer to MSP, in relative terms the price accruing to Bihar farmers was subpar on a trend basis. Second, there was ‘dumping’ (in a trade sense) of rice, after the National Food Security Act (NFSA), 2013, where a significant amount of rice was brought in from the Central Pool at prices much below marginal cost. Third, strong technological improvement in maize occurred in this period. Notably, maize is the only crop where Bihar’s productivity was higher than national average in this period.
Bihar is among the leading producers of maize in India and the third largest producer of fruits and vegetables after Uttar Pradesh and West Bengal. For maize, this year most farmers reported getting a price of ₹1,000-1,300 per quintal, as against the official minimum support price (MSP) of ₹1,850. For wheat too, farmers in Bihar reported receiving prices 10-15% lower than the MSP. Besides, wheat procurement in the state was only 5,000 tonnes, compared to 13 million tonnes in Madhya Pradesh, which has the same crop yield as Bihar, and 39 million tonnes nationally. Unlike Bihar, Madhya Pradesh did not abolish and instead strengthened its APMC infrastructure over the years.
Bihar had a bitter experiment in the growth of agriculture sector after abolishing the APMC act. The Bihar experiment of abolition of APMC act has important lessons for future marketing reforms in agriculture. The advantages of these reforms will gain profit to farmers only if they are accompanied by private investment in creating the physical infrastructure and institutional techniques needed to allow for mass involvement of farmers. While this did not come out even after a decade-and-a-half of the abolition of APMC mandis in Bihar, the record of other states on attracting private investment isn’t much better.
Annual Report Of Agriculture Sector In Bihar
The report says agriculture occupies a very crucial space in Bihar economy. “The growth in agriculture and allied sectors has been steady in Bihar. The Gross Cropped Area was 79.97 lakh hectares in 2019-20, with a cropping intensity of 144 per cent. During the last five years, agriculture and allied sectors grew at a rate of 2.1 per cent. Among the sub-sectors, livestock and fisheries have grown at a rate of 10 per cent and 7 per cent respectively”, the report said, adding the industrial development in Bihar has been promising in the recent years.
In the 2011 census, the level of urbanization in Bihar was as low as 11.3 per cent. But, after the state government decision of reformation, the present level of urbanization in Bihar is 15.3 per cent, which shows a significant expansion .
The aim of repealing the APMC Act in Bihar was to create new markets and attract private investment in agricultural markets and improve infrastructure. However, private markets did not emerge. Estimates show that market-level outcomes including measures of market efficiency were not causally impacted. In terms of farmer-level outcomes, there are contrasting impacts for maize and cereals. In the case of maize – where entry of private sector has been significant and there is market pull from livestock sector in other states – the repeal reduced transaction costs, brought in disintermediation, and improved farmer outcomes.
By shifting the trade away from APMC to non-APMC areas, without any infrastructure, the new rule is unfair to ensure better price realization for farmers. On the other hand, it might even lead to a repulse in the APMC infrastructure if enough revenue for its maintenance and development isn’t generated.