I am seeing newspaper reports that Bihar abolished APMCs way back in 2005 which is true. Using this argument, many views are coming up saying the new farm laws which open up the agriculture procurement will hence will not benefit farmers.

Let me share my views on the above. The agriculture reform comprised of the below 3 laws:

  1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
  2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020
  3. The Essential Commodities (Amendment) Bill, 2020

The first law allows the farmers sell their produce outside Mandis literally to any one and the purchaser just needs to have a “PAN Card”. The second law allows contract farming. The third law amends the “Essential Commodities Act(ECA)”. In the ECA , the government can impose limits on how much one can store. In case the person stores more than the specified amount, there is a jail provision. The Law is so stringent that, once a charge has been formed, it will be responsibility of the accused to prove that he was innocent and if (s)he failed (s)he could be jailed.

ECA was promulgated in 1955. At that time there were shortage of food grains and any hoarding could create inflation. But over the period of time, India’s food grain produce increased and India even started to export food grains. Hence, putting such limits through ECA became counter productive as India did not see any investments in cold chains, storage facilities etc. Hence, is no surprising that nearly 35% of the vegetable produce gets wasted.

Coming back to our original question: why the abolition of APMCs in Bihar did not help?

Any business for that matter has 4 stages: Investment, production, storage and sale. Bihar govt just liberalized the last stage i.e. the “Sale” of the produce. But there was no reform on the other stages. The law on contract faming allows farmers to enter in contract with third parties, this will help bring in investment, technologies for production. Since, there was no law on contract farming, farmer did not get access to modern technologies. The Bihar govt. did not also amend the ECA, the stock limits were still there. Even if a big company procures from a farmer, the company could not store. In such case why will the company purchase? Hence, this did not result the big players enter the agricultural market in Bihar. This led to the farmer rely on local traders to purchase his stock who did not give him/her a good remuneration.

We should view the combo of the 3 laws as one package. Having one law and leaving out others wont be of help to farmers. In case of Bihar that was rather counter productive.

Hence, I don’t see merit in using Bihar’s example in arguing that the farm laws wont help. Bihar’s farm reform was haphazard and implementation was flaky.

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