Farm Laws: How Bihar’s Peasantry was Pushed to the Brink after APMCs were Scrapped

New Delhi: The nationwide protests against the three contentious Farm Laws enacted by the Centre has brought Bihar into focus. It is a state where new regulations for agricultural produce and its storage, sale and pricing have been in place since 2006.

The Bihar government repealed the Agriculture Produce Marketing Committee (APMC) Act fourteen years ago in the name of “reforms”, soon after Nitish Kumar assumed the office of chief minister in 2005. It resulted in the shutdown of the regulated wholesale market for agricultural produce (commonly known as mandis). It enabled private firms to buy agricultural commodities directly from farmers.

The Modi government argues that the new laws are in the interest of farmers, since they would apparently free from the clutches of middlemen and empower them to sell their crops outside the APMC mandis at competitive prices. However, the Bihar experiment does not support such claims.

After the implementation of the much-touted ‘reforms’, the condition of farmers deteriorated instead of improving. Eradication of the APMC-regulated mandi system and the entry of private players led the farming community to losing a favourable marketplace. Farmers were left with no option but to sell their produce to private procurers at throwaway prices.

A SAGA OF LOW PROCUREMENT, EXPLOITATION

Farming in Bihar is no longer a viable profession. Here, it is not looked as entrepreneurship, but a source of livelihood in a state which has 16.19 million farmers, employing 77% of its workforce and generating 35% of the state’s gross domestic product.

While the state government often lists the Kisan Samman Yojna, input subsidies given to flood-prone areas and crop assistance projects as some of its measures aimed at the welfare of farmers, yet the peasantry alleges that it is left at the mercy of local traders and that its financial security (which was safeguarded by provisions like the minimum support price (MSP) and public procurement) was stripped.

“The PACS (primary agricultural credit society, which was formed for procurement of food grains after the APMC mandis were scrapped) does not buy wheat from farmers citing moisture and several other technical glitches in the system. The state government is thumping its chest claiming that it has begun procuring paddy so early – in December. The reality is that a Kharif crop is being purchased at the end of Rabi and that too due to the pressure by farmers across the country. Had there been no outrage, the procurement would have started in January or February. Given their landholding and economic conditions, small and marginal farmers (who constitute around 95% of the farming community in the state) cannot wait for government procurement as they need money for sowing the next batch of crops and also because they do not have storage facilities at home. After storing a part of it for domestic consumption, they have to sell rest of their farm produce to local traders at throwaway prices,” Vishwa Anand, a small farmer from Chaumukh village in Bochaha block of Bihar’s Muzaffarpur district, told NewsClick.

It is important to understand the demand and supply economics of local markets where the farmers sell their produce to local traders.

“Soon after its harvesting,price of that particular farm product goes down because of increased supply. Taking advantage of the situation, local traders offer very low prices — often nearly half of the MSP announced by the Centre. Those who have a storage facility at home and have financial resources don’t sell the crop soon after harvesting when the market is flooded with the produce. They wait for the supply to drop and for demand to rise so that they can bargain in the market to get a better price. But the majority of farmers are not privileged enough. Therefore, they sell it to local traders at low prices. Nearly half the farmers fail to even recover their input costs,” he explained.

“In a nut-shell,” he said, “farmers have been pushed to the brink after the revocation of the APMC Act. The Bihar experiment contradicts the government’s claim that the new laws won’t impact the mandi system and farmers will have the liberty to sell their agricultural produces even outside the mandis. Had it been so, the financial condition of farmers in Bihar — who didn’t go to mandis or were not covered under minimum support price (MSP) — should have improved over the past 14 years. But their condition has deteriorated,” he said.

If the conditions are favourable, farmers produce between 12 to 14 quintals of wheat and paddy in one acre of land. The government could not even procure one per cent of the estimated production of wheat in the Rabi marketing season of 2020-21. The total procurement of wheat stands at only 5,000 quintals so far. Farmers in the state were projected to having produced 61 lakh metric tonnes (LMT) of wheat this year.

There are two major cropping seasons in India — Kharif and Rabi. While the Kharif cropping season is between July and October during the south-west monsoons in the Indian subcontinent, the Rabi cropping season is from October to March (winter).

Paddy, maize, jowar (sorghum), bajra (pearl millet), soybean, cotton, sugarcane, sesame (an oil seed) and groundnut are major Kharif crops. The Rabi crops include wheat, barley, gram, mustard and peas. Many crops are cultivated in both Kharif and Rabi seasons.

LOCAL TRADERS RULE THE ROOST

Amarjeet Kumar Rai, a landless farmer from Naugarhwa village, which falls near the district headquarters of Bhabua, is faced with the double whammy of a lockdown and low demand. The new laws have made the matter worse.

“When the lockdown began in March, it was the sowing season for pulses like gram. Because of the complete closure of the market, there was black marketing of seeds and fertilisers. Even the rent of tractors used for ploughing the field was higher. It further hiked the already-increased production cost. Though the lockdown was relaxed in May and June, the situation was not back to normal when we had to grow paddy. After harvesting, the local market where we sell agricultural produce in the absence of cooperative societies had an abundance of paddy and cereals. As the supply grows, price falls. This leads to monopoly of private buyers who exploit us because they know we cannot keep the farm produce at home for long as we would need money for growing the next crop – wheat,” he said, adding that he had to sell his paddy at Rs 1,200 per quintal.

This year, the MSP for general grade and A-grade paddy had been fixed at Rs 1,868 per quintal and Rs 1,888 per quintal respectively. The MSP for wheat and maize stands at between Rs 1,925 and Rs 1,975 and Rs 1,850 per quintal respectively.

Rai said that before the APMC Act was scrapped, farmers would sell their produce to the market committees where a minimum price was guaranteed. But after the repeal of this system, they indulged in distress sales lest their produce would go to waste because they had no storage facilities.

He said he grows his crop on land he has taken on lease from landlords. As per his lease, Rai is supposed to give a fixed sum or half of the food grains to the land-owner; it is difficult for a farmer like him to survive if he does not get a good price from the market.

Rai, a science graduate said he knew farming was no longer a profitable business, with the production cost rising by the day and returns falling. However, he had no other option to make a living from. He studied despite financial constraints hoping that he would get a government job. However, with no vacancies his dreams lie shattered as he is now on the verge of crossing the age limit for applying.

“Solely depending on agriculture, we just make ends meet. There are no savings but we don’t have any other option. There are no vacancies in government jobs. Whenever a vacancy comes about candidates face a written test, the interview and then appear before high courts and the Supreme Court. By the time the decision comes, the government completes its five-year term and elections are announced. Unfortunately, this is the fate of students in Bihar where the CM is called ‘Sushasan Babu’,” he rued.

Rustam Khan, who hails from the same village, is one among six brothers who own 22 acres of land between them. “This region (Kaimur and Rohtas) is considered the rice bowl of Bihar because of fertile land and geographical conditions. The majority of people here depend on agriculture. But farmers have to depend on rainfall for irrigation. If it rains, we produce wheat and paddy on the land we own. If it does not rain properly, farmers grow wheat and paddy on around half of the land they have because irrigation with water pumps, which need electricity or diesel, is expensive. Production costs become so high that we cannot recover even 70% to 80% by selling farm produce in private markets,” he said.

Farmers in Kaimur, he said, depend on the Kohira Dam, which is small and unable to supply water throughout the year. The canals built to take its water to the fields are lower than the height of their fields. As a result, farmers have to use diesel-operated water pumps to pump out the canal water. It puts a heavy financial burden on farmers. On occasions the water in the dam is insufficient for irrigation if there is no proper rain.

“After production, the next challenge is selling it to the market. The PACS do not buy food grains so easily. Even if they buy, they buy it on credit and make payment after two to three months. Soon after harvesting paddy, we have to prepare the field for wheat crops. And we need money for ploughing the field and procurement of seeds and fertilisers. Left with no option, we have to sell it to the local traders who offer lower prices because there is a lot of supply. The farmers are ready to sell paddy at Rs 1,000 to Rs 1,200 per 100 kg. Ideally, the price should be Rs 1,800 to Rs 1,900 per quintal,” he said.

Ram Nagina Yadav, a farmer from Tekari in Aurangabad district, said that farmers have been left at the mercy of a monopoly market. “When PACS was introduced, we were told that it would benefit us. But what happened is that after the scrapping of APMC Act, middlemen and traders began ruling the market. They procure food grains from us at lower prices and sell it in APMC mandis in Punjab at MSP through their contacts,” he said.

“The new laws, say the ruling party’s candidates, are key to farmers independence. Farmers own an average of two acres of land in the state. How can a small farmer go out to sell his grain?” he asked, adding the government is “conspiring to hand over the land of the farmers to their loved ones. It also wants an end to MSP,” he concluded.

PACS — A GOOD IDEA THAT DIDN’T WORK

The PACS were expected to function like a system which would procure locally. It had a decentralised character where every panchayat would have a society operating on a co-operative model to procure and sell agricultural produce in bulk.

Anindo Banerjee, director of Programme Initiatives at Praxis – Institute for Participatory Practices, said if one looked at the entire procurement system in Bihar, the key bottleneck was storage.

“We did an analysis some time back and it appeared that even if all the storage facilities were to be utilised to their fullest, it would be just about three per cent of the production that the storage systems would be able to accomodate. This also has bearing on government procurement and the ability of PACS committees to assure farmers of a guaranteed purchase,” he told NewsClick.

He said it was difficult to sell produce to PACS committees and that one had to be really “influential” to do so. He said the idea behind PACS was good because it did well in the diary sector, which works on a co-operative model. But the grain sector could not replicate that model, he added.

Overall, he said, the Bihar story is different from other states where over 90% of land holding is marginal with an average estimated possession of one or 1.5 acres.

“Most producers here are subsistence farmers. I am talking about data from 2005. It would be far more skewed than 15 years ago. As long as Bazar Samitis were there, there were some assured market available for farmers despite the fact that there were issues, which definitely needed reforms. But doing away with the Bazar Samitis and expecting farmers to mobilise resources to sell the products whereever they wanted was possibly a far-fetched idea unless you create certain infrastructure close enough for people to access,” he said, adding that expecting small and marginal farmers to go all the way to private mandis was probably expecting too much.

He said: “If you go by the rate of actual procurement that has taken place, a very minuscule proportion of sales take place at MSP. The bulk of sales take place at rates far lower than the MSP. And therefore, the farmers demand that the MSP should have some sort of legal guarantee.”

Even MSP, he said, should be seen as a minimum support price. The way the Swaminathan Commission calculated the MSP was contentious, he added. The opportunity cost for farmers was not taken into account. Now, however, the farmers are raking up the demand to revisit the basis on which the MSP is calculated and make sure that they get remunerative returns for their investments.

In Bihar there are contractors who have made a business out of procurement at throwaway prices and selling them at mandis. Even when the APMC mandis were there, he said, the purchase used to be made through middlemen. “Middlemen are not necessarily bad in the sense that that when you don’t have a loyal system they operate as a chain, enabling procurement and sale of the produce and ensuring that the produce is sold at a reasonable price. So, criminalising them is not just,” he added.

The question is whether the PACS are able to sell whatever they procure in bulk from farmers in the panchayat. “Unless they have the facility to store the procurement they do, they won’t actually do it,” he concluded.