CREW Project
Diagnostic Country Report (DCR) –India
Key Findings – Staple Food Sector (Wheat)
Presentation by
Themes of this Presentation
• Coverage of the study and key findings
• Key policy reforms identified with visible/potential welfare impacts
• Seed sector reforms, private engagement and farmers’ welfare
• Agriculture Produce Market Committee (APMC) reforms leading to very limited
impacts on the ground
• Primary Agriculture Cooperative Societies (PACS) – holds tremendous potential
but needs urgent institutional reforms
• Lessens learnt
• Seed policy
• Agricultural Marketing
• Procurement
• Way Forward
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Coverage of the Study
Key Findings
• The study covered production, agricultural
marketing, procurement, warehousing and
distribution aspects
• Fertilizer - Policies have neither been able to
foster competition in the market, nor able to
unambiguously enhance the farmers’ welfare.
• Both secondary and primary survey were used
• Seed – Policies have significant impact
through improved seed quality, better
access and higher seed replacement rate
• Secondary data – various policy documents,
research papers, data on fertilizer, seed,
production etc.
• Primary survey
• Rajasthan (Districts - Alwar and Bhilwara)
• Farmers - 200
• Consumers - 200
• Bihar (Districts - Vaishali and Saran)
• Farmers - 200
• Consumers - 200
• In-depth interviews of the state officials
• Discussions with other stakeholders
• Agriculture marketing - Divergent
experiences; limitations of the in
attracting investment; the study also finds
that complete abolishment of APMCs is
not the right solution.
• Procurement – Current public monopoly
may not improve accessibility and better
price realisation, especially for marginal
and small farmers.
• Warehouse – The weakest node in the chain
• Distribution – Characterized with severe
loopholes;
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1. Seed sector Reforms and Implication on Producers
Favorable policy framework for competition leading to benefits
1.1 National policy framework (Seeds Sector)
Policy
Focus
Industrial Licensing Policy, 1987
De-reservation of the seed sector
Seed Development Policy, 1988
More foreign collaboration and easing of import norms
New Industrial Policy 1991
Recognised as high priority sector; more liberalized FDI norm
Protection of Plant Varieties and Farmers
Right Act 2001
Better protection of intellectual properties; attracting more private investment
National Seed Policy 2002
Enhanced role for private players in seed distribution and marketing
EXIM Policy 2002-07
Further liberalisation of export-import of seeds
National Seed Plan 2005
• Emphasis on better private & public sector synergy
• 20% of foundation & certified seed from private sector
Bihar Agricultural Road Map 2006
• Seed sector reforms
• Thrust on self sufficiency in seed production
• Increase seed replacement rate
• Enhanced role of private players to boost seed production and marketing
• Strengthening seed infrastructure: Bihar Rajya Beej Nigam (BRBN); Bihar State Seed Certification Agency (BSSCA); Seed Multiplication
Farms; etc.
• Schemes: Mukhyamantri (Chief Minister) Tibra Beej Bistar Yojana; Beej Gram Yojana; Seed Production by Govt. farms;
• Certified seed distribution on subsidy
250,000
16,000
Production in quintal
200,000
173,554
10,402
150,000
14,000
205,000
12,000
10,462
10,000
142,584
8,000
100,000
6,000
4,941
50,000
4,000
61,904
2,473
2,000
29,712
0
2005-06
2006-07
2007-08
Production in quintals
2008-09
2009-10
Area in hectare
Area in hectare
14,255
• Seed production- Increased by 7 times over 2005-06 to
2009-10
• No of private - Increased from 1 to over 10
• Farmers’ feedback - Increase in access – 87%; Supply
reliability and higher purchase – 83%; Quality
improvement 79%; Better affordability – 77%
• Increased crop yield
 Saran: 17 Q/ha to 25 Q/ha (‘06-’09)
 Vaishali: 15 Q/ha to 30 Q/ha (‘06-’09)
 Bihar: Wheat yield augmented from ~18-20 Q/ha
in 2008 to 38-40 Q/ha in 2013.
• Issues of policy conflict - Private producers can sell to National Seed Corporations rather than developing their own distribution
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network
2. Agriculture Produce Market Committee (APMC)
Reform:
Limited ground level impacts in both states
Issues in APMC provisions:
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Continued government control despite limited market access
Licensing rules inhibits competition by acting as entry barrier
Severe infrastructural bottlenecks in the APMC markets
High intermediation cost
No national level integrated market in the face of regulatory barriers
Lesser price realisation for farmers
High wastage due to long supply chain
APMC Reform and Implications
Bihar Story - APMC scrapped
• All market barriers removed, to achieve
• Greater private participation in market
development
• Better access for buyers to directly procure from
farmers
• Engaging farmers in contract farming
• Ground experience, however, belied the potential
• Little or no private investments in infrastructure
• Complementarity with public investment
• Farming community largely of marginal or small
farmers
• Benefits are reaped majorly by medium/large
farmers (selling in organised markets)
• Decline in transaction cost (savings by farmers
selling in organised markets)
• Thriving ‘middle layer’ – largely perceived as a
win-win
Rajasthan Story - APMC Embraced
• Compliant with all three provisions of Model
APMC Act: Direct marketing, contract farming
and private markets
• Even with ‘full’ reform, ground condition has
not changed much
• No operational farmer-consumer market
• Only 2 licenses issued for private markets; still
non-operational
• Only 1 license for trading in multiple markets
• No registration of contract farming
• 76 direct marketing licenses issued, but limited
operationalization
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3. Procurement in Bihar through Primary Agriculture
Cooperative Societies (PACS):
Tapping potential needs urgent institutional reforms
Overview of PACS engagement in procurement
Implications on Farmers’
• Since Ravi Marketing Season (13-14), 2 public
procurement entities are in operation:
• Primary Agriculture Cooperative Societies
(PACS) & Bihar State Food Corporation (BSFC)
• PACS purchases from the farmers and sells it to
BSFC, who in turn delivers it to FCI along with
its own procurement from its purchase centres
General
• Establishes state monopoly in procurement
• Politically influenced institution with vested interests
• Holds considerable potential for greater access
for marginal/small farmers to government
procurement
• 8463 PACS in Bihar in 2012-13
• Implies larger local presence and formidable
network
• No system of performance audit
• Farmers need to submit land ownership records (tedious
and time-consuming)
• Refusals to purchase citing quality issues is quite common
• A ‘broker’ segment has emerged – who purchases from
farmers at a discounted price and sells it to PACS
(farmers seem to be happy with this arrangement)
• Bias towards paddy
Monopoly Status
Increased market access for 31% farmers
Better price realisation for 29% farmers
Lessons Learnt
Seed Policy Reforms
Agriculture Marketing
• State took advantage of an enabling
national policy framework
• Contrasting reform experience –
Bihar vs. Rajasthan
• State developed a focused ‘Operational
Plan’ with key targets
• Both enables greater private
participation on paper; but little
impact on beneficiaries due to
implementation issues
• Thoughtful yet pragmatic role
allocation between public and private
entities
• Public entity (Bihar State Seeds Corp)
introduces innovative programmes
retaining its identity and visibility
• Reaps benefits in terms of increased
yield and overall production
• Entry and greater participation of
private players
- More investment, including R&D
- Higher production
- Scope for development of better
varieties
• Policy Implications:
- Withdrawal of government will
not automatically attract private
players
- Need an integrated policy
framework encompassing
infrastructure policy, credit
policy, etc.
- Flexibility to adapt to
heterogeneity among
stakeholders
- Planning and implementation
of reforms, keeping in mind the
‘needs’ of specific target groups
Procurement
• PACS enable greater access to
marginal/small farmers by its strong
local network
• Since procurement at MSP, distressselling incidences should be lowered
• A strong network of middle-men,
considered helpful by farmers
• Needs administrative and
institutional reforms
• Potential of private players as
procurement agents worth exploring
• Selection of agencies may be
done on the basis of open
bidding
• Can further expand the
procurement network,
improving accessibility
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Way Forward
Seed Sector Reform
‘Seed Policy’ components of the Bihar Agricultural Road Map 2006 under the overall national seed policy framework
enabled the state to increase private participation and investment in R&D, helping it to record higher yield and
production. Further in-depth and focused investigation is required to come out with a quantitative measure of welfare
impact of this policy to identify whether this model can be adopted as best practice by other states.
Agriculture Produce Market Committee (APMC) Reform:
Failures of two extremely different approaches highlight the complexity arising out of the multiplicity of stakeholders
and diversity across geographies. This calls for a dedicated probing covering larger number of states to understand the
issues further for appropriate reform measures required and ways to successfully implement them.
Procurement in Bihar through Primary Agricultural Credit Societies (PACS):
With larger local presence through a formidable network PACS held considerable promise for greater access for
marginal and small farmers to government procurement activities. However, politicization, vested interests and lack of
administrative reforms has restricted the success of this systemic shift. An in-depth understanding of the politicoeconomic nuances is essential to develop a policy framework that may insulate such proactive shift in procurement
chain from adverse externalities.
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