CREW Project – India
Findings from
Diagnostic Country Report (DCR)
Wheat Sector
Presentation by
Outline
• Seed sector reforms, private engagement and farmers’ welfare
• APMC reforms leading to very limited impacts on the ground
• PACS – hold tremendous potential but needs urgent institutional reforms
2
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
National Seed Policy 2002
Better protection of intellectual properties; attracting
more private investment
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
4
1.2 Bihar Agricultural Road Map 2006
• Seed sector reforms a key element (In 2006-07, only 6200 qtls of certified/quality
seed on subsidy was distributed. Seed Replacement Rate - Paddy 12%, Wheat 11%,
Pulses 5%)
• Salient features vis-à-vis Seeds sector reforms (Agri Road Map 2006):
• 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 Tibra Beej Bistar Yojana; Beej Gram Yojana; Seed
Production by Govt. farms; Certified seed distribution on subsidy
• Issues of policy conflict Private producers can sell to National Seed Corporations
rather than developing their own distribution network
5
1.3 Impact of Seeds Sector Reforms
250,000
14,255
14,000
205,000
173,554
10,402
12,000
10,462
10,000
150,000
142,584
8,000
100,000
6,000
4,941
4,000
61,904
50,000
2,473
2,000
29,712
-
2005-06
2006-07
2007-08
Production in quintals
2008-09
Area in hectare
2009-10
AREA IN HECTARE
200,000
PRODUCTION IN QUINTAL
• Seed production increased by 7 times
over 2005-06 to 2009-10
• No of private seed players increased
from 1 to over 10
• Farmers’ feedback
16,000
• 87% report increase in access
• 83% report increased reliability of supply
and higher purchase
• 79% report quality improvement
• 77% report better affordability
• 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.
6
1.4 Lessons for Policy
•
•
•
•
State took advantage of an enabling national policy framework
State developed a focused ‘Operational Plan’ with key targets
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
7
2. Agriculture Produce Market Committee
(APMC) Reform:
Limited ground level impacts in both states
2.1 Issues in APMC provisions
•
•
•
•
•
•
•
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
9
2.2 Reform and Implications in Bihar (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
10
2.4 Reform and implications in Rajasthan (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 operationalisation
11
2.5 Lessons for Policy
• Contrasting reform experience – Bihar vs. Rajasthan
• Both enables greater private participation on paper; but little impact on
beneficiaries due to implementation issues
• 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
12
3. Procurement in Bihar through Primary
Agriculture Cooperative Societies
(PACS):
Tapping potential needs urgent institutional reforms
3.1 Overview of PACS engagement in procurement
• Since Ravi Marketing Season (13-14), 2 public procurement entities are in
oparation:
• 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
• Establishes state monopoly in procurement
• 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
14
3.2 Implications on Farmers’
General
• 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)
• Politically influenced institution with vested interests
• No system of performance audit
• Bias towards paddy
Monopoly Status
• Increased market access for 31% farmers
• Better price realisation for 29% farmers
15
3.3 Lessons for Policy
•
•
•
•
PACS enable greater access to marginal/small farmers by its strong local network
Since procurement at MSP, distress-selling 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
16