Competition Reforms in the Wheat sector (Bihar and Rajasthan) National Advocacy Plan (CREW Project) Neha Tomar, CUTS International CREW NRG-IV Meeting, 8 th April, New Delhi

Outline Introduction to CREW Advocacy Phase Issue I: Impact of Liberalisation on Wheat Procurement in Bihar -Current situation -Emerging issues -Suggested Work Plan -Envisaged Outcome Issue II: Exploring Greater Private Participation in Rajasthan APMC Markets -Current situation -Emerging issues -Suggested Work Plan -Envisaged Outcome 2

CREW Advocacy Phase Output of the Research Phase Diagnostic Country Report (DCR) Advocacy Phase -Main research findings -Purpose/Goal -Timeline -Anticipated Outcome -Role of the NRG 3

Impact of Liberalisation on Wheat Procurement in Bihar CURRENT SITUATION Agriculture Produce Marketing Committee (APMC) ‘mandis’ were abolished in Bihar in 2006 Big players like ITC, Britannia and Cargill have started procuring from farm gate and local traders Primary Agriculture Credit Societies (PACS) have been granted monopoly in wheat procurement since Previously there were 7 procurement entities 4

Impact of Liberalisation on Wheat Procurement in Bihar EMERGING ISSUES Impact of APMC abolishment -Only large farmers (and traders) seem to have benefitted -Limited local ‘mandis’ Engagement of Private Players – Not much information PACS Monopoly - Price realisation, market access Challenges in PACS - Land papers, inherent loss mechanism, broker segment 5

Work Plan & Envisaged Outcome KEY QUESTION: Implication changes in wheat procurement on farmers? Stakeholder Discussions – Department of Agriculture, FarmsnFarmers, NABARD Research study details -Purpose of Research -Overall methodology (in brief) -Location: Purnia / Muzaffarpur District Outcome – Implication of liberalised APMC regime and inputs for further reforms in procurement in Bihar 6

Exploring Greater Private Participation in Rajasthan’s APMC Markets CURRENT SITUATION Rajasthan amended the APMC Act in 2005 Provision has been made for e-trading, single point levy of ‘market fee’, single registration/license for trade/transaction in more than one market ‘Mandis’ in Rajasthan: 130 regulated markets and 307 market sub yards Private Participation: 2 licenses for private markets, 0 license for contract farming and 76 direct marketing license 7

Exploring Greater Private Participation in Rajasthan’s APMC Markets EMERGING ISSUES (Entry barriers in licensing) -Prescribes minimum produce to be bought -Buying points have to be located outside municipal limits -Security Deposit with respective APMC -Excess documentation 8

Work Plan & Envisaged Outcomes KEY QUESTION: What are the challenges that impede private participation? How can they be mitigated? Stakeholder Meetings (Department of Agriculture, NIAM, ITC) Discussions private players, government officials and experts Submission of ‘Input Paper’ to the State Govt (Deptt of Agriculture, GoRajasthan) Outcome: Suggesting improvements in components of the enabling environment for effective private participation 9

THANK YOU 10