1. CREW Project – India Findings from Diagnostic Country Report (DCR) Wheat Sector Presentation by

2. 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

3. 1. Seed sector Reforms and Implication on Producers: Favorable policy framework for competition leading to benefits

4. 1.1 National policy framework (Seeds Sector) PolicyFocus Industrial Licensing Policy, 1987De-reservation of the seed sector Seed Development Policy, 1988More foreign collaboration and easing of import norms New Industrial Policy 1991Recognised 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 2002Enhanced role for private players in seed distribution and marketing EXIM Policy 2002-07Further 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

5. 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

6. 1.3 Impact of Seeds Sector Reforms 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 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

7. 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

8. 2. Agriculture Produce Market Committee (APMC) Reform: Limited ground level impacts in both states

9. 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

10. 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

11. 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

12. 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

13. 3. Procurement in Bihar through Primary Agriculture Cooperative Societies (PACS): Tapping potential needs urgent institutional reforms

14. 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

15. 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

16. 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