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

2. 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 2

3. 3 The study covered production, agricultural marketing, procurement, warehousing and distribution aspects Both secondary and primary survey were used 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 Coverage of the Study Fertilizer - Policies have neither been able to foster competition in the market, nor able to unambiguously enhance the farmers’ welfare. Seed – Policies have significant impact through improved seed quality, better access and higher seed replacement rate 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; Key Findings

4. 1. Seed sector Reforms and Implication on Producers Favorable policy framework for competition leading to benefits 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 1.1 National policy framework (Seeds Sector)

5. 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 Issues of policy conflict - Private producers can sell to National Seed Corporations rather than developing their own distribution network 5 Seed production- I ncreased 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.

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

7. 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 7 APMC Reform and Implications 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 Rajasthan Story - APMC Embraced

8. 3. Procurement in Bihar through Primary Agriculture Cooperative Societies (PACS): Tapping potential needs urgent institutional reforms 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 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 Overview of PACS engagement in procurement 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 Implications on Farmers’

9. Lessons Learnt 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 9 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 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 Seed Policy ReformsAgriculture MarketingProcurement

10. 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 politico- economic nuances is essential to develop a policy framework that may insulate such proactive shift in procurement chain from adverse externalities. 10