APMC Act : Bihar Case Study – UPSC GS3

Analysing the impact of abolition of APMC in Bihar

• It was hoped that abolition would ensure better prices for farmers of the state and attract large sums of private investment.
• Before their abolition, Bihar had 95 market yards, of which 54 had infrastructure such as covered yards, godowns and administrative buildings, weighbridges, and processing as well as grading units.
•  With no revenue to maintain it, that infrastructure is now in a dilapidated condition.
•  A study by the National Council for Applied Economic Research reported increased volatility in grain prices after 2006.
• Most of the farmers surveyed reported high storage costs at private warehouses.
• Farmers this year in Bihar received lower price for maize compared to the farmers in states with APMC.

Lessons from Bihar

• The Bihar experiment has important lessons for future marketing reforms in agriculture.
• The benefits of these reforms will only accrue to farmers if they are accompanied by private investment in creating the physical infrastructure and institutional mechanisms needed to allow for greater participation of farmers.
• The record of states on attracting private investment isn’t much better.