In 2006, the Bihar government deregulated the agricultural sector, and largely removed government oversight over food grain procurement. Previously a majority of food grain procurement happened through the Agricultural Produce Market Committee, a marketing board run by the state government that would organise mandis—wholesale markets—where farmers could directly sell their produce to the Food Corporation of India or the State Farming Corporation at the established minimum support price. The MSP is a price guaranteed by the government to protect farmers from market fluctuations. In 2006, Bihar replaced this system with Primary Agriculture Credit Societies, panchayat level societies that would serve as a middleman in food grain procurement. PACS buy food grain from farmers and sell it to the FCI, SFCs or to private wholesalers. The three recent farms laws, share a similar procurement framework with Bihar after 2006, in the fact that the state does not bear the onus of buying excess grain directly from farmers at the MSP. After the passing of these laws, several leaders of the Bharatiya Janata Party said that Bihar’s experiment with PACS gave farmers economic freedom and increased their revenues. Accounts from Bihar bely this claim. Several farmers and presidents of PACS I spoke to from Bihar told me that wheat and paddy farmers were now getting far lower incomes than they did under the APMC system, due to the involvement of private mills, the inability of government agencies to pay their bills on time and poor planning by state agencies.
During the recent protests against the farm laws, BJP leaders have frequently cited Bihar’s agricultural deregulation as a success story that must be emulated across the country. On 13 December 2019, the BJP organised the Kisan Chaupal Samellan—farmers’ conference—at the Bhaktiarpur locality of Patna in Bihar, to assure farmers that the three new laws would not negatively affect them. The Krishijagran—an agriculture focussed regional magazine—quoted Sanjay Jaiswal, the state’s BJP chief. “Those misleading the farmers are trying to use the shoulders of farmers for their own political agendas,” he said, during the conference. Further, the magazine also quoted Ravi Shankar Prasad, the union law minister. He assured farmers that “the MSP and therefore the mandi system will continue under the new laws,” and that the new laws, “aim at improving the economic conditions of farmers by providing them direct benefits of their agro products sale without the involvement of middlemen.” Both speakers said that Bihar’s agricultural track record following the 2006 abrogation of the APMC’s proved this. The Deccan Herald quoted Prasad as saying, “The laws give the farmers opportunity to sell their produce either in mandi or in PACS or outside the realm of mandi, PACS or Vyapar Mandal … I just want to ask whether or not farmers be given such freedom or opportunity.”
Contrary to Prasad and Jaiswal’s faith in the PACS, farmers and PACS’ presidents in the state told me that the system had several major lacunae and often led to farmers making distress sales at very low prices. In contrast to the “freedom” Prasad claimed the system gave, farmers often felt like their prices increasingly depended on government machinery that was slow, corrupt and often forced them to sell their produce far below the state’s MSP. The new system also has new middlemen including millers, local merchants and PACS presidents, some of whom are viewed by farmers as being corrupt.