Thread by @avinash_shahi

1/n Everyone is using Bihar as an example of the negative impact of such deregulation—without much data or analysis of what happened. Government of Bihar abolished the APMC Act in 2006. Abolishing the APMC Act changed little in Bihar.

2/n >90% of Bihari farmers sell their produce at the farmgate. Mandi regulations matter little to them. There is an interesting case study of wheat growers in Bhojpur by Jeff Wittsoe.

3/n Wittsoe came across large tractor-owning farmers who would lend their tractors to aadhatias, but not take their produce to the market themselves.

4/n The Mandi price data shows that the abolition of the APMC Act even helped Maize growers in the early years. The farm harvest prices (FHP) increased marginally in Bihar after 2006 compared to the other maize growing states.

5/n Small and large private companies could get maize procured by local traders delivered straight to the Railway Godowns. Harish Damodaran has written about it.
The FHP of paddy, however, went down. I am not sure why.

6/n Hardly any paddy (~1-1.2 million tons) paddy is procured in Bihar and that too not in Mandis.
Bihar’s experience also shows that the deregulation, by itself, does not lead to a boom in private investment in market infrastructure or formal contract farming, etc.

7/n The deregulation of wholesale markets is a positive step, but we do need increased public investments in Agri market infrastructure.

8/n More than regulations, we need large public investments in market infrastructure to reduce the transaction cost of trading and to create more competitive markets. Bihar needs this investment more than most other states.

n/n The Old AMPC Mandis in Bihar are in terrible shape. Bihar's Mandis are a good example of how a complete withdrawal by the state may not always spur private initiative to maintain public or even club goods. Maybe Bihar is South Italy.