Bihar's Agricultural Productivity Surges Amid Stagnant Public Investment and Market Infrastructure Challenges

Bihar's agricultural sector has experienced substantial productivity gains over the past two decades, even as the markets and public budgets meant to sustain these gains have lagged behind. Between 2004-05 and 2024-25, rice production in the State increased by 236 percent, wheat production by 120 percent, and coarse cereal production by 266 percent. These increases were primarily driven by rising productivity rather than an expansion of cultivated area, reflecting long-term investments in quality seeds, irrigation, farm technology, and extension services.

Sugarcane, fruits, and vegetables have followed a similar path of intensification. Sugarcane production rose by 195 percent, fruit production by 68 percent, and vegetable production by 25 percent. In particular, Bihar has emerged as a leader in specific high-value crops. The State accounts for 85 to 90 percent of India's makhana output, concentrated around Darbhanga and northern wetlands, and now holds a GI tag for Mithila Makhana alongside a dedicated National Makhana Board. Furthermore, mushroom production more than doubled between 2021-22 and 2023-24, making Bihar the country's largest mushroom producer.

However, the story is markedly different for pulses and oilseeds. Since 2004-05, the area under pulses has declined by 32 percent, resulting in a 16 percent drop in production. Oilseeds have shown a similar contraction, with cultivated area falling by 19 percent while production rose by just 6 percent. For smallholder farmers, these crops remain high-risk and low-return without assured procurement mechanisms and remunerative pricing.

A major structural challenge lies in the State's marketing system. Following the repeal of the Agricultural Produce Market Committee (APMC) Act in 2006, the anticipated private investment in scientific storage, grading, and processing did not arrive at scale. As a result, many surviving APMC yards function under government administrators, while an unorganized network of wholesale markets and intermediaries has expanded, often eroding price realization for farmers.

Efforts toward course correction are underway through both public and institutional channels. Between 2021 and 2024, the State government completed the renovation of 12 strategic market yards at a cost of approximately ₹748 crore. Concurrently, organizations like the Bill & Melinda Gates Foundation, through Microsave Consulting and the JEEViKA program, have helped establish farmer producer organizations and cooperatives, linking them to digital platforms like e-NAM.

Fiscal data, however, highlights ongoing challenges in public commitment. Bihar's agricultural budget allocation has declined from 3 percent in 2016-17 to an estimated 2.6 percent in 2026-27, with a compound annual growth rate of -1.42 percent over the decade. This contrasts with peer states such as Chhattisgarh, where agriculture's share of the budget rose from 12.6 percent to 17.9 percent over the same period.

Experts suggest that future policy actions should focus on correcting budgetary commitments, implementing cluster-based diversification aligned with regional agro-climatic zones, and strengthening value chains through local institutions and digital market linkages.

"Bihar's agricultural sector demonstrates how productivity can thrive on the resilience of smallholder farmers even when institutional and fiscal support lags behind. However, long-term economic sustainability requires more than raw output. To capture true market value, the state must address its infrastructure gaps, modernize supply chains, and align public spending with regional agro-climatic strengths. Bridging the gap between farm-gate production and organized markets is essential for rural economic growth." — Dr. Shishir Gupta, Founder & CEO, StartupLanes