Understanding Budget’s Makhananomics: Why Finance Minister Sitharaman announced creation of ‘Makhana Board’ in Bihar

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What is makhana?

Known in English as fox nut, makhana is the dried edible seed of the prickly water lily or gorgon plant (Euryale ferox), a species which grows in freshwater ponds across South and East Asia. The plant is known for its violet and white flowers, and massive, round and prickly leaves — often stretching more than a meter across.

The state of Bihar contributes to roughly 90% of India’s makhana production. “Makhana crop is grown in almost 15,000 hectares in Bihar which produces nearly 10,000 tonnes of popped makhana,” a 2020 paper by Indian Council of Agricultural Research said.

Production is concentrated in nine districts of northern and eastern Bihar — Darbhanga, Madhubani, Purnea, Katihar, Saharsa, Supoul, Araria, Kishanganj and Sitamarhi — which fall in the so-called Mithilanchal region. Of these, the first four districts mentioned contribute to 80% of Bihar’s makhana production.

Outside Bihar, the crop is cultivated in smaller quantities in the states of Assam, Manipur, West Bengal, Tripura and Odisha, as well as in Nepal, Bangladesh, China, Japan, and Korea.

Makhana has culturally been part of Hindu rituals for centuries. Of late, however, it has gained popularity as a ‘superfood’ for its rich nutritional properties — makhana is nutrient-dense, low-fat, and an ideal “healthy snack”, experts say.

The global makhana market was valued at $43.56 million in 2023, according to market research firm Spherical Insights. With a market growing at a CAGR of 8.31% from 2023-33, it is expected to reach $100 million by 2033, the research firm predicted.

Why is the announcement in the Budget significant?

Despite being the largest producer of makhana, Bihar has not been able to harness its growing market. This is exemplified by the fact that despite Bihar producing 90% of the country’s makhana crop, the largest makhana exporters in India is Punjab and Assam. Punjab does not even produce makhana.

This is because Bihar neither has a developed food processing industry, nor required export infrastructure. In fact, not a single airport in Bihar has a cargo hold.

“Thus, Bihar ends up selling all its fox nuts as raw material to FPUs (food processing units) outside the state at cheap prices. These FPUs add value to the product through flavouring and packaging, and thus command better prices,” a senior bureaucrat in Bihar told The Indian Express on the condition of anonymity.

“Additionally, since the market in Bihar is not well-developed and organised, there is a long chain of intermediaries leading to those engaged in fox nut farming getting very low prices compared to what makhana commands in the commercial market. Thus, neither the farmer, nor the state — in terms of revenue — earns what they actually can,” the bureaucrat said.

Low productivity is another major problem in makhana cultivation in Bihar. Currently, cultivating makhana is an extremely arduous and labour heavy process, which pushes up the overall input cost.

Seeds are sown in standing water bodies — such as ponds in the Darbhanga-Madhubani belt and open fields with one foot deep standing water in the Supaul-Kishenganj belt — and harvesting is done manually by diving to the bottom of the water body. Subsequent processing of makhana — from cleaning and sun drying the seeds, to roasting and finally “popping” to produce the form in which they are consumed — too is manually done.

Moreover, farmers have been slow to adopt high yield varieties of fox nut seeds developed by agricultural institutes, such as Swarna Vaidehi and Sabour Makhana-1. According to the 2020 ICAR paper, traditional farming practices have a production capacity of 1.7-1.9 tonnes per hectare, far lower than the 3-3.5 tonnes per hectare that the HYV seeds can give.

“More awareness needs to be created among farmers to adopt better seeds,” the bureaucrat said. He added, however, that “attempts at mechanising the harvesting process have not worked” because “the industry has not been able to come up with an efficient machine”.

How exactly can having a Makhana Board help?

Sources in the Bihar government said that the state needs a robust food processing industry, along with strong chains of storage facilities, an efficient market, and an export infrastructure.

The Makahana Board, which has a budget of Rs 100 crore, is expected to provide training to farmers, making them export-oriented, help create an ecosystem that brings investments in the food processing sector, and help create required export infrastructure.

According to JDU Working President Sanjay Jha, the state government expects to create the right ecosystem for food processing units through the Makhana Board, and a food processing institute the government has announced.

“Then the airport at Patna is being expanded. Very soon the Purnea and Darbhanga airports will be fully functional. All these will have cargo holds. This will facilitate exports,” he told The Indian Express.

A senior Bihar bureaucrat, however, said that a lot will depend on how much money the governments, both the Centre and the state, are willing to spend, and how much interest they take in realising the potential of the food processing sector in Bihar.

Earlier attempts to this end have not been very encouraging. In 2002, the government set up a National Research Centre for Makhana under ICAR in Bihar. Till July last year, the Darbhanga-based centre had only 10 employees against a sanctioned strength of 42. There was no administrative staff, and a full-time director was never appointed.

What is the political significance of this announcement?

With months to go for the Bihar legislative Assembly polls, the announcements will help Nitish Kumar offset some of the criticism he has faced over his failure to imagine Bihar’s economic growth beyond the roads and power supply. Unemployment and migration were among key issues in Bihar during the recent Lok Sabha polls.

Last year, the Bihar government had asked for an MSP for makhana from the Centre.

Additionally, the announcements are a direct signal to a politically significant community of Mallahs in the state. The farming and harvesting of Makhana is almost entirely done by the Mallahs (fishermen and boatmen), who are also among the most impoverished communities in the state.

Although accounting for only 2.6% of Bihar’s population, Mallahs are concentrated in the riverine belts of North Bihar, where they can command a voteshare of more than 6%. The community has historically sided with social justice parties since the JP movement. In recent years, however, they have been wooed by all parties in successive elections given that they are also an assertive caste who can get other lower castes to rally behind them.

In a closely fought election, the NDA would want them on its side. “It will not only give much needed impetus to the makhana industry in Bihar, but also help its farmers who come from the impoverished community of fishermen. Since it is a labour-intensive industry, it will also create jobs for the community,” Jha told The Indian Express.

At the moment, some 10 lakh families in Bihar are involved in the cultivation and processing of makhana.