Farmers clean grain heaps in Punjab mandis. But can they ensure that their pockets are not cleaned by the middlemen?
The loot continues. And it is backed by the Punjab Government.
This time it is the arhtiyas (middlemen) in Punjab. They walked away with Rs 783-crore (or Rs 7,830 million) in 2009-10 for virtually doing nothing. Before you raise your eyebrows, let me tell you that in the past decade Punjab arhtiyas have been paid Rs 6,400-crore as commission and that too for doing nothing.
Punjab arhtiyas play no significant role in procuring wheat and rice grains. An assured market prevails for these staple grains (and also cotton) and all that the arhtiyas do is to provide for hired labour in the mandis. The Food Corporation of India (FCI) routes the payments to farmers through the arhtiyas for which the middlemen get a commission of 2.5 per cent. They deduct all the pending dues of the farmers, and then issue a cheque for the balance amount.
There are about 20,000 arhtiyas in Punjab.
But look at the political clout they wield. A few weeks back, the FCI decided to make a correction and by-pass the middlemen. It announced direct payments to farmers for the paddy harvest that flows into the mandis. The arhtiyas were quick to react threatening boycott of the procurement process that was slated to begin in a few days. They then lobbied with the Punjab government, and reportedly accompanied Chief Minister Prakash Singh Badal to New Delhi. After a couple of days of hectic parleys, the FCI was forced to withdraw the order.
A two-line order by FCI issued on October 5 says: "direct payment order of minimum support price to farmers is kept under abeyance for Punjab and Haryana up to Sept 30, 2011 or till further orders."
In other words, Punjab arhtiyas get an open license to loot the hapless farmers for another year. For 2010-11, the amount to be neatly and quietly pocketed is expected to exceed Rs 800-crore.
This surely is some 'inclusive' growth.
A recent study conducted by a team of economists led by Dr Sukh Pal Singh of the Punjab Agricultural University (PAU) states: "On the basis of The Punjab Agricultural Produce Markets Act, 1961, Punjab Mandi Board had fixed their commission for different crops, including fruits and vegetables. The rate of commission was fixed at the rate of 1.50 per cent of value of farm produce on May 26, 1961 on ad valurem basis. But, commission agents being a strong political lobby, could manage to increase their commission from time-to-time. The rate of commission was raised to 2.00 per cent on April 11, 1990; it was again raised to 2.50 per cent on 22 May 1998 on all agricultural commodities and 5 per cent fruits and vegetables."
"The market charges for long have been the highest in
Punjab. At present the total market charges are 13.5 per cent of the value of the produce; which constitute 4 per cent as purchase tax, 3 per cent as the infrastructure cess on wheat and paddy whereas it is 2 per cent in case of cotton, 2 per cent as market fee, 2 per cent as the rural development fund and 2.5 per cent as the commission for the commission agents. Despite the fact that commission agents do not have any significant role in the procurement of those crops (wheat and paddy) in which assured marketing prevails, they are able to increase their commission from time to time. "
The PAU study goes on to detail the malpractices that middlemen indulge in. It provides an excellent insight into the farming woes. No wonder despite all the half-hearted attention that agriculture is receiving, there is little hope on the farm front. Take a look at what the study says: "The main source of income of the commission agents is not the commission charged on the sale/purchase of crops but the interest taken on the credit advanced to the farmers. An average commission agent advances a loan of Rs 65.74 lakh to farmers. Out of a total debt of Rs 35,000-crores on Punjab farmers during 2008-09, it is estimated that Rs 13,300-crore (38 per cent) is advanced by the non-institutional credit agencies in which commission agent is the major source of finance.
"As per law a person involved in moneylending business must register himself as a moneylender. The Punjab Registration of Moneylenders Act 1938 states that the suits for the recovery of loan could be filed by registered moneylenders with a valid licence. This law laid an obligation on the moneylender to regularly maintain an account for each debtor separately, of all transactions relating to any loan advanced to that debtor. the government prescribed the manner in which accounts had to be kept.
"Moreover, creditor had to furnish each debtor every six months, with a legible statement of accounts signed by the creditor or his agent of any balance or amount that may be outstanding on 30th June or 31st December. But practically, at all levels, there is a violation of this Act. As during our field survey we experienced that among the respondent commission agents not even a single commission agent was registered for the business of moneylending."
I wonder when will policy makers (as well as the farmer unions) are able to emerge free from the clutches of the middlemen. Instead of recovering Rs 6,400-crore that the middlemen have pocketed in the past ten years, the Punjab government has allowed them to fleece the farmers for another year. This is scandalous indeed.
It tells us how a handful of the resourceful (in this case the 20,000 middlemen) can hold the State to ransom. At the national level, over Rs 5,00,000-crores tax exemptions by way of 'revenue foregone' to business and industry is another classic example of the rich pocketing the resources meant for the welfare of the poor. The loot continues.