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CROP PAYMENT
Prompt payments in other states |
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CROP PAYMENT
For
50-year-old Kuldip Singh of Tibbi Jatana village in Mansa district the going was good. The land was fertile, he had a family and, above all, he had the pride of being a village ‘numberdar’. But that was till cotton — often referred to as white gold — started failing him. Instead of accompanying villagers to revenue courts as numberdar, he was often seen pleading with his ‘arthiya’ for loans. After the crop failed on account of American bollworm for successive seasons, his debt piled up with an exorbitant interest. And then the inevitable happened. The much feared arhtiya — or commission agent — came with his men and not only took away all the wheat stored in the house but also his tractor. This was an insult a proud farmer could not take, and he took the ‘only way out’ that others before him had chosen — he consumed a pesticide, leaving behind parents and young children to fend for themselves. This is a tale from 2000. But the shocking pattern continues. Even as the Green Revolution story loses the plot in Punjab, the state’s farmers continue to be burdened by the blight of the arhtiya, who has come to be the arbiter of their existence. India is the only country in the world, and Punjab the only state in India, where a farmer is barred from selling his produce in the open market at the prevailing price. By law, he has to do so to the commission agents only, as mandated under the Agriculture Produce Marketing Act, 1961, which is still in force. From this law the arthiya draws his immense powers. He can fulfil farmers’ productive and non- productive needs. Strengthening the arhtiya in his exploitation of the farmers a la feudal days is the British era Punjab Registration of Money Lenders Act, 1938. The Act is so lax that today commission agents can only snigger at it when asked how they are controlled by it. They can simply bribe their way out if accused of exploitation, and raids by officials — mandated to check their books once a year — are unheard of. That successive governments have been only interested in tapping into the powerful and cash-rich arthiya lobby for election funds is apparent from the fact that no genuine steps have been taken to repeal or modify the Act. The present SAD-BJP government paid lip service in 2009 by setting up a committee to look into how direct payment to farmers for their produce could be made by government procurement agencies. No concrete steps have been taken. In the meanwhile, commission agents continue to act as the custodian of the produce and sale proceeds because all procurement happens through them and the payment from procurement agencies reaches the farmer through them too. This indirect system of payment puts the cash in the hands of the arhtiya, which he leverages to exploit the farmer.
The money lending Giving the agents complete hold over farmers is their parallel business of money lending. Between sowing and harvesting, any time a farmer needs money, the arhtiya is happy to provide a loan, albeit at a high rate, which would be higher if it is for a wedding. After the harvest, the first thing the arhtiya does is to deduct the debt and interest from the payment due for the produce. Among the tools and tricks used by the agents to exploit farmers are blank papers and promissory notes they make them sign, non-issuance of J-Form (which records the quantity of crop and market fee due), high rate of interest, the ‘damami’ charge, slip mechanism, and multiple licences for businesses. The most sinister of these is the damami system. It was especially prevalent in the cotton-growing Malwa belt during from 1997 to 2003, the period when cotton crops failed frequently. Arthiyas not only collected the interest on the previously loaned amount but also on the projected commission they had lost on account of crop loss. Distressed farmers would even be forced to foot the tea and liquor bills of the agents.
Loans of distress As the input costs of farmers increase and relative returns diminish, they often find themselves in need of loans. Toward this, the Central government claims it is increasing by a certain percentage the amount set aside for farm loans. This year’s budget has earmarked Rs 7 lakh crore under the farm loans subsidy head to enable farmers to avail cheap loans at per cent. The ground reality, however, is very different. Not finding loans reaching farmers, certain farm organisations investigated the matter and found that rural road building companies, non-banking finance corporations and even rural moneylenders had been clubbed under the same head. This facility is being exploited by moneylenders, who work their way through the system to secure the loans available at 4 per cent. This money they use to finance farmers, charging them interest rates as high as 40 per cent!
Pound of flesh The sway the arthiya lobby holds with the political rulers is apparent from the fact that they have managed to get their commission increased from 1.5 per cent in 1961 to the present day 2.5 per cent (ad valorem). As per official figures, there were 20,232 registered arthiyas last procurement season. It is estimated each of those arhtiyas earned around 5.3 lakh per season. A few years back, the arhtiyas were seeking an even further increase.
Counting misfortune Rs
6,427 crore The amount arhtiyas are estimated to have pocketed since 1990. Rs
35,000 crore The total farmers’ debt in Punjab estimated by the National Sample Survey Organisation (NSSO), which says the state’s farmers are the ‘most heavily’ indebted in India. 10 lakh Total farming families in Punjab, which means the average debt per family works out to Rs 3.5 lakh. 38 Percentage of all the loans of farmers owed to commission agents in Punjab. 25 Percentage of debt-hit families that have sold their land.
Muddle over suicides
5,000 The number of farmers Punjab Agricultural University estimates have committed suicide in the past 10 years. In 2008-09, nearly 3,000 farmers were estimated to have committed suicide in Sangrur and Bathinda. However, a recent state-commissioned report by PAU reports only 2,890 suicides in Bathinda and Sangrur between 2000 and 2008, thus playing down the issue. 1,738 Suicides recorded by MASR in 91 Punjab villages between 1988 and 2010, out of which 91 were from just two subdivisions of Sangrur. 50,000 Suicides estimated by MASR across Punjab over the past two decades. It says not all districts are equally affected. 90,000 Suicides estimated by the BKU (R) between 1990 and 2006.
The problem
The solution
point
‘Govt’s direct payment plan a farce’ The present government’s attitude, he says, can be seen in the advertisement given by the Mandi Board asking the farmers who want direct payment to submit an application with their bank account numbers 45 days before the commencement of the procurement season. However, the ad was issued just 15-20 days before the season started on October 1. Sukhdev Singh says arthiyas prey particularly on marginal farmers. Besides high interest, he alleges farmers are also made to hand over blank signed cheques to the commission agent so that any subsidy or benefit accrued to the farmer may be encashed by him, at times even without the knowledge of the beneficiary. There is also little relief available in courts. While the courts accept the account books of arhtiyas as valid proof of loans taken, they give no relief when it comes to the high interest rate of compound interest levied. The reason: there is no specific law to penalise such high interest rates.
He cites the example of an arthiya of Andana village in Sangrur who started off as a commission agent with just 5 acres of land, but is today the owner of 125 acres.
counterpoint
‘A time-tested system’ Explaining the challenges involved in direct payment, he says nearly 70 per cent of the farmers in Punjab are under-matriculate, and would not understand the basics of the system, such as accessing their accounts online. Also, a government cannot provide services provided by the arthiyas. Moreover, the reluctance of the Centre to not increase the minimum support price (MSP) of crops and pulses in keeping with the price index indicates it wants to do away with the procurement policy and facilitate the entry of MNCs in this business. A proposal to allow private players to set up private procurement yards in Punjab was discussed in the Cabinet meeting before the last Assembly session, but the matter was kept in abeyance, he says.
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Prompt payments in other states
But
for Punjab, the majority of states do not have commission agents, largely because very little government procurement takes place there. The produce is purchased by traders through middlemen who visit the farms and strike a bargain. Although that system is far from perfect, and farmers are at the mercy of the traders for the price, they are assured of payment on the spot. The system of direct payment from government agencies, however, is working perfectly in Maharashtra and Tamil Nadu. Maharashtra has taken the lead in enacting the Maharashtra Money-Lending (Regulation) Act, 2010, which provides for a penalty of Rs 50,000 and five-year imprisonment for illegal money lending activities. Gujarat too has brought in an Act to this effect, but it is yet to be notified. As for providing loans to farmers, the entire amount budgeted for farm loans should be routed to farmers through cooperative banks and other financial institutions in letter and spirit at low interest rates. A functional network of cooperative societies exits in most villages of Punjab, which can be used for the purpose. In his award winning book, “Taking More Than a Commission: A Critique of the Commission Agent System in Punjab Agriculture”, Dr Sukhpal Singh of Punjab Agricultural University says farmers have to submit to the exploitive commission agents because of lack of alternatives for casual credit. He suggests alternative systems like direct state procurement and cooperative marketing should be developed. Secondly, the assessment of loans should be made on the basis of the market price of their land and not an arbitrarily fixed value of the land. There were certain useful elements in the Punjab Alienation of Land Act, 1900, enacted by the British that may be picked up. As per the act, professional money-lenders could not dispossess a farmer of land held for more than 20 years; a farmer’s plough, cattle, tools and seeds could not be attached to the loan; a farmer could sue; the interest on the loan could be re-examined and potentially reduced in court; and ancestral land was not liable for the farmer’s debt payment unless the debt was charged upon it. Dr Sukhpal Singh says a simple and effective way out is to readopt the law.
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Sukhdev Singh Kokri Kalan of the Bharti Kisan Union (Ugrahan), the most active farmer union that claims to have no political affiliation, says the outfit was the first to raise the issue of direct payment to farmers. He says the arhtiya system is ruining thousands of farmers’ lives every year, but no government has paid heed.
IS Jaijee of the Movement Against State Repression (MASR) says they have been demanding repealing of the Act and indirect payment to farmers but to no avail. There is only lip service to the cause of the affected farmers during an election year, but things continue as always once poll results are announced.
BS Rajewal of the BKU (Rajewal), one of the splinter farmer outfits, is perhaps the only farm leader supporting continuation of the arhtiya system. He says we should not rush to dismantle a system that has stood the test of time. While he admits there are no commission agents in Punjab licensed under the Money Lenders Act per se, but we can evolve a mechanism to regulate them as is being done in other states.