Pushing for private mandis

Ruchika M Khanna

A recent amendment to the Punjab Agricultural Produce Markets (General) Rules, paving the way for privatising mandis, threatens the state’s well-established marketing system. Farmer unions are up in arms at what they see as an attempt to corporatise agriculture in Punjab. The new rules allow for setting up of special and private market yards, besides kisan mandis (producer market yards) by private entities, anywhere in the state.

Balbir Singh Rajewal, president of the Bhartiya Kisan Union (Rajewal), says this move clearly indicates the government’s inclination to outsource agriculture marketing to corporate houses. “Their only motive is profit-making. All the facilities that the farmers get in the mandis operated by the state government for free will be charged in the private market yards. As the farmers’ income is already shrinking, this step could make it worse for them. What is the need for the government to privatise this system since it is already so well-established?” he asks.

It is not just the agriculturists who are alarmed at this move. A political debate on the issue is expected in the coming days. A meeting of all stakeholders, including MLAs from various political parties, has been called soon to debate and discuss how the move could turn out to be exploitative for the farmers, who have threatened to oppose it.

On their part, government functionaries say it is a step towards reforming agriculture. “Contrary to popular opinion, the real crisis in agriculture does not stem from poor farming practices, but because of a deficient marketing, supply and distribution chain. Through this move, we are hoping to get private funds for creating better infrastructure in mandis,” says a senior agriculture department officer.

Lal Singh, chairperson of the Punjab Mandi Board, says though the state government amended the rules to create private market yards under pressure from the Centre, it will be a good initiative. “The farmer will benefit as he will get better infrastructure in the private mandis,” he adds.

Another amendment to the Rules pertains to making direct payment to farmers, bypassing the arhtiya. The move is aimed at financially empowering the farmer and reducing his dependence on the arhtiya. The latter acts as a private money-lender to fulfil all farm and non-farm credit needs of the land cultivators. ‘Arhtiya te kisan da tan nau-maas da rishta hai. Eh tan tut nahin sakda (the relationship between a farmer and a commission agent is like that of nails and flesh… it cannot be broken).’ This has been the rant of the powerful lobby of commission agents, arhtiyas or kacha arhtiyas, as they are better known as, every time they feel threatened by an attempt to curtail their powers. Politicians across party lines have shied away from endorsing direct payment to farmers. After all, arhtiyas provide financial muscle to political parties in the state. In recent years, Punjab has been reluctant to support the Centre’s push for direct payment to farmers.

Direct Payment to farmers

The Punjab Government has finally brought in a system for giving direct payment to farmers for their produce procured by state agencies, with an amendment to the rules concerned. The arhtiyas will continue to get their commission of 2.5 per cent, but they will no longer be the recipient of the money, for further release to farmers, as is the case now. Arhtiyas or commission agents release the payment to farmers after taking their interest/instalment on the loan given to the farmer. The interest that the arhtiyas charge on loans is as high as 18-24 per cent, against the interest rate of 6-11 per cent on loans offered by institutional sources of finance like banks. According to eminent

agro-economist at Punjab Agricultural University (PAU), Ludhiana, Sukhpal Singh, who has spent years studying farmers’ indebtedness leading to their suicide, the total loan availed by farmers from arhtiyas is estimated at 36 per cent of the total agriculture credit market. “The arhtiyas have proliferated in almost all areas of rural economy — they are the money-lenders, sell farm and domestic inputs to farmers and also buy their produce. They not only provide credit for all farmers’ needs, but also push them to purchase things from their own shops (16. 21 per cent arhtiyas do this) or their friends’/relatives’ shops (53.39 per cent do this), thus controlling the state’s agriculture market,” he says.

Rules framed by punjab Agriculture department

• A special market yard can be created in a small enclosure or building within an existing mandi for a particular commodity, such as fish, fruits, vegetables, flower or wood.
• Private market yards can be established and developed, on minimum of 10-acre area.
• Producer and consumer market yard can be set up on minimum 1 acre.
• Kisan mandis have been allowed on minimum 3-acre area, besides the e-trading platforms for spot marketing of notified agriculture produce.
• In special yards, total revenue collected will have to be shared with the government agency where the special market yard is set up.
• In case of all other private agriculture trading platforms, the owner will have to provide all infrastructure: auction platforms, cover sheds, shops, godowns, storage, pre-cooling chambers, packing & grading chambers, electronic display of market rates, along with basic sanitation facilities.
• The private entities will have to be owners of the land where they set up the mandi, or have it on lease for a minimum of 30 years.

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