To farmers’ rescue

Print edition : March 07, 2014

At the Azadpur mandi in New Delhi during a protest against the circular issued by the Agricultural Produce Marketing Committee. Photo: PTI

Wholesale vegetable traders and daily wage labourers participating in a protest organised by Chamber of Azadpur Fruit and Vegetable Traders in New Delhi on February 3. Photo: Sushil Kumar Verma

The Delhi government gets tough with agents at vegetable wholesale markets who charge farmers a 6 per cent commission for selling their produce.

IN a bid to control the prices of essential food commodities, especially vegetables and fruits, the Delhi Agricultural Produce Marketing Committee (APMC), which is controlled by the Delhi government, issued a circular in the first week of February preventing commission agents from charging 6 per cent commission from farmers for selling their produce in the mandis (government-run wholesale markets). The order is seen as an important step in protecting farmers from exploitation at the mandis, which are largely controlled by a trader-commission agent nexus. Azadpur in Delhi is home to Asia’s largest vegetable wholesale market. The capital has a few smaller mandis, too. The APMC order is expected to bring relief to a significant number of farmers who directly or indirectly sell their produce in the wholesale market.

Unhappy with the order, traders and commission agents called an indefinite strike demanding its revocation. However, they withdrew the strike after the Aam Aadmi Party (AAP) government threatened to invoke the Essential Services Maintenance Act (ESMA) against them. ESMA is a regulatory Act which gives overriding powers to a government to arrest people if it feels that essential services are being disrupted at the behest of an interest group.

The circular, issued on the instruction of Development and Labour Minister Girish Soni, follows a Delhi High Court order in October 2013 directing the APMC to ensure that the commission was charged from the purchaser and not the seller. Responding to a petition filed by the Himachal Pradesh government and a few farmers’ associations, the court noted that since farmers were the most vulnerable group in the agricultural production chain, charging commission from them was an exploitative process. The Delhi government said it was only implementing the court order when it issued the circular.

The agents, however, feel that such changes in business practices could lead to further price rise as they shift the burden to the purchaser, in this case the wholesale dealers of fruits and vegetables. Since the Azadpur mandi is the largest in Delhi and the country, the protest there is the loudest. “Over 2,500 trucks of fruits and vegetables come to the mandi every day. At present, the annual turnover of the mandi is of Rs.6,500 crore. Following the new decision, the burden of close to Rs.400 crore will be on the consumers of Delhi,” said Metha Ram Kripalani, president of the Chamber of Azadpur Fruit and Vegetable Traders.

Smaller mandis are not keen on going against the order. “We are also against the decision but we should have approached the Supreme Court within three months of the High Court’s order. We did not do that. Now there is no point in going on strike. We should find a legal way out,” said a senior member of the traders’ association of Ghazipur mandi.

The implications of such an order can be understood from the way the mandis work. The concept of mandis originated during the colonial period and was meant to provide fair prices to farmers who could directly sell their produce to the purchaser. This platform was strengthened after Independence. The government appointed agents so that they could help farmers find buyers through a system of auction.

Over a period of time, however, the arthiyas, or agents, who were supposed to charge commissions from the purchasers started giving credit to the farmers, most of whom depended on advance money to raise crops. The agents became moneylenders. This system grew exploitative as the agents, through the credit system, made the farmers bound to them and at the same time expanded their network among farmers. This is how a system of credit encouraged a form of bonded labour. “Debt is a way to keep the farmer bound. Usually, a farmer is poor. Agrarian crisis over the last two decades has deepened a farmer’s woes. When an agent gives advance money to a farmer, he also ensures that the farmer sells his produce only through him,” said Sudhir Panwar of Kisan Jagriti Manch, a farmers’ association.

In the course of time, this advance money began to be channelled to the farmers by big purchasers of the mandis through the agents. The agents established networks among farmers in different rural pockets, and the purchasers relied on them. And since the agent directly passed on the purchaser’s money as advance to the farmers, he took 6 per cent of the farmer’s profit as his commission apart from the commission he got from the purchaser. In the process, what was supposed to be a fair-price platform for the farmer became an exploitative, top-heavy system run by the trader-agent nexus.

In the credit-ridden economy of the mandis, the agents justify the commission taken from the farmers. “All our trade happens on the basis of trust. There is not much dealing in cash. Udhar [credit] is the norm. In this chain, only the farmers get paid in cash. Should we not charge them for that?” asked Parvesh Kumar, a commission agent in Azadpur.

However, the farmer is the lowest in the hierarchy of this agricultural production chain. In this system of debt, he can hardly bargain for a better price as his purchaser is fixed. Eventually, he gets the minimum profit. The purchasers dictate both prices and profits in the trade. Therefore, the claim of the traders and agents that the new order will shift the burden on to the consumers is misplaced.

“The farmers need cash to survive. That is why the agents pay them in cash to sustain their link with the farmers. The traders do not want to compromise on their profit margins at all. The fact is that a farmer earns not more than Rs.40,000 a year in any crop. Charging 6 per cent from that is absolutely unjustified,” said Rajendra Kumar Sharma, former president of the APMC.

The Delhi Agriculture Marketing Regulation Act (1988) acknowledges the credit system. It says that an agent can charge a maximum of 15 per cent interest a year in case he gives advance money to the farmer. However, in the present system, an agent charges 6 per cent in every deal the farmer has with the agent, and not on an annual basis. “This is nothing but loot. A farmer growing perishable items like vegetables and fruits generally has around 10 deals with the agent every year and he has to shell out 6 per cent every time as commission,” said Sharma.

Therefore, a clamour for some form of state control over perishable items, until now outside the purview of the State, is growing among the farmers. “A transparent system of pricing by a government body must be instituted for perishable items. Probably a body like Agmark, which brands and controls the price of foodgrains, can be asked to do that. Otherwise, the prevailing system will deprive the farmers of their dues,” said Panwar.

The demand is justified as traders and other big businessmen have groomed the mandi system in their favour by manipulating the farmers, who enjoy no immunity despite putting in the largest share of work in the agricultural chain. The Delhi government’s order, therefore, provides some relief to the farmers but it remains to be seen whether it can be implemented properly, considering the resistance it will face at every stage of the trade.