Market Shifts Middle Ground

This is a paradigm shift for farmers—from a system prevalent particularly in Punjab, Haryana and Western Uttar Pradesh since the beginning of the open-ended, assured procurement of foodgrain (especially wheat and paddy) at the minimum support price (MSP) in the mid-1960s, to another based on direct benefit transfer (DBT), that entails payments only through the accounts of farmers. The Centre asked all states to adopt DBT, and now Punjab, after some initial reluctance, has joined Haryana and UP in implementing it. This has changed things drastically for Punjab’s 10.53 lakh farmers as well as its 33,000 arhtiyas (commission agents or middlemen). The new system has been adopted even as farmers, largely from Punjab and Haryana, are protesting on the borders of the national capital against three farm laws passed in Parliament last year. The protestors say these laws are detrimental to the interests of farmers.

In 2011, Sukhpal Singh, professor of economics in Ludhiana-headquartered Punjab Agricultural University, did a study on the non-institutional debt of farmers in Punjab. Loans from arhtiyas formed a major chunk of that debt. He suggested that the system be changed so that farmers get payment directly for their produce and the problem is weeded out. Now that DBT has been implemented, the professor says things are not quite encouraging. “Though farmers are happy getting payments directly in their accounts, this change should not become part of a long-term design aimed at implementing the three farm laws that farmers oppose,” says Singh, adding that an initiative of implementing mandatory farad (property documents) at the time of sale of farm produce is ready and the Centre has conveyed to the Punjab government that there would be no extension beyond the upcoming kharif (paddy) procurement.

Leaders of the protest against farm laws, who represent various farmers’ unions, had sought postponement of the implementation of DBT. The Centre refused to allow the Punjab government any further extension and insisted that the state implement it from the current rabi season. When the arhtiyas threatened to go on strike, CM Captain Amarinder Singh intervened by offering to allow them to keep track of direct payments made to farmers on the public finance management system (PFMS), the portal through which the payments are made. In the earlier system, the entire payment of the crop used to be given to the arhtiyas, who were supposed to subsequently pass it on to the farmers. The government funds thus handled by the arhtiyas ran into thousands of crores, as procurement cost at MSP for two crops—rabi (wheat) and kharif (paddy)—in 2020 touched Rs 60,000 crore. RBI sanctions these funds for procurement of foodgrain through a system of cash credit limit (CCL). Before passing on the payments, the arhtiyas used to deduct the amount the farmers had borrowed from them. The system of deductions adopted by arhtiyas has always been a matter of debate.

Insiders in the government department reveal that problems are coming up because arhtiyas have not welcomed the new system wholeheartedly. Arhtiya association president V.K. Kalra admits that the section of society he represents is feeling low after the curtailment of their powers. “Yet we will continue to support the procurement system,” he says. The Centre has announced that it would continue to pay farmers Rs 46 per quintal for supporting procure­ment. Earlier, according to reports, arhtiyas were getting nearly 2.5 per cent of the total MSP disbursed to farmers. According to Kalra, procure­ment was carried out in a smooth manner because of the age-old relati­ons between farmers and arthiyas. “There are 1,850 mandis in the state and the arhtiya system was crucial to procurement at that scale. Time will tell how things change,” he adds.

Tarlochan Singh (48) of Rupnagar district’s Bhurara village and Dalip Singh (39) of Patiala’s Neelpur village are among the beneficiaries of DBT in Punjab. “Why wouldn’t I be happy? I am excited for having become the first beneficiary of the scheme in the state,” says Tarlochan, whose account was credited with Rs 1.58 lakh two days after wheat procurement started on April 10.He owns 10 acres of agricultural land and has sold only a portion of his produce. “I got the payment within 48 hours of selling my wheat produce in the grain market. Earlier, this used to take 7-10 days. But it has come with an added responsi­bility as now I have to manage the funds myself. The arhtiya, who used to do it in the past, won’t be doing it anymore. Now we have to be careful about our expenditure as we do not have anyone to fall back on. We will get used to the new system,” says Tarlochan.

Procurement was delayed by 10 days due to the Covid pandemic. The Punjab food and civil supplies department, which procures grain on behalf of the Centre through its four procurement agencies—Pungrain, Punjab State Warehousing Corporation, Markfed and Punsup—is expecting arrival of 130 lakh tonne of wheat for procurement. The Centre’s Food Corporation of India, which drives the national public distribution system (PDS), also does procurement in the state.

“Punjab has received a CCL of Rs 21,000 crore for procurement and we have made DBT payment of Rs 7,200 crore to about 2.25 lakh farmers in the state so far. I think it is going on at a steady pace,” says an official of the state department, adding that 75 lakh tonnes of wheat has reached the mandis.

Dalip Singh says he feels empowered, as the old system has finally changed. “The arthiyas used to delay payments to farmers for weeks and sometimes months, and it led to overcharging and fleecing. There is no fear of being fleeced now. The commission agents should not be worried as the age-old farmer-arhtiya relationship is here to stay. Farmers have reposed faith in the arthiyas for decades. It’s just that the tables have turned now,” says the 39-year-old, who got Rs 1.48 lakh in his account as price of his produce.

Punjab food and civil supplies minister Bharat Bhushan Ashu says the new system has been launched in the state successfully and hiccups, if any, are being removed. “We are happy to implement the new system. We were already making payments to the farmers through this system via the arhtiyas, but now the payment is going directly,” says Ashu. The Union food and PDS ministry has access to the system through the PFMS portal and continuously monitors its progress.

Nek Singh, a resident of Khokh village, has been farming for almost 55 years. Happy about receiving the payment for his produce directly in his account, he is nonetheless apprehensive on a number of counts. “Direct payment for wheat and paddy is alright, but how would they pay for basmati, cotton, groundnut, pulses and other crops for which the MSP is announced but never paid? For these crops, trading takes place in mandis through the arhtiyas,” he says, adding that there is also mismatch between bank account details and names of farmers in many cases, which need to be rectified.

By G.P. Singh in Chandigarh