Coming A Cropper

HOW genuine was the paddy crisis in Punjab? Or that, albeit on a lesser scale, in UP, Orissa and Haryana? Weeks after the Centre announced a Rs 350-crore compensation package for the affected farmers and put their agitation to rest, the skeletons of the crisis have begun to tumble out. What was being passed off as a particularly bad season financially for farmers is now showing all the symptoms of a well-hatched plan between the rice millers and officials of the government food agencies and politicians who made hay while the farmers in panic mode went in for distress sale.

The affected farmers, who sold their paddy for as low as Rs 250 per quintal to private traders against the government-set minimum support price (msp) of Rs 540, are levelling allegations of the procurement agencies being hand-in-glove with the traders' lobby, which traditionally has strong links with the bjp. That the traders—who are also farmers—will now be selling the same rice stocks to the agencies at msp rates has lent credence to the simmering resentment among small farmers.

If Punjab's farmers are crying foul, so are those in western UP, Haryana and Orissa. The general drift of their complaint is that they are being cheated by the trader lobby. After the paddy fiasco, the farmers have now sown wheat but no msp for their produce has been announced by the Union food and civil supplies ministry.

In Punjab, marginal farmers are yet to recover from last season's losses. "We've been cheated like never before. The commission agents charged Rs 10 per quintal, food inspectors had to be bribed at Rs 20 per 50-kg sack and after all this, the trader lifted stocks at miserably low prices—Rs 300 a quintal. When we waited with our paddy stocks in the mandis for 28 days, the government didn't come forward. And now it is buying the same from millers at the standard price," says Roop Singh of Kriti Kisan Union in Galkalan, Moga. The mandis across Punjab echo with such angry outbursts.

According to the state government's estimates, the farmers suffered a loss of at least Rs 135 crore owing to distress sale of paddy to the local traders and rice millers. But going by the personal experiences of farmers, the actual figure could well run into a few hundred crores. Every ruse was used to cheat the unlettered farmer—most have been provided with fake transaction slips by the traders. So, even those who sold their crops at a lower price have slips saying that the deal was struck at msp rates.

Gardeep Singh, grading supervisor at Morinda mandi, confirms that the actual distress sale figures are much higher than those registered at the local mandis. "Morinda mandi witnessed heavy distress sale. The farmers sold their crops well below the msp. The traders often give fake slips and maintain parallel accounts to fudge records."

That officials of the procurement agencies have been raking in the money goes without saying. In the biggest ever crackdown by a state agency, the Punjab State Warehousing Corporation (pswc) suspended 26 of its officials for loss of paddy worth Rs 38 crore from its godowns, six months ago. "During physical inspections carried out at places like Ferozepur, Moga and Patiala, we discovered that paddy was missing from the godowns. The millers had sold it in the open market instead of supplying the rice to us," says pswc managing director Arun Goel.

The distress sale happened in the three-week period before the Food Corporation of India (fci) and five state agencies finally stepped into the market in the last week of September, even as the crop arrived in the local markets as early as the first week of the month. Although the fci's official deadline for lifting the crop starts from October 1, arrival of paddy in the local mandis is advanced by one or two weeks every year. So far, the fci was not hard and fast about the dates in procuring its share from the markets. But this time, it refused to lift the stocks, saying the quality of paddy was substandard. Another reason was that it has already got enough buffer stock in its godowns and lacked space to store additional purchases.

But after a series of state-wide agitations and in the face of pressure from the state government, the fci stepped in and started its procurement, relaxing the damaged and discoloured grain limit from 2 per cent to 8 per cent for farmers.

This decision came on October 15, till when the unsold paddy crop had been lying open in mandis for almost a month. Unseasonal rains discoloured grains further, compelling farmers to go for distress sales where some of them could not even recover their investments. The worst hit have been small and middle-level farmers. "Can you imagine my plight? I was moving from one mandi to other with my stock of 700 quintals of paddy for an entire month to find buyers. But nobody came forward. The traders also refused to buy initially but once there was room for speculation, they stepped in. I sold all my produce for just Rs 465 per quintal to a miller. Now I am neck deep in debt," says Harpal Singh of Rasulpur village of Jagraon.

"We have only jiri (paddy) for survival. Now that despite a bumper crop we have to sell it like discarded fodder, there is no way we can hope for a happy time in coming months. Like some others, we too might have to commit suicide," says a depressed Bant Singh in Malak village of Ludhiana.

For farmers, the paddy harvest this year brought forth the worst side of the notorious nexus between procurement agencies' officials and the traders—most of whom are also millers and protected by local politicians. In fact, the nexus is so deep-rooted that in almost all the grain markets across the state, the two are in a position to speculate the transactions and strike deals to suit their gains.

So while the fci took its own time to make its mind up, the grain markets were rigged by the millers' lobby, which rules the roost in Punjab agriculture. "We paid Rs 13.50 per quintal to the grade inspectors to get our stocks sold. Still, the best rate I was offered from the private miller was Rs 350 per quintal," says Sampuran Singh of village Rattiyan in Moga.

It's obvious the milled rice was sold in the open market by traders in connivance with officials. The extent to which millers enjoy political shelter can be gauged by the fact that police refused to register the fir lodged by the fci against those guilty.

As a last resort, the fci had to take the matter to the high court for "recovery of cost' of the missing paddy. "As a stringent measure, the licences of defaulting millers have not been renewed this time," says Goel.

But the state government gives the millers a clean chit. "Why should the millers suffer on behalf of the farmers? The paddy was of very poor quality and they purchased the same at their own risk and they have to supply us the best quality milled rice. There is no logic that traders should suffer the damage," justifies state food minister Madan Mohan Mittal. But this argument is unlikely to mollify the farmers, who have been rendered penniless after the disastrous glut.



On the other hand, the millers, who made huge profits by inducing the distress sale, impressed upon the fci and finally managed to get a major sop granting them the permission to supply 63 kg of rice per one quintal of paddy to the corporation's stipulated 67 kg. The difference of three kg per quintal is huge for a harvest of about 110 lakh tonnes of paddy.

It has been a win-win situation for the millers. No wonder then that they are heaping praise on the government. "The government has handled the crisis in the best possible way," says Balbir Singh Uppal, the chairman and managing director of the Lakshmi Group, which has the country's biggest rice mill in Khamanon. Ironically, while the food minister is extra sympathetic towards the millers' business prospects, Uppal does not deny the millers benefited from the fci move. "Due to the fci relaxation, for every one-tonne per hour (tph) capacity milling plant, a miller will gain about Rs 6 lakh to Rs 7 lakh. The millers should use this as an opportunity to modernise their plants," advises Uppal, who owns a 65-tph capacity plant.

There is another important signal being sent out by this year's paddy crisis. The fci's reluctance to procure the paddy initially, and its delayed entry into the market, points to the Centre's intentions to de-subsidise food procurement and gradually dismantle the public distribution system. The wto's Agreement on Agriculture stipulates that free market alone will take care of food security concerns.

This implies that in case the government goes for procurement, it will be at market price. So the very concept of the msp, which serves as an incentive and a guarantee for assured price for crops even in case of a bumper harvest, will have to be scrapped. "Free trade in food products and agricultural commodities does nothing to further the survival of farming communities in India, where they form the basis of the economy. The new trade regime in agriculture will eliminate only the hungry and not the hunger, the small and marginal farmers and not unsustainable agriculture," points out Delhi-based food and trade policy analyst Devinder Sharma.

Meanwhile, Punjab's farmers, who actually realised the Green Revolution dream, are now uncertain about their future. The first blow dealt by the government has put them in dire straits. And they have few options. "The seed was given by the government and we put in our best of efforts. How is it that overnight the farmers of Punjab are producing substandard paddy?" asks Chamkaur Singh, who sold his paddy for Rs 478 a quintal in Moga. "We tried oilseeds and potato but they failed. Paddy and wheat are the only crops we can grow," says Gurdev Singh of Malak village.

Even the Rs 350-crore package planned by the Centre to bail out the farmers in distress has not provided relief. Of this amount, Rs 100 crore has been exclusively allocated for disbursement of compensation to the affected farmers who sold their paddy to traders below the msp. However, the state government says that it will take at least a month before the relief reaches the farmer. "Different farmers have carried out distress sale at different rates. Although the losses suffered by the farmers is far more, we have limited amount to Rs 100 crore to be disbursed as compensation. We will have to collect data and create different slots depending upon damages incurred by individual farmers. The relief will be distributed accordingly," says the food minister.

The farmers doubt if this money will ever reach them. Fake slips, fudged records and connivance between the traders and the government officials makes it look impossible. "We are already burdened with huge debts. Now we don't know what will happen to the wheat crop. A good harvest alone does not bring cheer to us anymore," says Jangeer Singh a small farmer in Moga.

Jangeer and others of his tribe are now worried about their future and survival. For millers, politicians and officials, the last harvest was undoubtedly the best in several years. They are ready for their next kill in April next year. n