Ajit Singh (50), a farmer from Nathana in Bathinda district of Punjab’s Malwa region, sold his 40 quintals ‘kapas/narma’ directly to a ginning unit, which separates cotton from seed, and the owner of this unit purchased it exactly as per the new agri Act without paying any Market Development Fee (MDF), Rural Development Fee (RDF), which is one per cent each, and 2.5 per cent arhtiya (commission agent) charge. In the end, the farmer was paid Rs. 5,300 per quintal for his crop while the MSP for narma is Rs. 5,725 per quintal. The farmer was given Rs. 425 per quintal less payment – or 7.5 per cent less than MSP – as the buying unit argued that the quality of the crop was not up to the mark. Ginners are the main buyers of raw cotton in Punjab.
Ajit is not the only one. A fellow farmer, Gurtej Singh, who sold 20 quintals narma to the same ginner outside the mandi was paid Rs. 5,000 per quintal, which is 12.5 per cent or Rs. 725 per quintal less than the declared MSP. In this case, the ginner paid him less because the farmer came to him via his arhtiya, who charged 2.5 per cent commission per quintal from the purchaser.
In both cases – one of direct sale and other through arhtiya outside the mandi, farmers were paid much below the MSP fixed by the government.
Over the past three weeks, a large number of farmers have sold around 1.30 lakh quintals narma to ginners, private traders in Bathinda, Mansa, Fazilka Mandis, Mukatsar, Barnala and Faridkot mandis and also directly to fetch a good price. But they have only managed to get Rs. 4,600 to Rs. 5,300 per quintal for even their fine quality cotton.
Not only cotton growers in the Malwa region of Punjab are facing such losses but in the other region – Majha – of Punjab where PUSA 1509 Basmati arrival is in full swing farmers are fetching Rs. 1,600 to 2,100 per quintal against Rs. 2,700 per quintal last year, while Basmati rate in the international markets is all-time high this year. This is happening despite Punjab government’s reduction in MDF and RDF rates from 2 per cent each to 1 per cent each for Basmati traders and millers, who were demanding level playing field with Haryana where mandi user charges are 1 per cent. The state government has not reduced MDF and RDF rates for cotton.
Farmers also sold maize at Rs. 800-900 per quintal recently in the third region, Doaba, of the state against MSP of Rs. 1,850 set by the Commission for Agriculture Cost and Price (CACP).
Though the Punjab government has already rejected three agri Acts, and also reduced MDF and RDF on Basmati and may follow it in the cotton crop too, there is no visible change in the fate of farmers who are growing crops other than wheat and paddy, which are purchased by the government. These other crops are sold directly to private players or via arhtiyas.
Crops like Basmati, cotton, maize, barley, pulses, oilseeds, guar, etc. are only purchased by the private players barring cotton, which is also purchased by the Cotton Corporation of India (CCI). CCI enters the market if the rate goes significantly below the MSP, it enters in the market to level the market price by purchasing cotton at the MSP with up to 1 per cent to 4 per cent of cuts only against MSP depending upon the moisture in cotton.
In Punjab, CCI entered the market on Monday and purchased 200 quintals cotton at Sangat (Bathinda) and Tappa (Barnala) mandis at the rate of Rs. 5,496 quintal to 5,725 per quintal which is quite above the prevailing market price of narma in Punjab’s mandis. Last year also CCI had purchased 35 per cent of the total 42.60 lakh quintals kapas in Punjab when the rates went down.
“When I went to a private player to get good price against the mandi what I got over Rs. 400 less than the MSP,” said Ajit Singh.
“We have entered in the market because the rate of cotton has gone very low against the MSP and now we are purchasing it at full MSP with moisture content, not beyond 12 per cent as cotton with moisture content with 8 per cent is getting full MSP and there is 1 to 4 per cent cut if the moisture level is 9 to 12 per cent,” said Assistant General Manager (AGM) CCI Punjab Neeraj Kumar, adding that even with 4 per cent cut farmer would get around Rs. 5,500 per quintal.
But like cotton, there is no government agency for other crops like Basmati, maize, etc. which will enter the market to purchase these if the market rate goes too low like this year.
“Why should I pay 4.50 per cent tax including 2 per cent MDF & RDF and 2.5 per cent Arhtiya commission when as per the new bill there is no such condition and farmers are coming to me directly for selling their cotton as nearly 1,000 farmers have approached me and we are paying them as per the quality of their cotton but when we have to pay the above taxes certainly farmers will get less and government must understand it,” said Suresh Kumar, Managing Director of Punjab Spintex Limited, a Bathinda based cotton yarn manufacturer, exporter, and owner of a ginning unit.
“If the government wants a win-win situation for farmers, then it should pay the difference between the MSP and the actual amount paid to the farmers,” he said, adding that it will make spinning viable too because CCI sells us cotton (without seed) at quite a high price.
Bhagwan Bansal, president, Punjab Ginners Association, said that ginners are the main buyers of the Kapas in Punjab and they are not finding the level playing when neighbouring Haryana is charging 1 per cent mandi user charges, Punjab is sticking to 2 per cent as it will ruin Punjab ginning industry when border area farmers sell in Haryana mandis which are as close as for them as Punjab mandis.
But even a slashing of mandi tax may not help farmers as exporters, millers, and traders of Basmati claim that the low rate of Basmati is because of high breakage in the rice.
A big rice exporter said that farmers’ fate will hardly improve because everything is in the hands of the purchaser as they may show his good quality crop in poor light to pay him less and farmers’ hardly have any option but to sell.
“Majority of arhtiyas also exploit the farmer in connivance with both- private players and government agencies (for wheat and paddy) by paying less to the farmers for the crop and making gains by charging full MSP from the government,” said another rice sheller owner, adding that farmers get their payment from arhtiyas not from the government directly.
“When the Farmers’ Produce, Trade and Commerce Bill is not implemented in the state and Punjab government has agreed to the demand of private traders for reduction of MDF and RDF fee then why farmers’ loot is taking place right under the nose of the Punjab government,” questioned farmer Gurmeet Singh Sarhali of village Sarhali under Batala tehsil of district Gurdaspur. Sarhali sold his PUSA 1509 Basmati at the rate of Rs 1,800 per quintal against Rs 2,700 last year. He added: “We are diversifying from paddy by growing Basmati for several years, but the government is not thinking about us and had left us to the mercy of exporters, traders, and arhtiyas who are minting huge amount of money from the same Basmati which they are purchasing from us as a meagre price.”
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