Direct payment system for grain farmers of Punjab, Haryana soon

NEW DELHI: The Central government has decided to implement a major agricultural trade reform in two north Indian states by directly paying farmers the minimum support price for procurement of grains and removing agents from the process.
While the agents, called arthiyas, will continue to be paid commission, payments to grain farmers in Punjab and Haryana will no longer be routed through them. The agents, many of them with strong political connections, are deeply entrenched in the grain trade in Punjab and Haryana and have threatened to launch an agitation against the move.

However, the government appears determined to implement the change. Haryana and Punjab, which contribute the most to the nation’s food grain stocks, are the only states that continue with the practice of making payments through arthiyas.

“We have categorically told the Punjab government that we will not purchase paddy and other crops if commission agents are not removed from the system,” said a senior agriculture ministry official. “Punjab has assured us that it will devise a mechanism for direct payment to farmers, bypassing arthiyas from this kharif harvest itself.”

He said Haryana already has a system in place for direct payments to farmers.

“Haryana will follow suit. It had developed the system last year. Since Punjab had not opted for elimination of arthiyas, Haryana also continued with the old system,” he said.

Food minister Ram Vilas Paswan and food secretary Ravi Kant have written to the Punjab government asking it to eliminate arthiyas from the procurement process. Both pointed out that Punjab, despite repeated assurances to do away with the middlemen, continued to pay farmers through them.

“Almost all the states have moved to online procurement to plug corruption and to ensure direct payment to farmers. But in Punjab and Haryana, the same old system of arthiyas continues… There is no record or receipt about the amount of payment farmers receive,” the official said.

Under the arthiya system, farmers in Punjab and Haryana unload their produce at a market yard licensed to an agent by the local mandi committee. The arthiya gets the grain cleaned, organises auctions, packs the produce into 50-kg bags and dispatches them to the buyers. The agents get commission and receive money on behalf of the farmers. They then distribute the money to farmers.

“Arthiyas will continue to get 2.5% commission for their services. But the value of the crops purchased will be transferred directly to the farmers’ accounts. It will not change hands through arthiyas anymore,” the official said.

Vijay Kalra, president of the Federation of Arthiyas Associations of Punjab, said the state government can’t play with the livelihood of the agents. “If the government does that, we will hit the streets and stage dharnas. It’s a question of livelihood for lakhs of people engaged in this trade – be it the farmers, arthiyas or labourers. We will strongly oppose this,” he said.

He said the government tried to abolish this age-old system back in 2009, too. “Then also, the farmers themselves came forward and said that they can’t survive without arthiyas. The government had to roll back the move,” he said.

There are about 50,000 registered arthiyas in Punjab, which has 1.5 million farmers. Every year, Punjab contributes 13 million tonnes of wheat and 12 million tonnes of rice to the central pool, while Haryana dispatches 3.9 million tonnes of rice and 9.3 million tonnes of wheat.

“Payment must be given to commission agents,” said Duni Chand of Ambala’s New Grain Market Commission Agents’ Association. “We lend money to farmers. If payments are directly transferred to their bank accounts, there is no guarantee that we will get our money back.”