State govt, though, prefers to retain the commission agent route
Even as the Punjab government has shown unpreparedness to make direct payment to farmers for foodgrains procured for the Central pool despite direction, the farming community feels the union government’s decision is in the favour of the community.
They feel the payments made directly to farmers can help in eradicating rural indebtedness. On its part, the state has preferred to retain the system of making payments through commission agents. Insiders feel strong pressure from commission agents (arhityas) is stopping the state from implementing the system.
The Bhartiya Kissan Union says eliminating the commission agents is in the interest of farmers to be paid directly by the Centre or the state. “The age-old system of making payment to farmers through commission agents is also responsible for indebtedness of farming community,” union president (Punjab) Ajmer Singh Lakhowal told Business Standard.
The Punjab State Farmers’ Commission, too, advocates direct payment to farmers. They feel the system will help discarding the exploitation of farmers by commission agents, who also act as money-lenders and charge “exorbitant” rate of interest from them.
Further, the Punjab Agricultural University has underscored the need for changing the current payment system by paying directly to farmers through account payee cheque.
A study it conducted recently highlights commission agents as charging exorbitant rate of interest on credit from farmers and indulged in malpractices. It says commission agents pocketed about Rs 6,500 crore during 1989-90 to 2009-10 on the marketing of all commodities in the state. They charge a 2.5 per cent commission on foodgrains and 5 per cent on fruits and vegetables.
In the current upcoming procurement season, the state —including all government and private agencies — is likely to procure 11.20 millions of wheat in the upcoming procurement season commencing from April 2012.
So one can easily get an idea, the quantum of commission involved.
Crucially, the state has made it clear to the Centre that it would not be possible to make direct payment to farmers for the procurement of wheat at least in the present rabi (wheat) season beginning in April this year.
Punjab has sought a mechanism for the direct payments to the farmers, besides an amendment to the Agriculture Produce Marketing Act. Amid these, commission agents and some of the farmer organisations are at loggerheads on the issue. While farmers are asking for a direct payment, commission agents are opposed to it.
In 2010, the Food Corporation of India had tried to implement direct payment system which was stayed by the Centre after the immense pressure from the Punjab government. The Centre is keen on direct payment to farmers for the procurement of grains for its pool, so as to reduce the role of commission agents.
