AGITATING FARMERS and Punjab are stuck in a strange cleft stick – the Centre is offering them what they always wanted and struggled for, but the section of rich Aarhtiyas that is now supporting the agitation is telling farmers that what the Centre is offering them will harm the cause.

Still more ironic, the Centre now seems hell bent on forcefully giving farmers what they wanted, and the farmers could soon be fighting against what they always asked for.

Welcome to the world of Naunh Maas Da Rishta between commission agents and farmers!

Punjab is now the only one of the 12 procuring wheat and paddy procuring states where the farmers are paid through Aarhtiyas. In all other states, farmers receive direct digital payment, a system put in place vide the Finance Ministry’s Public Finance Management System (PFMS) order issued on May 28, 2018.

The Centre has now asked Punjab to make sure the farmers receive direct payments. This move will badly hurt the rich Aarhtiyas in Punjab. Historically, the farmers have been at the mercy of the Aarhtiyas when it came to procurement, but the fact also is that they often find the Aarhtiya the most dependable when they need some small loans.

Aarhtiyas are invariably the local money lenders, too, and in recent years, have also emerged as big time investors in real estate and businesses, too. They are the region’s local version of Venture Capital Tzars.

In the recent farm agitation, Aarhtiyas went all out to support, fund and even guide the farmer agitation, much of it upfront and a lot covertly, a fact known to everyone who is not living under a rock in the back of the beyond.

Historically, the farmers have always wanted the Aarhtiya out, while the political parties and politicians found them the easy to dip into cash bags.

At one stage, the Prakash Singh Badal government had come close to buckling before the farmers’ demand and was about to implement the system for direct payment to farmers, but the Aarhtiyas moved heaven, earth and Akal Dal, not necessarily in that order, and the Badal government capitulated at the last moment.

Add to it the not so minor fact that many of the farmers’ unions are led by persons who are deep into the Aarhtiya business, and the picture will start making more sense to you.

The Centre’s move is neither new nor sudden, but is likely to be projected as such by not just Amarinder Singh’s government but also the farmer unions.

Punjab had been seeking repeated exemptions from the new direct payment regime since the interests of the Aarhtiyas, friends of every government led by a rich Jat Sikh chief minister with agriculture listed as his or her main vocation, prefers to pay farmers through Aarhtiyas under the Punjab Agriculture Produce Marketing Rules-1962.

It is this piece of legislation that has been keeping intact the Naunh Maas Da Rishta, mandating MSP payments through commission agents.

Many states have also integrated their land records with the central procurement portal, a particularly sore issue in Punjab where benaami land properties and open violation of Land Ceiling Act is the norm.

Experts now expect a rogue phenomenon to play out in the public discourse if the Centre pushed the envelope on this one. On the one side will be the rich Aarhtiyas demanding justice for farmers while actually fighting to safeguard their own interests.

On the other hand will be the farmer organisations which are likely to label the latest move by Centre as yet another tactic to divide the ranks of protestors.

There is also a third stakeholder, the landless farm labourers, which is supposed to be a part of the struggle and has absolutely no stake in the longevity of the Aarhtiya system, but this section will also be forced to stand up for the Aarhtiya and the commission system.

The landless Dalit section is backing the agitation and the farmers have found it strategically beneficial to claim their support but the fact is that the agitation is primarily centred around the farmers while the farm labourer is marginalised even among the marginalised.

The Centre has somehow united the Aarhtiyas and traders, the farmers, rich and small, and the landless Dalit labourers. While there is a lot of rhetorical talk about Hond Da Sawaal, a question of existence, the fact is that the Dalit labour section has been facing this threat from the other stakeholders in the agitation.

The incessant talk about the remarkably romantic relationship between nails and human flesh – Naunh Maas Da Rishta – will make any serious student of the commission agent system nauseous. Nothing could be further from the truth, but when you need forces in a battle, why turn away a warrior who brings wealth and heft to the battleground?

Not long back, the same farmer unions were up in arms against the Aarhtiya system, and wanted to completely abolish the entity called Aarhtiyas. Top economists and scholars who are today spending much ink in op-ed articles were writing with pens dipped in vitriol against the Aarhtiyas who, they were claiming, were nothing but “blood sucker elements” of society.

Rewind a decade. The Shiromani Akali Dal (SAD) government in Punjab, having declared bringing in a direct payment system, had to beat the retreat and CM Parkash Singh Badal had come up with this ‘Naunh Maas Da Rishta‘ nonsense, appealing to the Aarhtiyas to start paying the farmers within seven days of buying the crop.

The Punjab State Mandi Board was one organ meant to guard the interests of the farmers was handed over to the Aarhtiyas. Ravinder Singh Cheema, President, Aarhtiya Association Punjab, was made its vice-president by Badal. Ajmer Singh Lakhowal, a Badal acolyte among the BKU leaders, was made the President.

A PAU study had triggered and intensified the debate. The FCI had already served an ultimatum. Farmers had been claiming that the commission agents had enslaved them through their stranglehold on marketing system. It was a vicious system: the Aarhtiya could keep a farmer in a vice-like grip, and then pose as his saviour by lending him money at horrible rates of interest. Aarhtiyas became an arrived class exactly during the years when the farm sector slipped into a crisis.

But What Does An Aarhtiya Do? That is, apart from claiming to be farmers’ friend and having a “Naunh Maas Da Rishta“, whatever that means?

The farmer brings his produce to the market, and the government buys it through the Aarhtiya. Then the government gives the money to the Aarhtiya, and he pays the farmer. In this transaction, he pockets a commission of 2.5 per cent. So far, so simple.

Now the complex part: The government is under obligation to buy, and that too at a fixed pre-announced rate. The market where the government must buy is pre-determined and pre-declared. All market facilities are provided by the government. The farmer pays separately for maintaining those markets and facilities. The Aarhtiya pays the farmer only after he gets the money from the government.

Then, what exactly does the Aarhtiya do to earn that 2.5 per cent of commission?

When the Badal government decided on direct payments, it had actually even notified the date from which it was to become effective. Later, the Badal government buckled and scrapped the move.

To assuage angry farmers, Badal appealed to the Aarhtiyas to ensure that farmers were paid within seven days of selling their produce. But such was the state of the Nauhn Maas Da Rishta that the Aarhtiyas refused point blank. They said they will do so only if the government agencies first paid them within 48 hours.

In effect, the Aarhtiya was saying that the Government of India must move fast enough from the Raisina Hill to the back-of-the-beyond grain markets in Punjabs to pay him within 48 hours, only then would he move fast enough to pay the farmer next door in the next 72 hours.

The question “Do we need Aarhtiyas in Punjab?” was changed into “Should farmers receive direct payment from the government?” The Aarhtiyas further changed the question to “Is it fair on the part of the government to expect them to give farmers the money for produce within seven days of buying the crop?”

The Food Corporation of India (FCI) had declared in 2010 itself that it will make direct payment to farmers. Angered by this, the Aarhtiyas announced a boycott of procurement of paddy that was to start on October 1, 2010.

The broad-spectrum of farmers wanted the Aarhtiya out. Some farm union leaders who were not Aarhtiyas themselves were demanding that the government should find out how many Aarhtiyas have gotten transferred the land pieces in their name after the loan-availing farmers’ failure to repay.

Dr. Sukhpal Singh of Punjab Agricultural University, Ludhiana, who, along with Tejinder K Dhaliwal, had led an authoritative research on “Commission Agent System in Punjab Agriculture”, was clear that the time had come for the procurement agencies and government to deal directly with the farmers without the middleman called Aarhtiya.

It is a different matter that our farm economists, who have become a sort of demi-participants in the agitation, no more refer to such researches.

Farm union leaders, including Joginder Singh Ugrahan and former MP and BKU president Bhupinder Singh Mann are on record as saying that not paying the farmer directly was “illegal, unethical and anti-social” policy.

Talk of tradition

Since there is so much talk about the “tradition” governing the aarhtiya-farmer relations, it will in the fitness of things to dwell on it. The PAU study claimed that the change of aarhtiya by the farmer was “very rare” up to the late 1970s. But with the entry of non-traditional commission agents in this profession, particularly the Jat arhtiyas, things changed to some extent.

Sample this: “It is interesting to know that about 44 per cent of the farmers are still dealing with the same commission agent for more than one generation. The indebted farmers are not in a position to repay the whole amount of debt in a single season; this among other factors is the reason why the farmers remain bonded with the same commission agent.

Due to this the change of Aarhtiya among farmers is not a common phenomenon. Basically, this change is very difficult as the farmers have to take the informal clearance from the old commission agents by clearing their dues for joining the new commission agent.” Exploitation runs in the family. No?

The fact is that the Commission agents have earned huge surplus capital from this profession and have invested it in not only other business activities but also in endearing themselves to the ruling classes, politicians.

As everybody at the Singhu-Tikri-Gazipur border knows, today’s commission agent is part of the larger nexus of politician-criminal-transporter-sand mining mafia-bus permit mafia-liquor barons-real estate property dealers-polluting industry-sugar mill-rice sheller-contractor buckyball structure.

It is the Commission agents who sell pesticide/fertilisers, it is they who have the surplus that you need to speculate in property business. No one knows better than the Aarhtiya about which particular farmer is in a deep-shit crisis and is the most vulnerable, and can be forced to sell his land for a pittance.

To quote directly from the study, here is what the PAU scientists had to say about the Aarhtiya-farmer social relationship:

“An age old myth about ‘nail and flesh relationship’ (Nauh Maas Da Rishta) among farmers and commission agents is widely publicised in the popular media. The prevalence and relevance of commission agent system in the Punjab agriculture is claimed by the commission agents on the basis of its sustainability since generations.

The commission agents argued that they have a well-knit relationship with the farmers as both the parties have blind faith in each other. Nowadays, significant changes have been noticed in this relationship. Although the traditional commission agents were professionally very smart, they were sober and polite in dealing. This picture has changed to rudeness and arrogance to some extent due to the entry of Jats into this profession.”

Calculating the Commission

Certain significant strands of the farmer-Aarhtiya debate have been brushed under the carpet to push the ‘nail and flesh relationship’ nonsense.

Why, for example, have we not seen any questions being raised about how and on what basis is the commission calculated? Also, on what basis did the then Parkash Singh Badal government hike the commission from two per cent to 2.5 per cent? Why has Amarinder Singh kept it at the same level?

In 1961, the rate of commission was 1.5 per cent, by 1990 when it was clearly time to end the institution of Aarhtiya, this rate was actually raised to 2 per cent. Then, in 1998, it was raised to 2.5 per cent for food grain and to a whopping 5 per cent for fruits and vegetables.

Also, it is important to note and but is hardly mentioned that the market charges have been the highest in Punjab for long, clocking at 13.5 per cent of the value of the produce. The break up includes 4 per cent purchase tax, 3 per cent infrastructure cess on wheat and paddy (2 pc for cotton), 2 pc market fee, 2 pc rural development fund and 2.5 pc commission for the Aarhtiya.

The commission went up when it was proven beyond doubt that the commission agents did not have any significant role in the procurement of crops like wheat and paddy. In which other market in the world does one find middlemen in an assured market paradigm?

The fact is that the commission agents are a rich class by themselves. They are major funder of political parties. Each commission agent is closely interlinked with politicians. The commission agents are also money lenders. In fact, some would say that they are primarily money lenders.

Under the law, any commission agent who is a money lender and charges any interest is committing an illegal activity. Everyone knows how wide sections are committing this illegal act. Now, everyone wants to find not a solution as per law but only a “pragmatic” solution.

For decades, the word “agent” has remained a kind of slur in Punjabi society. Badals have often called one or the other rival Akali leader as an “agent of the Congress”. His detractors often call him “an agent of the RSS-BJP”. Even among militants, the renegades are called “agents of agencies”. You can well imagine how a commission agent is seen in Punjab!

Is there a senior journalist or a farm economist or an engaged reader of newspapers or consumer of news who does not know how many and which farm union leaders are themselves Aarhtiyas, too?

“Let any of the top farm economists of Punjab, be it Dr Sucha Singh Gill or his bête noire Dr Gian Singh, come up with a figure of how much the commission agents earn in commission from Punjab’s farmers in a year,” said a young economist.

“In just 2009-2010, a whole ten years ago, the commission agents had earned a sum of Rs 784 crores from all the crops. Imagine what the figure will be today! And then keep in mind that we are only talking about white money. Even this whopping figure will be peanuts because as almost everyone knows, and thankfully, no one denies, the main source of income of commission agents is not the commission charged on the sale/purchase of crops but the interest charged from farmers for the credit advanced to them,” she said.

The PAU study showed that an average commission agent advances a loan of Rs. 65.74 lakh to farmers. This accrues an interest of Rs. 15.78 lakh per annum. Out of the then total debt of Rs. 35,000 crores on Punjab farmers during 2008-09, it was estimated that Rs. 13,300 crores (38%) was advanced by the non-institutional credit agencies in which commission agent was the major source of finance.

Commission Agent Is Actually A Money Lender

As the farmer union leaders and Aarhtiyas frolic together in a lovebath at the Singhu-Tikri-Gazipur border, no one is recalling the intense debate that raged about the very need for the commission agents, nor about the merits of direct payment.

So much so that no hue and cry is being raised even about the fact that commission agents are actually money lenders. Their role as commission agent is something that gives them real power over their clients who are farmers and who often depend upon them for loans.

In law, the commission agent cannot be a money lender, and to lend money, he has to register as a money lender. Not one has done so across Punjab.

In law, punitive legal action becomes imperative the moment it is proven that any commission agent has lent any amount of money to any farmer.

But since so many flout the law so blatantly and they have been doing so for so many years, most of the stake holders have simply lost sight of the fact that wholesale violation of law should have invited a sledgehammer response from the government to put an end to the pernicious practice.

But that does not happen, simply because the commission agent cum money lender lobby is a major stake holder in the ruling classes, a significant funder of political parties and enjoys across the political lines support.

As per law a person involved in money-lending business must register himself as a moneylender. The Punjab Registration of Moneylenders Act 1938 states that the suits for the recovery of loan could be filed by registered moneylenders with a valid license.

This law laid an obligation on the moneylender to regularly maintain an account for each debtor separately, of all transactions relating to any loan advanced to that debtor.

The government prescribed the manner in which accounts had to be kept. Moreover, creditor had to furnish each debtor every six months, with a legible statement of accounts signed by the creditor or his agent of any balance or amount that may be outstanding on 30th June or 31st December. But practically, at all levels, there is a violation of this Act.

Not a single commission agent has registered ever in Punjab for the business of money-lending.

Commission agents are around the corner guys and, therefore, more accessible. The farmers are increasingly in a desperate situation, thanks to the skewed farm policies. And as we all know only too well, any farmer caught in a cleft-stick of inimical market situation and apathetic state response is vulnerable to consent to high interest rates from the only quarter who is accessible to him for a small loan.

The aarhtiya in his avatar as a money lender is a godsend in such a situation. For the aarhtiya, the farmer who comes begging for a loan in a desperate situation is a god-sent customer. Woebegone such a god, but then he has been helping the money lender for centuries!

And that today becomes an argument not to throw out the Aarhtiya, but to keep the Aarhtiya and nurture the Naunh Maas Da Rishta because Modi wants to throw out the MSP system!

The PAU study minced no words in saying that the money lender Aarhtiya “exploits the farmers by charging exorbitant rate of interest, supplying spurious farm inputs and through other various malpractices in the marketing activities.”

Although the fact that farmers always borrow money from commission agents is well known, the source from which commission agents borrow this money is still not documented in any record.

Even the PAU study was weak on this aspect though at one stage, it candidly stated that “around nine commission agents disclosed that they also borrow money from large farmers, police officials, and bureaucrats and from other servicemen. The rate of interest charged by these people is higher than that of the institutional sources.”

“They disclosed that big farmers who are politically well connected, police officers and bureaucrats think that their money is always safe with the commission agents from two angles. Firstly, the money can be kept secret as black money and secondly, they can get it back as and when they want with political power and authority as commission agents will not dare to cheat them.”

It is a pity the Commission Agents are not tom-tomming the study as a proof of their being good borrowers themselves.

Large Farmers & Commission Agents

But why have the large farmers who have the muscle and money not rebelled against the Commission Agent? Here is a peep from the PAU study:

“The Market Act envisaged commission from the buyer only. However the commission agents continued to charge the commission from some farmers, to whom they had advanced some loans, which generally included the small farmers who were not aware of the legality of it. As the awareness increased the commission agents stopped charging the commission from the farmers, particularly since 1990s.

On the other hand, the field survey also reveals that some large farmers negotiate to get 1 per cent to 1.25 per cent of the commission which is paid by the procurement agencies to commission agents. This shows that the large farmers who are educated and have surplus capital are in a position to negotiate everywhere, including with the commission agents. This is the same class that invests money in many allied activities or commission agent business.”

Leading agriculture economist Professor Sukhpal Singh of the Indian Institute of Management (IIM), Ahmedabad, in his recent study on reforming agricultural markets in Punjab has also argued that it is time to get rid of the Aarhtiya. His work is part of the policy series by the Punjabi University’s Centre for Development Economics and Innovation Studies.

“The interlocking of the credit, input and output markets by the Aarhtiyas in the state has led to farmer indebtedness in the context of poor institutional credit reach which is both inadequate and costlier due to higher transaction costs despite its lower interest rate,” the study said.

In fact, Prof Sukhpal Singh (IIM) considers the Aarhtiyas are a root cause for the farmers’ troubles. He claims that the system of payment for the farmer produce through Aarhtiyas was bad as Aarhtiyas are unregistered, unregulated, and indulge in informal money lending at high rates of interest. They also supply farm inputs and groceries to farmers on seasonal credit.

What the farmers need, as per farm economists like Dr Sukhpal Singh (IIM), is more accessible formal credit system, better designed financing programmes for farm sector and better institutional credit delivery. Not the Naunh Maas Da Rishta type non-sense in which the nail has been biting into the flesh for a century, and now at the Singhu-Tikri-Gazipur borders, too.

The Centre is now giving farmers what they wanted. The Aarhtiya is now fighting against it. The farmers are now backing the Aarhtiyas. The Amarinder Singh government is now backing the farmers. The Badals are now against the Centre on this direct payment to farmers system. The Aarhiyas have been nice to both Badal and Amarinder Singh, and both are very nice to the farmers, too.

It is all a strategy.

Somewhere out there is the truth, buried under the headlines by the very same reporters and editors and farmer leaders who know the truth.

As the Chinese say, we are condemned to live in interesting times.