In the 15 days since the Centre intervened directly to help farmers in Punjab get the minimum support price (MSP) for their cotton crop, not one of the state’s 2 lakh farmers has responded — they have instead chosen to continue to sell to their traditional buyers, the arhatiyas or commission agents, at prices well below the MSP. Why have Punjab’s cotton farmers snubbed Cotton Corporation of India (CCI), the marketing support agency for kapaas under the Union Ministry of Textiles?
CCI’s intervention
On October 6, CCI entered the market to buy narma (raw cotton) directly from farmers at the MSP, and thus help reduce their dependence on arhatiyas. Areas were marked out for CCI in all the state’s cotton mandis. Cotton farmers, however, did not respond. At mandis where officials tried to persuade farmers to sell their crop to CCI directly, both farmers and arhatiyas protested; on October 12, arhatiyas organised protests at all mandis.
Farmers have long complained that the MSP is only on paper, and they don’t actually get that price when they sell. CCI chose to enter the market to purchase directly from farmers when market rates were close to the MSP; if the rates fell subsequently, it would be CCI’s responsibility to buy at full MSP as per the quality parameters of the crop.
MSP, current prices
The government has fixed an MSP of Rs 5,150 per quintal for medium staple (less than 27 mm fibre), and Rs 5,450/quintal for long staple (27.5-33 mm fibre) cotton. Punjab grows mostly the long staple variety (fibre 27.5-28.5 mm), the MSP for which has been fixed at Rs 5,330/quintal narma, as per figures with CCI. On Saturday, the rate at Abohar mandi, the largest in the region, were far lower than the MSP — Rs 5,150/quintal narma. At Fazilka mandi, the rate was Rs 5,050/quintal. Rates at mandis are fixed daily in auctions conducted by arhatiyas. Rates are low because moisture levels in the crop are high — up to 15-18%. This is well above the specified limit of 8-12%, after which the price starts to fall.
Not just economics
The reason for farmers’ lack of enthusiasm about CCI lie in the social structures of rural Punjab, in which the arhatiyas and farmers share a close transactional relationship. Farmers say dealing with CCI is fraught with the risk of upsetting the arhatiyas, who might not be willing to help them in the future. Farmers depend on arhatiyas for small loans for cropping operations and personal needs, which they find more convenient than approaching a bank for a loan. Also, several farmers at Abohar mandi said, selling to CCI requires registration and submission of documents such as Aadhaar and bank account details. The entire crop is checked thoroughly for moisture content, and the MSP is reduced according to readings of the moisture meter. Even then, the money might take a week or longer to come into the farmer’s hands, whereas the arhatiya pays immediately.
There are about 26,500 licensed arhatiyas in Punjab, who control the crop of over 11 lakh farmers who mainly cultivate paddy, wheat, and cotton. Each arhatiya deals with between 20 and 200 farmers. The lives and economic wellbeing of the arhatiyas are often linked to those of the farmers. Arhatiyas earn interest on the credit they offer to farmers in need of cash, and a commission of 2.5% per quintal on the crop they supply to buyers. Also, many arhatiyas are farmers themselves. They are Jat Sikhs, as opposed to Banias or Punjabi Khatris/Aroras. These arhatiyas are bigger farmers who aggregate the produce of smaller farmers, who take loans from them.
“Not a single farmer has registered with the CCI for direct selling of their crop. We wanted to purchase from the farmers in case the rate falls low against the fixed MSP, but we cannot force them to sell to us,” Brijesh Kasana, general manager of the CCI’s Bathinda office, said.
Punjab, one of the top 10 cotton-producing states of the country, is expected to produce some 9 lakh bales of cotton (1 bale equals 170 kg) this year. In Punjab, Haryana and North Rajasthan (mainly Sriganganagar and Hanumangarh districts), the first pickings of kapaas (raw in-ginned cotton containing both the lint fibre and seeds) starts around end-September. Farmers usually go for three pickings, one following the other in 15-20 days, so that harvesting is completed by early November, which allows farmers to then plant wheat. In Gujarat, Maharashtra, etc, pickings start around mid-October.