Amandeep Sandhu on Arthiyas - extract from PANJAB: Journeys Through Fault Lines
PANJAB: Journeys Through Fault Lines One of the biggest argument the government is putting forth for new Farm Laws is that it will eliminate middle-men. These middle-men, per the government are the arthiya - the commission agent and money-lender. The Farmer Unions are defining the arthiyas as 'service providers'. Here is a peek from my book (pages 300 - 306) that takes you to the ground and explains the phenomenon from what I experienced. You decide.
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Panjab is neither a cash economy, nor a cashless one. It is an economy of unending credits and debits. I learnt this as a young boy when I helped with farm work in my school holidays. I remember in a harvest season I climbed the trolley in which we carried wheat to the mandi. I sat on the piled-up wheat and our siri (permanent farmhand), Bhagta, sat with me. A few migrant labour bhaiyas also sat atop the wheat at the far end of the trolley. My uncle drove the tractor that pulled the trolley. To me the travel from field to town seemed like a king’s procession. From my geography books I knew this wheat would reach faraway Odisha and Kerala. My uncle was the good king who served his people, fed them and saved them from hunger.
(At the Mandi) It took us a whole day to unload the wheat, get it weighed, store it in sacks, sew the sacks, arrange them in order, and count them twice over. All day I helped where I could, mostly in picking up the fallen grains and putting them in sacks. Later, in the evening, my uncle and I went to meet the merchant uncle who had bought the wheat. He offered us tea and biscuits and then started getting lentils, sugar, tea leaves, soap, talcum powder and so on loaded in the tractor trolley. He even got me an additional ice cream. After this ritual he opened a big, thick red cloth-bound register and wrote down a figure, then asked my uncle to check and sign. He gave us no money.
This was unlike Baba, who, after a month’s work in the Steel Plant in Rourkela, would go to the bank with me and withdraw money. Money that we would take to the market and buy lentils, sugar, tea leaves, soap, talcum powder and so on. I, who started the day feeling like a king, now even with the items in our trolley, felt like a pauper without any money in hand.
On the way back, I sat next to uncle on the tractor, on top of its big back wheels. I did not want Bhagta or the bhaiyas to hear our conversation. In a low voice, though the tractor is a noisy vehicle, I asked my uncle, ‘Did we get a fair price?’
‘Yes,’ he answered.
‘Then why didn’t we get any money?’
‘That is how it is. Arthiyas keep our accounts. Do you need anything we did not get?’
I could not get the experience out of my mind and compared it with how in the last vacations Baba had given me a home course on how money came into being and the barter system was discarded.
Yet, this seemed like barter system to me. That was my surprise: how come in my own lifetime, in the same country, we had two systems—cash and credit? Salary and barter?
When we reached home, uncle, who was also a science teacher, took out a chart paper. He folded the chart paper into two. On the left side of the fold he drew a patch of land and a man next to it. To this initial picture, he added a tractor, diesel container, water in a canal, a tube well, electricity, seeds, fertilisers, pesticides, labourers, a sickle and also the combine harvester which then was a new product. Against each of them he put the rupee sign. On the right side he drew a grain market like I had seen that morning, part of it covered by a shed with shops all around, weighing machines, sample grain, mounds of grain bags, godowns, labourers, tractors, trucks, factories, shellers for rice and atta chakkis (flour mills) for wheat. Then he drew rail tracks, distant cities, more bags, more shops, homes, kitchens, rotis, children sitting around a dining table, and their mother cooking.
In between the two parts of the paper, on the fold, he put a question mark: who connects them? It is the arthiya, he told me. This is how the arthiya, commission agent, fits into the agrarian system and is in fact the pivot on which both the farm and the market rotate.
Depending upon the Minimum Support Price — available only on wheat and paddy — the arthiya procures the crop. He also procures maize and vegetables and basmati rice, whose prices fluctuate from mandi to mandi, and sugarcane which goes directly to the sugar factory. His payment from the market is not certain and could take any amount of time and is often delayed for various reasons: bureaucratic reasons, the state’s fiscal health, rice shellers and sugar industries, who were the arhtiya’s customers, not being able to market the produce and so on. However, the farmer needs immediate resources to carry on with the next crop cycle. The arthiya, through his logbooks and guided by his sense of the farmer’s finances—previous loans, credits, other expenses—advances the money to the farmer.
The complex market system involves multiple stages of which the government has barely regulated a few: seed, grain testing, pricing and godowns. Even these fluctuate depending upon the produce and are often manipulated by the merchants. The Food Corporation of India and the Panjab agriculture marketing boards like Marketing Federation (Markfed) and Panjab Supplies Corporation (PUNSUP) are supposed to inspect the yield, but inspectors in Khanna, Asia’s largest grain market, told me that they continue to rely on the arthiyas, their relationships with the clients and their ability to test the yield. Since seeds, pesticides, insecticides and fertilisers are all the needs of farmers, arthiyas have deep networks with their suppliers and because of the credit that is extended to them, farmers are forced to tap into those networks, thereby binding them very closely with the arhtiyas.
According to a survey published in January 2016 by Panjabi University, Patiala, 89 per cent of Panjab farmers are under debt. The outstanding debt in rural Panjab stood close to Rs 70,000 crore, of which about one-fifth was from loans extended by private moneylenders—arthiyas. Panjab has 20,000 arthiyas and the extent of farm indebtedness has doubled in the past ten years. Each arthiya works with around 300 farmers. While the arthiyas are strengthened by their position on the right side of the law, support for farmers and labourers remains scarce.
With greater privatisation, the state seeking to step out of the flawed agrarian and agricultural market structure and corporates looking to step in at various stages of the process, the need actually is of a giant political will to set up the terms of trade to regulate Panjab’s 1850-plus grain markets. The farmers’ need for resources continues to be their primary concern. The farmers also have other basic domestic and familial needs for which they need money. Like in the case of the striped rust disease when Bhola suddenly needed money to purchase fungicide. Which bank would have advanced him the money without guarantee? How long would that have taken? He had to go to the arthiya—who is both a flexible bank and a brutal recovery agent. The arthiya charges an interest of anything from 12-18 per cent in south Panjab to 18-24 per cent in north Panjab, on the money he advances.
Even the big farmers, owing to their social class which has taken a wholly materialistic turn—big weddings, posh cars, palatial houses, an unending desire for land, either agricultural or a property in a town or a city—are often under debt to the arthiyas. This affliction ails the small and marginal farmer too, albeit not at the same scale. It is a social peer pressure. It raises the question why a poor person is not entitled to what Panjabis are otherwise celebrated for around the world—living it up. Of course, the larger question is if such pomp is even necessary.
The Panjabi farmer, especially small and marginal, but also a big one, is always at the edge of fiscal sufficiency. Loans and debts go down generations, yet he remains optimistic. If you ask any farmer, big or small, he will tell you that he will somehow repay his loan: a better crop, a better price, a better season. But it isn’t easy. A single spell of rain before the wheat crop matures by the end of March can devastate the crop. Rain and strong winds before the paddy harvest in October can flatten the fields. Then there are diseases, illnesses, and all sorts of pest attacks. How does this kind of life—without any assurance of returns, without any guarantee of income for a whole season of work—shape the mind of the farmer?
It wears down his patience. It makes him prone to emotional decisions. What logic or reasoning can we present about the rain or wind or pest that devastates the crop? A farmer can only respond to the vagaries of nature. He can’t control them. It is an unending fight where the only let-up is if nature remains kind. When it doesn’t, and the cycle of debts entangles him, to keep his honour, in the absence of state systems to keep him going, he just goes down—commits suicide.
The critical difference between a farmer’s life and that of a salaried person or a businessperson is that salaries come on timely intervals, recoveries happen in weeks or in a couple of months, but a farmer has to wait a whole season (which stretches to about six months), and that too at the mercy of the weather. The arthiya is the pivot of the system because the state has failed to nuance itself enough to truly aid the farmers and meet their needs. Where it does meet the needs and the farmers fail, their pictures are pasted on the walls of banks as if they are criminals, recovery agents are sent to threaten them at their homes, the police and legal machinery get involved, and there is widespread public shaming. The shame that this brings leads to suicide.
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From my meetings and interviews with arthiyas in mandis, I learnt that while many are just arthiyas, the reasons why some of the current arthiyas seem to be predators are that earlier, when arthiyas were Hindu banias and Hindu-Sikh khatris, they had little interest in acquiring the land and in farming it. They were powerful, as in they dictated terms to Jutts, but it was a symbiotic relationship. That demography of arthiyas has changed over the last two decades. A few years back, the economist Professor Sukhpal’s research highlighted that more than one-fourth of all arthiyas today are Jutts.
From my loose observations, I place the figure now at one-third of all arthiyas. Jutt arthiyas understand the farmer very well because of their common caste background. While many of them remain symbiotic with farmers, some don’t. This is where the stories of kurki and exploitation come to the fore. Unlike the arhtiyas of yore, a Jutt arhtiya is more than capable of farming the land. Hence, he has no qualms in acquiring it. The other reason is the boom in the price of land, as we saw in the previous chapter. The simple fact is that owning land is more lucrative than farming it. The additional reasons are not the failure of the state in broad policy terms but have to do with how corruption and political patronage has grown over the past few decades.
The arthiyas I met also told me stories of how corruption and demands from politicians hamper the system. ‘The inspector assigns a price to the grain and demands money from us. They take one rupee for every sack weighing fifty kilos. If your shop receives 30,000 sacks of grain, then they’ll ask for Rs 30,000,’ said one.
‘But he can’t just pocket the money?’
‘The income tax officer demands money, the sales tax officer demands money … Politicians understand how the system is
functioning.’
‘Are politicians also receiving money?’ I asked, wondering if I would get a reply.
‘Yes, of course.’
‘How?’
‘Through district magistrates in charge of food at the district level. They send money to the local MLAs and ministers.’
How well-oiled the process is!
‘There must be bribes for posting?’
‘Yes. I have heard that it could go up to Rs 50 lakh. The entire system is compromised. If someone says that suicides are just because of arthiyas, it is false.’
Most arthiyas are now either pro-Akali or pro-Congress. When either is in power they blame the other group for treating farmers badly. But the fact is that the entire process is compromised and the arthiyas have enormous influence over what lawmakers decide.
In 2013, the government decided to reform the Agriculture Produce Market Committees to help farmers bypass middlemen and directly sell to the purchaser. However, these reforms were never operationalised as the government did not amend the AgriculturevProduce Market Committees Act in order to allow this to happen.
In the same year, when the government chose to enact a Contract Farming Act to clip the wings of commission agents, the law did not usher in any significant changes, though it helped private supermarkets buy produce from farmers directly.
One cannot wish the arthiyas away from the system. One has to find ways of incorporating them into India’s diverse market systems. The modern banks, even co-operative ones, with their Kafkaesque processes of forms and guarantees, come nowhere close to the efficiency of the local arthiya. The question really is: if the arthiyas are such an important link between the farmers and the markets, why hasn’t the state, in the last half century since the Green Revolution and since becoming a state, acted and created laws that make the atmosphere conducive for both arthiyas and farmers?
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The new Farm Laws do not do that. By seeking to replace the system, the government is throwing the baby out with the bath water...
