Noise over mandis drowns out support for corporate silos
The first of a two-part series finds out why farmers in Punjab are spooked by the new legislation
It’s early morning at the 200,000tonne Adani wheat silo at Dabra village in Punjab’s Moga district, and a group of elderly farmers is getting ready for another day of agitations after spending the night at the protest site. Elsewhere in the state, farmers have been demonstrating at other Adani-run wheat silos, Reliance retail chains and private road toll booths, demanding the abolition of The Farmers’ Produce Trade and Commerce
(Promotion and Facilitation) Act that was recently pushed through Parliament by the Modi government.
In a sense, the Adani silo is what the new law seeks to establish across India. And to the protesting farmers, it is a symbol of all that will go wrong in their lives.
The silo, set up by Adani Agri Logistics in 2007, is the largest in India. In 2008, the Prakash Singh Badal government designated it as a notified government purchasing point (mandi). There is another Adani wheat silo of similar capacity at Kaithal in Haryana and others of smaller capacities at six locations in Madhya Pradesh.
The idea was that farmers could take their produce directly to these silos without going to the mandis. The silo would weigh the produce and take the farmers’ wheat. And the Food Corporation of India (FCI), which pays crores of rupees in rent to Adani Agri Logistics for running the silo through a 30-year concession agreement, would pay the farmers directly in three days.
The logic behind turning these silos into government notified mandis was two-fold: save the farmer and the government the 2.5 per cent that commission agents get at mandis and quicken the process of selling farmers’ wheat stock. The government’s new law designates all such silos, warehouses and any place of collection and aggregation of farm produce as ‘trade areas’, and any farmer or company is free to sell and buy in these trade areas.
The question is, has this model worked for farmers in the 12 years of its existence?
Adani Agri Logistics certainly thinks so. “Farmers are so happy with the efficient and transparent functioning of silos that they do not need to be lured with any incentive. They have come to the silos year after year for the last 12 years. Once a farmer comes here, he will not go to any other mandi even if he has to wait for some time,” says Puneet Mehndiratta, vice-president at Adani Agri Logistics.
Some farmers agree that they have benefited from taking their wheat to the Adani silo. A few kilometers’ drive through lush paddy fields from the Adani silo, lies the village of Daroli Bhai. Laib Singh, a farmer in his 70s, says, “We benefit more by taking our wheat to the Adani silo. Here my produce comes to five to seven quintals more weight as compared to government mandis.”
“However, though in the early years they paid us ~20 more than the minimum support price (MSP), those incentives have been gone for many years.”
Gurmail Singh, another elderly farmer in the village, too, says that there are advantages to taking their produce to the corporate-run silos. “It takes around three hours to give my wheat at Adani. In mandis it would be almost three days before the wheat would be taken by commission agents. But of late, the waiting time has increased at the silo and they have also started rejecting wheat,” he says.
An FCI official at the Moga base depot explains that Adani’s silos save the government crores of rupees on three counts – daily wages to labour, the transport cost from mandi to warehouses and the cost of gunny bags to store and transport wheat. Besides, the silos have negligible wastage of wheat as opposed to its own warehouses.
Farmers agitating at the Adani silo in Dabra dismiss this argument. “Big companies will offer attractive prices for one or two years. Once farmers start selling to them, they will artificially depress prices. Isn’t this what Reliance Jio did? Offer free phones and data, capture the market, and then start charging more. Farmers will become slaves of big corporations,” says Buta Singh, 72, a farmer protesting at the Adani silo site under the banner of the Bhartiya Kisan Union Ekta Ugraha (BKU)..
“The new bill will finish off mandis and reduce government procurement. There is no law that guarantees MSP to farmers.
The government gives us a guarantee for only rice and wheat. This year we got Rs 700 for maize although its MSP was Rs 1850 per quintal,” adds Gurnam Singh, another farmer.
Gurnam Singh feels that big companies will start hoarding grains at their huge storage facilities. “Currently, the government guarantees that no farmer will be left with unsold wheat and rice at mandis. If companies hoard grains at their silos then they will turn us away from their gates. Who will we sell to then?”
Apart from t he mammoth Adani silos in Moga and Kaithal, there are hundreds of other private ones across the country. In fact, the government has approved an ambitious plan to build 10 million tonnes of silo storage capacity in the coming years. Ten of the 62 silos will be in Punjab and the rest will be in Haryana, West Bengal, Rajasthan and Bihar. Most will have capacities of 50,000 metric tonnes.
Prem Vatsa’s Fairfax Group has also emerged as a big player in the silo business. The Group, which is a majority shareholder of the National Collateral Management Service (NCMS), has bagged at least 15 contracts, including three each in Punjab and Haryana, to build 8 lakh metric tonnes of silo storage in the country.
At present, Adani Agri Logistics has 8.75 lakh metric tonnes of silo storage capacity, and is building an additional 4 lakh metric tonnes capacity at Kannauj i n Uttar Pradesh and Darbhanga and Samastipur in Bihar.
Many of the farmers Business Standard spoke to in Sangrur, Ludhiana and Moga districts also fear that the new law will go against their interests as it states that any dispute between the farmer and the company or trader can be settled only through the sub divisional magistrate (SDM).
“What can a lowly SDM do before a big company? Now even if the government delays payments, we know that the money will come. A farmer can’t do anything if companies refuse or delay payments. This law will turn us into slaves,” says Rajbir Singh, a farmer in Sangrur,
The logic behind turning silos into government-notified mandis was to save the farmer and the government the 2.5 per cent that commission agents get at mandis. But most farmers dismiss the argument