Corporate entities purchase directly from farmers at rates marginally higher than local mandi prices

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Traders and corporate houses are purchasing from farmers at rates marginally higher than the local mandi prices in the case of many crops such as paddy, bajra and soyabean. To say the very least, a part of the savings on mandi fees/taxes and arathiya commission are being passed on to farmers by them.

Corporate buyers and traders are buying up to 85 per cent via the direct purchase route in states where such purchases were allowed even before the latest laws. ITC Agro with its readymade e-choupal infrastructure has increased their direct purchases. Many other large trading companies like Adani group, Cargill and Glencore are currently buying from traders, who in turn are directly buying from farmers.

The entire benefit, however, is not transferred to farmers as the outside-mandi transactions involve higher expenses on labour, cleaning and grading of commodities and commission to the village-level aggregators. In mandis, the labour charge is shared by traders and farmers in 50:50 ratio, while traders are bearing these costs when buying at the village level.

Traders and direct purchasers claim they are paying at least 1 per cent more than the local mandi rates. The rates are higher depending on the location of the collection centres and quality of the crops. Farmers are also saving on hamali charges and freight when they are selling crops at their villages.

Mandi tax has been reduced to 1 per cent about a month ago from 4 per cent earlier in Haryana, while Punjab continues to levy 3 per cent each as market fee and rural development fee. Currently, there are apprehensions among traders and corporate firms after farmers’ protests over the Centre’s laws in Haryana and Punjab. Corporate entities have not shown adequate interest as they do not want to get into any controversy. 

Already Punjab, Rajasthan and Chhattisgarh have passed Bills in their respective assemblies to negate the impact of Central laws. Sorad to have been mulling to pass similar Bills.

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