Business

Caught In A Contract

Reneging MNCs are robbing farmers of their dues

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Caught In A Contract
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Since the PAFC is a nodal agency responsible for the conduct of private companies, Outlook sought its managing director Himmat Singh's response to these allegations. Holding the aversion to market forces responsible for such accusations, he said, "Few people understand that this is purely a voluntary decision of the farmer to join a new way of agriculture. If he has a problem, who's stopping him from filing a criminal case against Pepsi or any of the companies allegedly duping him?" He, however, admits that no farmer has approached the PAFC yet for arbitration because, as he puts it, "the market absorbs the defects". But, as Gill points out, "Presently, it's an unequal relationship between the farmer and the companies. Since the latter are more powerful, they are arm-twisting them, and few have means for redressal."

Himmat Singh argues that the PAFC wants farmers to be quality-conscious. "In the post-wto regime, farmers have to get used to quality standards," he says. Except that quality has become a convenient escape route. The CACP report cites the example of potato farmers who had signed contracts with Pepsi. A 3-4 day wait at the factory gate results in increased sugar level, rendering the produce substandard. The rejected quantity fetches just Re 1 a kilo whereas the contract price is Rs 4.50. Baldev Singh Jaldar of Bhaliapur in Amritsar district and 12 others entered contracts with Pepsi last June for Rs 1,200 a quintal of Basmati after having bought seed from it. "When I took the yield to them, the company told me it was substandard. It is like my wife telling me she doesn't like my beard wagging when I talk. Having bought the seeds and signed the contract, what option do I have," he asks.

It's a vicious circle. As the CACP report points out, "Even if the market price rises above the contract price, Pepsi ensures farmers deliver their produce at the predetermined price. No concession is given. In case of default, the farmer is blacklisted." The threat of blacklisting and the uncertainty of market rates the next season force the farmer to forego the higher market rate. Since there is no official procurement of Basmati by governmental agencies, farmers are captive to the companies.

Nijjer is the company that has come in for the worst criticism from the CACP for late payment, bounced cheques and non-payment. But PAFC says Nijjer Agro is not even registered with it and hence it knows nothing of its operations. Laws of the jungle rather than the farm seem to prevail in Punjab where the arbitrator is a mere spectator.

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