Futures trading in essential food commodities, in its present form, harms farmers and consumers. It only fattens wallets of middlemen and traders. The Centre seems to turn a blind eye to the problem, which may even blow up in the shape of a class war
A close look at Karamveer’s face and one can’t avoid but notice the contoured lines on his forehead – signs of early aging. The sugarcane farmer is a resident of Rasoolpur village in Hapur District of Uttar Pradesh where his ancestors have lived for more than a century. Nine years back, he used to sell sugarcane at the famed Hapur Mandi at Rs.95 per quintal. The sugar, extracted in a series of mills in western UP, was eventually sold in the market at Rs.12 per kg. An year ago, he sold all his produce to a middleman for Rs.165 per quintal. Sugar Prices were hovering around the Rs.40 a kg mark then. He also had to bear a cost of Rs.6 per quintal for transportation.
The produce from thousands of acres of sugarcane land in western Uttar Pradesh lands up in sugar mills via middlemen who sell it on a cash payment basis to rich mill owners. Last season, one quintal fetched a middleman Rs.250-300 on the day of the delivery itself. For Karamveer, an agonising post-delivery wait of two to three months has become a part of his quotidian existence. In the off season, he produces Arhar. Karamveer found out last year to his dismay that the lentil he sold at Rs.2,700 per quintal to a local middleman was costing an end consumer a whopping Rs.8,100. Karamveer is not your run of the mill small-time farmer. He belongs to the upper echelon of farmers in his community with large volume sales. “Smaller farmers have to wait for six months for payment. The middleman comes and says that he’ll make payment soon. He then disappears, sighting reasons like going to other areas for collecting payments from traders and mill owners. I deserved Rs.350 per quintal for my sugarcane. What I received was peanuts,’’ sighs Karamveer on the sidelines of a farmers’ meet in Delhi recently.
Under the Forward Contract Regulation Act of 1952, futures trading in all essential food commodities like wheat, rice and pulses was banned in India. The ban was slowly lifted on some commodities but in 2003, the then NDA government lifted ban on all food commodities including wheat and rice. Since 2006, the worst ever sustained food price inflation in Indian history has continued unabated. Massive speculation by big and small trading firms on fixed quantities of food grains results in a 2-3 time price surge in general. Traders and middlemen at multiple levels hoard hundreds of tonnes of food grains and sell them when the prices reach the zenith. This results in the end consumer buying the commodity at a price which is at least 4 times than what the poor farmer gets for his produce.
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