The chaupal system in Madhya Pradesh, which led to the corporatisation of mandis, is under fire.
Protesting against the "unjust" system, 220 galla mandis (grain auction centres) observed a protest day on Tuesday. Mandis in Indore, Ujjain, Sehore, Bhopal, Vidisha, Barasia, Bairagarh, Katni, Jabalpur and Raisen remained closed. Over 20 million traders, labourers and others associated with the mandis joined in the protest.
Introduced by the Digvijay Singh government, it allegedly "favoured some corporate houses". Interestingly, none of the farmers' bodies backed the mandi traders' protest.
"Multinationals are eating into our share. We are losing business since they have been allowed to purchase grains directly from the farmers. The Digvijay Singh government amended the Mandi Act in 2000 in haste. We have lost 25 per cent of our share to the multinationals," Bhagirath Patidar, president of MP Anaj Dalhan Tilhan Vyapari Mahasangh, told Business Standard.
Patidar, who is also the president of Bhopal Mandi, said this was a gross violation of Section 19(4) of the Mandi Act, which provides equal opportunities to traders and farmers. "We welcome the companies if they participate in the Mandi auction. There should be healthy competition," he said.
Office-bearers of the Mandi Maharani Laxmiganj and Barasia Mandi explained the process. "There are 54 chaupals in various villages. Sanchalaks appointed by the multinationals offer lucrative prices to the farmers through an online system.
"When the farmers transport their commodities to the 'hub', the company executives turn them down and offer lower prices on various accounts. Since the process is not an open auction, unlike mandis, farmers find themselves cornered and are forced to sell the commodities at prices set by the companies," they said.
While MNCs are allowed to purchase grains directly from the farmers, a trader having a Mandi licence is barred from doing so. "This attracts a penal interest of five times the mandi fee," said Sevak Ram, a licence holder in Bhopal Mandi.
The Mandi traders also alleged that company officials and executives deployed at the 'hubs' purchased in the name of the farmers and then supply the grains to processing units to evade Mandi tax since farmers are exempt from the tax.
With the amendment in the Act, mandi vyaparis now do not earn commission. Instead, they participate in open auctions. Profit margins are pretty low on each transaction.
A commodity worth, say, Rs 1,500 per quintal fetches a 2 per cent mandi tax, 1 per cent sales tax and Re 0.20 contribution to the destitute. The total income for the mandis from such a transaction stands at Rs 45.
Radheshyam Maheshwari, general secretary, Bhopal Grain and Oilseeds Merchants Association, said, "ITC has made a dent in our business. They have opened a shopping mall 'chaupal sagar' near Sehore, which will hamper the growth of local businessmen."
Similarly, Cargil and Hindustan Lever are also purchasing commodities directly from the farmers."
The government has now set up a panel to look into the matter. "A one-member committee has been appointed under the chairmanship of former Cooperative Minister Laxminarayan Sharma, who is a Rajya Sabha member. It will investigate the matter and submit its report within a month," S K Vashishtha, commissioner, MP Mandi Board, told Business Standard.A short message to ITC's International Business Division Chief Executive Officer S Sivakumar evoked a lukewarm response. The Bhopal branch manager of ITC was not available for comment.