When the lender gets exclusive purchase rights

Most cotton farmers end up selling their produce to traders who gave them inputs on credit

November 28, 2017 10:05 pm | Updated 10:06 pm IST - R. Avadhani

Cotton fields in Irgipally village in Sangareddy.

Cotton fields in Irgipally village in Sangareddy.

Yadaiah (name changed), a farmer from this mandal headquarters town, cultivated cotton in his three-acre land in addition to taking five acres on lease. He took seed and fertilizers on credit from a local dealer in the month of June before commencing cultivation of cotton.

In the first week of this month he harvested the crop by hiring labourers, but was forced to sell the produce to the trader who had given him seed, fertilizers and pesticides on credit.

“This is a routine for us every season. We have to borrow money from the traders as there are not sufficient funds available with us. There is an unwritten agreement to sell the produce to the traders who extended seed and fertilizers for us,” said the farmer.

It’s not just Yadaiah, many other farmers do the same. The farmers were not willing to be identified as they fear that they might be denied the facility next season if their names are revealed.

“They pay about ₹100 to ₹250 less than the market rate. But it is okay for us, because we wouldn’t have been able to cultivate the crop in the first place if the traders hadn’t helped us,” said the farmer.

“Many in our village took seed and fertilizers from a local trader and sold the cotton to him only. Farmers will not get the required inputs for the next farming season if they violate the unwritten agreement. Hence they have to honour the agreement,” said Ramulu, a farmer of Pulkurthi in Manoor mandal who cultivated cotton in one acre land, but purchased the seed and fertilizers by paying cash.

“About 60 per cent of the cotton farmers have taken seed and fertilizers from traders. The traders, on their part, are selling the cotton to ginning mills and benefiting,” said Prithvi Raj of Manjira Rytu Sangham.

“We have procured 777 bales of cotton from farmers so far from two purchase centres in Sadashivapet area,” Sanjay Dole, representative of Cotton Corporation of India (CCI) told The Hindu . That comes to 4,300 quintals.

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