Farmers in dispute with pitkala over threat to remove bank guarantee

The pitkala middlemen who find buyers for farmers’ produce, have refused to turn up at the central vegetable market this week in protest at a government consultation process to improve the Pitkalija’s operations.

Only four of the 17 licensed middlemen turned up at the Pitkalija, accusing the government of wanting to increase the bank guarantee they pay each year as security for the payments due to farmers.

They want the government to do away altogether with bank guarantee but also want their commission increased from 8% to 15%.

Farmers and the pitkali are now pitted against each other, with the Għaqda Bdiewa Attivi has accusing the Pitkala Association of wanting to revoke the bank guarantee obligations on market fruit and vegetable traders.

Under a previous 2015 reform, the pitkala could only have their licenses renewed if they present a bank guarantee equivalent to 10% of the previous year’s sales made. At law they are paid 8% in commission on the sales they broker.

Now, the pitkala want to do away with the bank guarantee. “This is unacceptable. The costs and risks of vegetable and fruit production are very high, and in light of other major challenges such as competition with an imported product, costs are always rising,” the farmers’ association said in a statement.

“Challenges in the resources available to producers means that uncertainties in the payment of products would amount to a significant regression in the position of farmers to continue to grow food for the Maltese population and take care of our rural environment.”

The agriculture ministry said it will protect the farmers and provide a viable system through which they are paid in time and in full for the produce they sell to the pitkala.

Minister Anton Refalo categorically denied any plans to do away with the bank guarantee – or to raise the percentage pitkala pay as a bank guarantee. “The rate is not even up for discussion,” he told MaltaToday. “A change to the law would require the involvement of the State Attorney, Cabinet and parliament.”

Refalo said the consultations were aimed at putting up better safeguards for farmers. “This is their produce and they should be able to know what is happening with it, who it is being sold to, what it is being sold for and when.”

He said this was solely about providing full traceability of the produce, as well as introducing further safeguards to protect farmers.

Despite farmers willing to negotiate a 10% commission, the pitkala are fixed on 15%. But that would deal a blow to farmers, who already suffer from too little return on produce.

Sources told MaltaToday that, in actual fact, it was only six of the 17 middlemen who had to provide a larger bank guarantee, and only because they had a larger turnover in 2020 than in 2019. “Because they made more money last year, this year’s guarantee has to increase to reflect that,” the source said. “But it is the amount in relation to the previous year that is higher, not the percentage asked.”

The other 11 middlemen saw a drop in revenue last year so they will be putting up a smaller bank guarantee.

In the absence of most of the middlemen at the central market this week, six farmers took it upon themselves to set up shop and sell their produce directly themselves. They ended up making more money, having skipped the middleman directly.

Refalo said the major concern for the ministry remains the farmers, who have always suffered from a lack of secure and sure way to trace their produce.

As things stand, nothing stops a middleman from a selling a farmer’s produce for €1 but telling the farmer he sold it for 50c. The farmer has no way to learn, check or confirm what his produce brought on the market.

Introducing a traceability system – that could trace produce from the consumers’ table to the grocer, the pitkal, and on to the farmer’s field – would go a long way to assuaging most of existing concerns.

Edwin Vassallo, the PN’s spokesman for farming, urged the government to publish its plans for the Pitkalija without any further delays. “COVID-19 has already provided farmers with additional challenges,” he said. “We believe that any problems at the Pitkalija that can disrupt the sale of farmers’ produce, should be tackled immediately as they could cause irreparable harm to farmers.”

The Malta Youth in Agriculture (MaYA) Foundation said that with many of the middlemen not operating, many farmers would not be able to trade their produce as usual. “The timing for this disruption could not have been any worse considering that production is at its peak,” it said.

MaYA welcomed news that farmers co-op Farmers’ Central Cooperative Society Ltd. (FCCS), who already act as Pitkalija middlemen, would be willing to step in to replace the defaulting brokers.

The government Malta Food Agency has replaced the private company Pitkalija Limited in regulating individual piktala. “We appeal to the Ministry for Agriculture, Fisheries, Food and Animal Rights to make sure that this situation does not lead to further burdens on producers and provide all the necessary resources to avoid food waste especially in the midst of a pandemic,” MaYA said.