A group of poppy importers and India’s poppy farmers are alleging that a small number of importers have cornered the latest import order via an informal cartel. The allegation is also that these importers had paid Turkish exporters much in advance of the CBN order.
Questions sent to CBN by ET around two weeks back were not answered at the time of going to press. ET is not naming importers alleged to have acted as a cartel because it could not independently verify these charges. Some importers making these allegations spoke off record.
While a section of the importers cry foul over the alleged role of a cartel “cornering” import permits, the farmers are worried about an impending stock glut and depressed poppy prices next year.
According to a group of importers whom ET consulted, three large ‘impex’ (import-export) companies based out of Bengaluru, New Delhi and Pune – along with 70-odd group companies – have managed to corner a large number of import permits issued by CBN in the last week of September. This cartel is alleged to have made advance payment to Turkish poppy exporters (to procure poppy seeds), several days prior to the CBN’s import notification. “It is clear the cartel knew about the notification well in advance…,” said a Mumbai-based importer.
“The cartel members have effectively blocked a lion’s share of poppy seeds that can be imported to India this year. We were shown a ‘no-stock board’ when we approached some Turkish exporters. They told us the country-limits have been exhausted,” he said.
Poppy cultivation, much like poppy seed imports, is heavily restricted in India. The CBN gives licences to a few farmers (about 25,000 to 30,000 farmers) every year to grow the crop.
The seeding season begins in October; by February, farmers begin to collect latex by making a small incision on the plant’s stem. The latex collected thus, is transported to opium factories at Ghazipur and Neemuch to derive alkaloids such as morphine, papaverine, codeine and noscapine – all used in modern medicine. Poppy seeds are also used for cooking.
Last cropping season, farmers managed to get Rs 70,000 – 1,00,000 per quintal selling the seeds. In poppy farming, farmers rarely make money selling the latex exclusively to the government. They may, at best, get Rs 2,000 – 2500 per kilogram. If they manage to smuggle a few packets to external buyers – an act which is illegal and a punishable offence – they may pocket upto `25 lakh per kilogram. But that is unbelievably impossible as latex collection is conducted under strict CBN supervision.
There are restrictions (or entry barriers) on import of white poppy seeds to India. These can be shipped in only on permits issued by the Gwalior-based CBN. After CBN put out the notification, Indian importers have to ask any legitimate Turkish exporter to register a sales contract with the Turkish Grain Board (or TMO).
Once the sales contract is ready, the Indian importer approaches the CBN for a provisional registration – a copy of which will be sent to the TMO as well. The importer is then required to make an advance payment (20% of consignment cost) favouring the Turkish exporter. This effectively “blocks” the quantity that can be imported by the importer from Turkey.
“The cartel has made the payments well in advance (even before the date of CBN import notification), and has blocked several batches of consignments that can be imported,” alleged an importer from Jaipur.
“We approached the courts for a remedy; and the Gujarat High Court asked CBN to appear for a deposition in the first week of October; but the CBN hurriedly issued permits to cartel members prior to them appearing in court,” the importer added. CBN officials were not available for comments. An email sent to CBN’s offices at Gwalior, Neemuch and Lucknow elicited no response till press time.
The government could be importing seeds to satisfy WTO statute – which brackets poppy as a ‘freeto-import’ commodity. “The government has put in place restrictions / entry barriers to prevent free import of poppy and other narcotic substances into India,” says NN Menon of Trade Track, a foreign trade consultant.
“The government could be under some WTO compulsion to allow free import of poppy seeds into India. But farmers could be at the receiving end of this policy decision,” he adds.
RS Chundawat, an opium cultivation specialist at Horticulture College in Mandsaur, is baffled at the government’s decision to import poppy seeds this year. According to him, poppy yields have been robust over the past few years – with 11 – 14 quintal per hectare every year.
“The latex belongs to the government and the residual seeds belong to farmers. Farmers make good sums of money selling the seeds in open market,” Chundawat said.
“Seed yield was very good this year, and we got good price for it. If the government is importing seeds this year, seed prices may crash next year,” said Sheetalsingh Solanki, a poppy farmer from Mandsaur, Madhya Pradesh.