Update 2 | Pitkala up in arms over government-imposed bank guarantee

Pitkala up in arms over government-imposed bank guarantee

Roderick Galdes says bank guarantee ensures farmers are paid on time

A group of pitkala – the middlemen responsible for finding buyers for farmers’ produce – are protesting a government reform that changes the conditions of their operating license.

Today, a number of pitkala were not allowed entry into the pitkali vegetable market after failing to produce a bank guarantee. These discovered that their space inside the market, which is rented out, had been taken over by other pitkala. An increased police presence was also noted.

Adrian Delia, a laywer representing the group, said that that the pitkala were not consulted on the reform, which was published in a legal notice in December 2014, after only a single meeting.

The notice holds that pitkala, from the 31 March 2015, are to present a bank guarantee equivalent to 10% of the sales made in one year. Pitkala, according to law, are paid only 8% of the value of sales they broker.

A pitkal brokering €500,000 in sales per year for example, will take home €40,000 per year. To continue operating, he or she would have to produce a bank guarantee for €60,000, under the new reform. As a result, some simply cannot afford to meet these requirements.

Delia argued that the government was unilaterally changing license conditions after APS Bank, who used to handle the transactions, did not renew its contract to do so because of what it considered a high exposure to risk.

“The reform’s aim to increase accountability and transparency has nothing to do with imposing these new conditions on these pitkala,” Delia said. 

“The pitkala are not against the reforms and changes that the pitkalija needs to undergo,” Delia said. So far, he argues, the reform has only served to impose added burdens on pitkala and harm their livelihood. 

But parliamentary secretary for agriculture Roderick Galdes argued that a bank guarantee ensures that farmer are paid on time.

Of some 17 middlemen registered at Ta’ Qali, eight have already paid their bank guarantee, adhering to the law, Galdes said.

“Their licences expired in December and gave them three month to conform with the law. The obligation now includes a bank guarantee to ensure that farmers are paid on time. Many pitkala have followed the law, others are now protesting because they expected to go in this morning, even though their licence has expired,” he said.

With the licence comes the title to the sheds at the Pitkali Market Centre. The protesting pitkala this morning complained that other pitkala were now taking over their sheds.

According the Galdes, the right to the land (shed) was lost once the licence is lost.

“The middlemen who paid their bank guarantee this morning went to work as usual while farmers took their produce to the Pitkalija and everything was business as usual,” the junior minister said.

Protesting pitkala this morning told MaltaToday that farmers received text messages urging them to be at the Pitkalija at 3am, as opposed to the usual 5am time.

Galdes said the parliamentary secretariat wanted to have a transparent system ensuring that farmers are paid their dues. He said, that APS bank pulled out of the contract after it felt exposed “because a number of pitkala were not paying farmers what they owed them”.

He said it was “not true” that the bank guarantee was “money taken out of the pitkala’s turnover”. “These are monies saved in the bank … those who have thousands to pay in bank guarantees means that they make millions in turnover,” Galdes said.

He added that nothing was stopping the protesting pitkala from renewing their licence and returning to work.

In a reaction, the Nationalist Party said the best solution is always found in “consultation”. Toni Bezzina, PN spokesman for agriculture said there existed lack of agreement between the piktala and the government, “so much so that the two versions contradict each other”.

Bezzina said that the bank guarantee was imposed on the middlemen without any consultations, leading to the incidents reported at the Pitkalija.

“The best solution is found in consultation and talks held with all interested parties. Obviously, this shouldn’t be done at the detriment of farmers and the system must ensure that farmers are paid on time. The ideal solution can be found with proper consultation,” Bezzina said adding that the PN looked forward for a solution as soon as possible.