‘Pitkala’s days of threatening government are over’ – Galdes

Protesting pitkala (vegetable market middlemen) refusing to pay a bank guarantee in line with new regulations have accused the government of “pushing them out of business”, arguing that they did not have the required money to make good on a bank guarantee.

On the other hand, parliamentary secretary Roderick Galdes insisted that the “middlemen’s days of threatening the government are over”, arguing that the middlemen’s insistence on retaining the status quo had prevented the upgrading of the system over the years.

Galdes also denied that the bank guarantee was threatening the middlemen’s livelihood, pointing out that the majority of them had now paid the guarantee.

Out of the 16 middlemen, at least five however still insist they do not want to pay it.

“What we can only conclude is that the government is trying to push us out of business… I don’t have the money to make good on a €68,000 bank guarantee. Where am I going to get that money from?” Sue Bonavia, the only woman pitkala at the pitkalija  vegetable market, told MaltaToday.

However, just before the article went to print, Bonavia informed MaltaToday that a number of farmers have since pledged their support to a number of middlemen, offering to collect the necessary money for a bank guarantee. 

Paul Bonello, a second middleman who has insisted that he will not pay the bank guarantee, argued that alleged abuses committed by other middlemen should be tackled directly with them.

“For 30 years they have accused us of committing abuses but they never found anything. I can give him my paperwork anytime he requests it. He can ask the farmers who come to me whether they are happy. I don’t think a farmer who thinks you’re cheating him would continue coming to you,” Bonello said.

Informed sources have told MaltaToday that some middlemen – they are responsible for finding buyers for farmers’ produce – owe farmers hundreds of thousands, with one of the middlemen having accumulated a debt of some €334,000. 

MaltaToday is also informed that the police have been asked to investigate cases where farmers last received payments last October.

Sources close to the vegetable market, who described the system as “feudal”, said that rampant abuse of the housewives’ sales – sales to non-hawkers – had led to one middleman making €167,000 in sales. Commercial enterprises, including restaurants and hotels, had infiltrated the scheme.

Through the housewives’ sales – which have now been stopped – the middlemen take the full amount of the sale. 

By law, middlemen cannot sell on credit, however the system had evolved into one where the middleman would first sell the produce, and receive payment later. Originally meant to sell by auction, the middleman today sells the produce to those who offer the best price and, generally, after having secured the hawkers of their own trust.

While the middleman sells the farmers’ produce to hawkers – technically meaning that the middleman cannot pay the farmer if the hawker has not paid him – it is the middleman’s responsibility to collect the money and chase after any defaulting hawkers and vendors.

Until 2013, when APS Bank was still operating the system, the bank ‘guaranteed’ that the farmers would get their money on time even though the full amount would not have yet been deposited.

The accumulation of dues, however, forced the bank to pull out of the system, because it was being “exposed”. Sources said APS did not want to renew their contract in 2012 but had agreed to monthly extensions until a solution was found.

The original system saw hawkers depositing their money in an account with APS and the bank would then pass on the monies to the farmers. A number of middlemen used to deposit these monies on behalf of hawkers who never learned how to operate the ATM. 

On their part, the middlemen would fill out a form listing the amount of farmers’ produce they would have sold and to which hawkers. 

An invoice, Bonello and Bonavia said, would then be issued by the department of agriculture. According to a third middleman, Peter Calleja, the middleman had “no right” to chase a defaulting vendor in court because the invoices were issued by the department, not by the middlemen.

This statement was categorically denied by the parliamentary secretariat for agriculture. 

In November last year, the middlemen received a letter from the parliamentary secretariat informing them of a meeting that was to take place on planned reforms at the vegetable market. 

“They had told us we would start collecting the money and they vaguely mentioned a bank guarantee but didn’t expand on it,” Bonavia said.  

A legal notice published last December then introduced a bank guarantee, changing the conditions of the middlemen’s operating licence.

The legal notice laid down that middlemen were to present a bank guarantee equivalent to 10% of the sales made in one year. Middlemen, according to law, are paid only 8% of the value of sales they broker in commission.

A letter sent to the hawkers on 27 February this year informed them that the APS Bank would no longer offer the cash office service, and that vouchers would now be paid directly to middlemen.

A month later, middlemen who had not yet paid the bank guarantee were told that unless they adhered to the new regulations, their licence would not be renewed.

On Thursday, eight middlemen accompanied by lawyer Adrian Delia held a press conference insisting that they would not be paying the bank guarantee that was imposed on them “without any consultation”. Delia also said that it should not be the middlemen to guarantee the payments of third parties.

Reportedly, the number of protesting middlemen had now gone down. 

The biggest bone of contention between the parliamentary secretariat and the middlemen who did not want to pay the bank guarantee was that the requested bank guarantee was too high.

For example, Bonavia explained, her commission earned for last year before tax was of €54,317.60 – 8% of the sales made on behalf of the farmers. The requested bank guarantee amounted to 10% (€68,000) on the sales made last year.

“I’ve never had any debt and my farmers were always paid on time. Is it fair to shut somebody out just because they don’t have the money to set a bank guarantee?”

Others however have bank guarantees that could go up as high as €160,000, reflecting €1.6 million in sales.

Roderick Galdes insisted that the bank guarantee was agreed to with various middlemen: “We discussed with each and every one and only two had initially protested. The bank guarantee is there to be used only when problems arise. It is a one-time payment.”

Galdes said the department carried out the necessary consultations and the bank guarantee was based on the turnover and profits made. He said the middlemen were given full flexibility on how to do the bank guarantee using the bank of their own choosing.

“The bank guarantee is not threatening their livelihood because it’s not coming out of their income. It is the same system used when government tenders are issued and bidders are asked to submit a bid bond or a bank guarantee,” he said.

According to Galdes, farmers agreed with the system because there were farmers who had been on the losing end through middlemen not paying them.

“The problem is that a number of middlemen want to retain the status quo: they have their own system and want to keep it. It’s not the first time that they held strikes in the past, with farmers being the ones to lose their produce. 

“The days of middlemen threatening the government are over. They cannot continue imposing systems which are no longer acceptable in this day and age. If we want to talk about standards we cannot continue operating with a 60-year-old mentality. We have to upgrade the system for farmers and consumers.”