Legislator 'did not understand the role of pitkala', court told

A lawyer representing ten pitkala has blasted the logic behind a legal notice that requires them to give a bank guarantee of 10% of their total annual income.

According to an amendment to the Marketing of Agricultural Produce Regulations, enacted last January by legal notice 472 of 2014, "Every pitkal who applies for the renewal of a licence after the 31st day of December of 2014 shall provide a bank guarantee, equivalent to 10% of his previous year’s turnover from the sales of agricultural produce."

In the past, the farmer would leave his produce with his pitkal, who would then find the highest price for it. Pitkala would never handle money - a voucher system was in place whereby the buyer would deposit the money at APS, who would then distribute 8% to the pitkala and the rest to the farmers. 

However this all changed last November, when a meeting at the ministry was called, in which it was announced that the pitkala were going to be responsible for collecting the money instead of APS bank. They were warned that if they failed to provide the bank guarantee, their permit would not be renewed.

Up till 2012, APS bank had acted as a guarantor in cases where a pitkal would fail to deposit the income, to protect the farmer. Now that the agreement had not been renewed, the government argued that it needed a bank guarantee.

But the pitkala’s lawyer, Edward Gatt, told the court today that whoever drafted the law did not understand the role of the pitkal.

“The function of a pitkal is to synchronise the sale between the farmer and the hawker/seller,” said the lawyer. “The law speaks of 10% recovered from the sale made by the pitkal. This is already a flaw, because the pitkal does not sell. The sale happens between the farmer and the buyer, who is introduced to him by the pitkal”.

Gatt explained that the turnover of the pitkal is not the turnover of the farmer. The 10% guarantee should have been on the 8% commission they earn from acting as a middleman, not on the total turnover.

“Why should pitkala expose themselves to such risk when they do not even sell?”

Gatt also pointed out that the bank guarantee on uncollected monies is provided to the Director of Agriculture, with whom the farmer has no dealings.

Dr. Mario Spiteri from the Department of Agriculture, however, argued that before this system came into force, the bank was exposed to risk if the pitkal who gathered the money didn’t deposit it.

“The amounts that should have been deposited would sometimes reach €80,000...€100,000...the amounts would be substantial.” He said the 10% figure was proposed because more often than not, “a month or two would be skipped” and a figure would have to be decided on because “the government would be exposed to risk.”

Lawyer Abigail Caruana from the Attorney General’s office asked Spiteri what consultations were made with the pitkala.

“A meeting was held last November, and nobody objected...” Spiteri began, but was cut short by loud murmurs of dissent from the pitkala packing the courtroom, requiring the judge to bring the courtroom to order.

Spiteri said that many "one-to-one" meetings with the pitkala, “took place because some did not want to meet in front of others.”

“One must look at the context of what is actually happening,” said the lawyer. "The definition of sale in the law under which the legal notice was published includes ‘every transfer of objects’, not just for money. The definition of a pitkal under the same law is a person who sells. This was only contested now that there is the issue of the guarantee. True, the pitkal was not supposed to deposit money, but the problem was that it was not always the case in practice.”

Gatt argued that the old system had worked for generations. If the warrant is not granted, he warned, farmers will be unprotected. “I do not recall ever having a warrant with both requisites so completely satisfied” said the lawyer.

Judge Joseph R. Micallef pointed out to Gatt that the injunction essentially wanted to prevent the law from being effective. Gatt agreed, but added that it was a necessary measure to keep the pitkala in business while the case is in court, because “if it is taken up to appeal stage, it could take years”.

The judge will deliver a decree in chambers.