Punjab's regulated market system was built under the Punjab Agricultural Produce Markets Act of 1961. There are around 1,800 mandis and purchase centres, more per unit area than in any other Indian state, so that no farmer is far from one.
The arhtiya is the commission agent in the mandi. He is licensed, takes a commission on the sale, and in practice also lends. Because he lends without paperwork, at short notice, for weddings and medical bills as well as for inputs, and because he settles against the next crop, he is embedded in rural credit in a way no bank is.
Interest on that credit is high and the debt is generational. Punjab's farm suicide surveys consistently find non-institutional debt at the centre of the cases they examine.
The mandi system is also the mechanism through which the minimum support price actually reaches farmers, which is why any proposal that bypasses it is read here as a threat rather than as a reform.
The arhtiya is both the reason procurement works in Punjab and a principal source of the debt that is destroying its farmers. Both statements are true at once and the policy argument has never adequately held both.
The market yard is regulated by the state board, the arhtiya holds a licence to auction, and the state agencies buy the grain at the support price.
The arhtiya is also the lender, the transporter and often the source of inputs, which means the farmer's whole financial relationship runs through the person who sells his crop.
That is why the mandi system cannot be reformed as a market question alone. Removing the arhtiya removes the credit and nothing has been built to replace it.