Category: Riba, Loans and Working in Banks

The ruling on selling Food for its same type, but of different Qualities, like Wheat and similar things

Question :

Our land produces grain and the currency with us is in grains due to the small amount of cash available. So, when the time of seeds comes, we buy from the merchants with the Sa' being equivalent to a riyal. Then, when the harvest time comes and the grains have been dried, we give two Sa's of them to the merchants for one riyal, for example. This is because the price at the time of harvest is cheaper than it is at the time of seeding. Is this transaction permissible?

Answer:

There is a difference of opinion among the scholars regarding this practice. Many of them hold the view that it is not permissible, because it is a means to selling wheat and other than it for its same type with differing qualities and delayed payment. That is exactly Riba from two aspects: the aspect of the differing qualities (Al-Fadhl) and the aspect of delayed payment (An-Nasi'ah). Another group of the people of knowledge has gone with the view that this is permissible, if the seller and the buyer do not secretly conspire to giving the wheat instead of cash, and they did not stipulate that in the contractual agreement. These are the statements of the people of knowledge concerning this issue. This dealing of you appears to contain a secret agreement to give more grain in exchange for less grain, because money is scarce. This is not permissible. Thus, it is obligatory upon the farmers in this type of situation to sell the grains to others besides the merchants who bought the seeds from them. Then, they should pay the merchants their due in cash. This is the safe and secure path, and it is in keeping away from Riba. If the sale occurs among the merchants and the farmers with cash, then the farmers end up paying with grains without any previously planned dealing and no condition, then most likely that is correct, as a group of the scholars has said. Especially since the farmer is poor and the merchant fears that if he does not take the grain from him as the price in place of the money that he owes, he will not get what is due to him and he will not receive anything. This is because the farmer will pay with grains to someone else and leave him or he will use it - the grain - on some other needs. This often happens with many of the poor farmers and the right of the merchants is lost. However, if the merchants and the farmers have a previously understood agreement to give grain after the harvest instead of cash, then the first sale is not correct due to the mentioned understood agreement. The merchant is not entitled to anything except what is equal to the grain that he gave to the farmer without any increase, which makes the matter like a loan, as it is not correct to sell with a secretly understood agreement to take more grain.

Source:
Ash-Shaykh Ibn Baz
Fatawa Islamiyah, Vol. 3 Pages 358-359