Sunday, Nov 27, 2022

When cash vanishes: A double-whammy

Farmers are facing the heat from both collapse of demand and inability to purchase inputs post-demonetisation.

demonetisation, modi, pm modi, narendra modi, india demonetisation, currency ban, old currency, 500 note ban, 1000 note ban, pune, pune market, agricultural produce market committee, wholesale market, wholesale market, atms, demonetisation effect, indian express, national news, india news The market yard of the wholesale agricultural produce mandi at Pune wears a deserted look post-demonetisation. (Express Photo: Pavan Khengre)

The last one week and more has brought nothing but bad news for Vasant Pimpale. This farmer from Pargaon Tarfe Ale, a village in Pune district’s Junnar taluka, has already lost 11 tonnes of green chilli grown on eight out of his 15-acres holding. The loss hasn’t been courtesy drought, flood or hail, but because of a disaster totally man-made.

“Till early this month, I used to dispatch roughly two tonnes of vegetables (including cabbage, cauliflower and brinjal) every day to the Vashi wholesale market in Navi Mumbai. But after November 8, I am unable to send even 800 kg, as the traders have told me that there is no demand,” says Pimpale, who has had to endure the loss of his chilli crop, which has turned from green to red, simply for lack of buyers. And he’s clear what has been behind his tale of misfortune: the Narendra Modi government’s decision to ‘demonetise’ Rs 500 and Rs 1,000 denomination currency notes.

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Since November 8, the day demonetisation happened, prices of green chilli at Vashi have fallen from around Rs 14 to Rs 3 per kg, while similarly dropping from Rs 13 to Rs 4 for cauliflower and from Rs 26 to Rs 12 for brinjal. “The market for our produce has all but collapsed,” complains Pimpale, who is among the many farmers in rural Maharashtra to have been impacted by the virtual disappearance of cash from the system.

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The bulk of them have operational bank accounts, but sell their entire produce for cash to traders who are now strapped for currency. With the mandis in Nashik, Lasalgaon, Manchar, Manmad and other produce market towns officially closed and even the terminal market at Vashi registering steep drop in trading volumes, farmers — particularly those growing perishables like vegetables and flowers that cannot remain in or outside fields too long after maturity — are the hardest hit.

Shriram Gadve, a farmer from Arvi near Narayangaon and also president of the Vegetable Growers Association of India, estimates that Junnar — the taluka where his village, too, falls — alone has some 40,000 acres under vegetable cultivation. 95 per cent of growers in this belt sell to the Vashi terminal market that is about 160 km away, while the rest dispose of their produce in nearby mandis such as Narayangaon and Manchar. The ones selling at Vashi do it through hundekaris.

The hundekaris are essentially local farmers, acting as conduits between growers, organised into groups, and traders sitting at Vashi. They aggregate the growers’ produce and arrange for its transport against a one per cent commission on the final price. While the traders in Vashi issue pattis (purchase slips) in the name of individual farmers, the entire payment after deducting transport cost and labour charges is made to the hundekaris. The hundekari may receive the payment either in cash or even through bank account transfer. But he pays the farmers belonging to his group entirely in cash.

“The pattis are sent to farmers a day after sale takes place, while payments happen on a weekly basis. We pay in cash after withdrawing the money from our own account. The farmers selling directly in local markets, too, transact wholly in cash,” explains Sachin Gadve, a five-acre farmer from Arvi who is also a hundekari for 60 growers. “Since demonetisation, the traders in Vashi have told us to send less quantities, as they are finding to it difficult to offload the produce further to retailers selling to the final consumer”, he adds.


“It’s very simple. The household end-buyer has no cash to purchase from the feriwala (hawker/retailer), who, in turn, sources from us. Everybody down the chain to the farmer has naturally been affected”, points out Rajendra Shelke, president of the Onion Potato Commission Agents’ and Traders’ Union at the Vashi market, which, on an average day, receives 700-800 truckloads of vegetables and 100-115 of onions and potatoes. On Wednesday, these numbers were down to 300 and 40 trucks, respectively. “Our whole business is done in cash. Today, we are neither able to sell the produce nor in a position to pay farmers”, he notes.

The situation is no different in other markets. Daily vegetable arrivals at Pune’s agriculture produce market committee mandi, which used to be around 200 truckloads, has dropped to 80. In most suburban markets, there has been no trading at all for the last one week. Jaydutt Holkar, chairman of the Lasalgaon market committee, has written a letter to the Chief Minister Devendra Fadnavis, seeking permission for transactions in mandis using the now-withdrawn Rs 500 and Rs 1,000 notes. “90 per cent of the business was, in any case, being done in these so-called high-value notes. If they have permitted petrol pumps to accept these, why cannot the same be allowed for agricultural produce in regulated markets such as ours?” he asks.

What makes matters worse is that no immediate end to the troubles seems to be in sight, at least for farmers. Hardly a week before demonetisation, Abhay Gadve, a five-acre farmer also from Arvi, had sent a two-tonne consignment of vegetables to Vashi and realised a net value of Rs 25,000 lakh after all the deductions. “In my latest patti, all that I got was Rs10,000 for the same quantity. The traders have sent out signals that there could be further reductions, unless cash returns to the system. If I sell at the rate they are quoting, even recovering input costs would be impossible. There’s a lot of cauliflower, cabbage, green chilli, onion, brinjal and coriander at this moment in the Junnar vegetable belt that is ready to be harvested. All this will be lost because of demonetisation. And we are stuck, since bank transfer is also not possible,” avers Gadve.


But it’s not just collapse of demand and prices. The cash crunch on account of demonetisation has also affected farmers ahead of plantings for the rabi season. “We normally start operations from the first week of November, during which time seeds, fertilisers and other inputs are procured. Since there is no cash, sowing of chana (chickpea), wheat and garlic is likely to be delayed by more than a fortnight. At the current rate, we may not even have plantings at all,” fears Deepak Bhise, president of the Junnar Taluka Tomato Growers’ Association.

Pimpale, the farmer from Pargaon Tarfe Ale village who also manages a farm input shop at Narayangaon, informs that he does daily business of Rs 2-3 lakh during this otherwise busy season. “Currently, I am hardly doing Rs 25,000-30,000. Farmers don’t have the cash, they are not used to paying through swipe cards or cheques, and I am in no position to accept the withdrawn currency notes. If cash isn’t injected into the system, we really don’t know what to do”, he sums up the situation.

First published on: 17-11-2016 at 02:21:10 am
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