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Farmers hit as vegetable prices crash down after demonetisation

The government’s decision to scrap high-value currency has sent wholesale vegetable prices crashing to rock-bottom levels, bringing misery to millions of farmers hoping for good returns for their produce after two successive drought years.

black money crackdown Updated: Dec 26, 2016 10:06 IST
Chetan Chauhan
Demonetization

Bharat, a farmer from Akole district could find no buyers for carrots in the Sangamner market as the prices of farm produce came crashing down after demonetization.(Anshuman Poyrekar/HT Photo)

The government’s decision to scrap high-value currency has sent wholesale vegetable prices crashing to rock-bottom levels, bringing misery to millions of farmers hoping for good returns for their produce after two successive drought years.

Onions sold for just Re 1 per kilogram in wholesale markets at Madhya Pradesh’s Neemuch and Mandsaur this week while tomatoes cost less than Rs 2 per kg in Andhra Pradesh and Chandigarh.

A kilogram of cauliflower fetched farmers just Rs 3 in Bihar and potatoes cost Rs 3-5 per kilogram in wholesale markets in Uttar Pradesh.

“I am ruined,” said Prem Patidar, a Neemuch farmer who sold his produce at one-fifth the production cost.

The steep fall has forced farmers to discard their produce in Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Uttar Pradesh as they could not recover even transportation costs.

Read | ‘My business will be finished’: Cash crunch hits farmers in Punjab

“Yes, the prices in the wholesale markets have crashed,” an agriculture ministry official admitted but said any reports of farmers discarding produce was “sporadic” and that the crisis would resolve soon.

But, despite the price crash, consumers are unlikely to get any benefit as rates have not come down drastically in the retail market.

Above-normal monsoon rains in most parts of central and northern India had fields sprawling with crops with farmers expecting to make up for the loss suffered in the last two years.

But they suffered a setback when the government recalled Rs 1,000 and Rs 500 notes on November 8, triggering a nationwide cash crunch and a collapse in the demand for vegetables in wholesale markets.

“The market is down by 30-50 % as consumer demand is low,” said Parneet Singh at Delhi’s Azadpur Mandi, Asia’s biggest fruit and vegetable wholesale market, adding that average horticulture output was also above normal.

Compounding the problem is persistent refusal by truckers to ply on long routes such as Delhi-Mumbai as they don’t have enough cash to give drivers, most of whom are semi-literate and cannot operate digitally. Also, traders are unable to pay fare in cash to truckers.

Read | Farmers can buy seeds with old Rs 500 notes; relief for small businesses

Farmers suffered a setback when the government recalled Rs 1,000 and Rs 500 notes. (HT File Photo)

Madhya Pradeshb Kisan Ayog president Bansilal Gujar blamed the demonetisation-induced cash crunch as the prime reason for the price fall. “Earlier one trader used to lend cash to another trader but this practice has come to a halt as there is not enough money,” he said.

S Raju, a farmer from Anantapur district of Andhra Pradesh, who dumped two tonnes of tomatoes on Wednesday, said there were no buyers for the produce. “Our entire hard work has gone waste,” he said.

Nilkhand Yadav, a potato grower in UP’s Ferozabad, said the first “good crop” in five years was a waste.

Yadav and Raju are among India’s 118.6 million farmers, as per the 2011 Census --- equivalent to the population of the Philippines. More than 80% of them are small and marginal whose lives run on the price they fetch for their produce. A farmer with less than 2.5 hectares of land is categorized as small and with up to 5 hectares as marginal, according to agriculture census of 2010-11.

Read | Post demonetisation, a farmers’ wish list from the budget

Devendra Sharma, an independent agriculture expert, termed the situation as worse than drought saying that farmers could seek compensation for a natural calamity but not for loss because of demonetisation. “I think farmers will take a lot of time to recover from the impact” he added.

While Centre has a minimum support price for grains, there is no such cushion for horticulture products, leading to farmers facing market vagaries.

(With inputs from Hyderabad, Patna, Lucknow and Bhopal)