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Thursday, Sep 19, 2019

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

Farmers — both growing seeds and crops — are predicting a slump in vegetable produce this coming season

india Updated: Dec 12, 2016 11:16 IST
Gurpreet Singh Nibber
Gurpreet Singh Nibber
Hindustan Times, Village Khokh (Patiala)
Nursery owner Nek Singh Khokh’s sales have dropped over the past month since buyers are low on cash.
Nursery owner Nek Singh Khokh’s sales have dropped over the past month since buyers are low on cash.(Anil Dayal/Hindustan Times)

Nek Singh Khokh fears he might wilt, just the way the saplings in his sprawling nursery might.

Ever since Prime Minister Narendra Modi unveiled his demonetisation plan, scrapping big denomination currency to drain the economy of black money and counterfeits, Khokh has been struggling to pay labourers to tend to his saplings.

The owner of a nursery, some 25 km west of the Punjab town of Sirhind, Khokh sells seeds and saplings — from potatoes to onions, tomato and chilly — to farmers from Punjab, Haryana and Uttar Pradesh. His sales have, however, dropped over the past month since buyers are low on cash. Now, the saplings too are currently threatened for want of farm hands.

Read | ‘Demonetisation will hit farmers, informal workers; long-term outlook positive’

“Our business involves lot of cash rotation. The complications are mounting with every passing day. I have never seen such an uncertain scenario in the past 50 years since I took over my family business and started producing saplings,” says Khokh, 70.

His problem is he has money, but can’t access it. The day Modi made his announcement, Khokh had Rs2.8 lakh in high-value currency which he deposited in a bank. Since then, he has been struggling to withdraw cash for payment to the labourers.

He is in a labour intensive business and needs to pay anywhere between 20 and 60 workers daily. “These days, I am cash strapped, and there are other expenses to buy fertiliser, pesticides, diesel and equipment which I am unable to do,” Khokh laments.

Khokh’s inconveniences spell bigger trouble for farmers who buy seeds and saplings from him. Coming amid the sowing season for rabi crop, the scarcity of cash is estimated to have delayed sowing in at least one-third of Punjab’s 35 lakh hectares of crop land. Khokh says the sowing for vegetables scheduled to start in January could also be in jeopardy.

“The demonetisation has adversely impacted agricultural activities,” admits GS Kalkat, chairman of Punjab’s state farmers’ commission.

Khokh could not have agreed more. He is currently preparing saplings of chilly over five acres which should be sufficient to grow the spicy ingredient over 900 acres. He needs money for that purpose but the squeeze in liquidity has put him in a tight spot.

He recently sold 1,500 quintals of potato seeds, one-third of which was on credit since farmers did not have the cash to buy. “I am sure farmers who come to buy chilly seeds will seek credit again. My business will be finished,” Khokh says.

Khokh is at one end of the agricultural chain. Sukhwinder Singh of Bhattian in Ludhiana is at the other by being a farmer who usually buys seeds from him.

“A farmer who plans to grow potato over 10 acres needs a cash investment of around Rs3 lakh. Costs include saplings, festiliser and pesticides. Most of the purchases are in cash, something we hardly have these days,” points out Singh.

The problem facing Jagdev Singh of Muteon is pressing. He had some cash savings which he spent on his daughter’s wedding recently. “Now no one would give me saplings on credit. Banks are of little help. I do not know how to sow crop this season,” he says.

Farmers — both growing seeds and crops — are predicting a slump in vegetable produce this coming season. Growing crops will be a challenge. Selling them will be no less a problem. Traders have already lowered the buying price citing cash crunch and farmers will be forced to sell in distress. “Traders’ loss is also farmers’ loss,” Khokh explains.

This is Part 5 of our ongoing series on the effect of demonetisation on rural India. The earlier parts focussed on Sunderbans, Bastar, Jammu & Kashmir and Vidarbha.

First Published: Dec 12, 2016 07:10 IST