1. Demonetisation: Cash crunch sows seeds of an agricultural crisis as planting of rabi crops begins

Demonetisation: Cash crunch sows seeds of an agricultural crisis as planting of rabi crops begins

Belying the estimates of many, the sowing of rabi crops has declined marginally from last year, with the last one week witnessing major retardation in the case of wheat, the principal rabi crop.

By: | New Delhi | Published: November 19, 2016 6:26 AM
As per data released by the ministry of agriculture, the sowing of wheat, which was 38% higher than the year-ago period until November 11, has since lost momentum.

Belying the estimates of many, the sowing of rabi crops has declined marginally from last year, with the last one week witnessing major retardation in the case of wheat, the principal rabi crop. Farmers’ cash crunch due to the government’s demonetisation move is almost entirely to blame for this, according to sources.

As per data released by the ministry of agriculture, the sowing of wheat, which was 38% higher than the year-ago period until November 11, has since lost momentum. It was almost flattish as on Friday (see chart). About 24.1 million hectares were sown with various winter crops until Friday, down 1.65% against the year-ago period. Sowing of rice was down by 2.3% while that of coarse cereals declined a sharp 11%. The area under pulses, of which a record output was predicted, grew just 4.6%, while oilseeds did comparatively better with an increase in area of 7.4%.

The adverse impact of the demonetisation-induced cash crunch, which hit farmers’ ability to purchase seeds and fertiliser, could be even more than the latest data reveals. Agriculture experts said ideally wheat sowing would have to completed by the end of November in Punjab, one of the biggest producer of the grain in the country. Uttar Pradesh has covered 1.5 million hectares so far while the biggest wheat producing state has set a target of 9.9 million hectares. Till now, wheat has been sown in Punjab in 2.4 million hectares while the target for the season is 3.5 million hectares. In Haryana, the grain has been sown in only 850,000 hectares so far while the target for 2016-17 session is to cover 2.5 million hectares.

An agriculture ministry official, however, sought to allay fears that the currency crunch would take a heavy toll on rabi output. “We have already eased norms for cash withdrawal by farmers, which is expected boost rabi crops sowing in the next couple of weeks,” the official said.

The agriculture ministry has set the country’s grain production target at a record 270.10 million tonnes (mt) for the 2016-17 crop year (July-June), up 6.7% from the output of 253.23 mt in 2015-16. The sowing of rabi crops usually begins at the end of October and harvesting starts from April onwards.

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Earlier this week, the government had announced substantial increases in the minimum support price (MSP) for rabi crops — wheat, barley, gram masur, mustard and safflower — for the 2016-17 season. MSP is the price at which the government would buy wheat, pulses and oilseeds from farmers.

 

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