More than a week after demonetisation of R500 and R1,000 banknotes, which led to a drop in arrivals of fruits and vegetables (F&V) and transactions at the Azadpur mandi in Delhi, the prices have not seen a sharp spike in the retail markets so far. Experts say due to the cash crunch, supplies of essential commodities like F&Vs and milk have not disrupted to a large extent as a major chunk of transactions between wholesale dealers and retailers is being done through credit.
“Although there are marginal difficulties faced by farmers, the supply line for fruits, vegetables and milk have not been disrupted because of currency crunch. There has not been any abnormal spike in prices of essential commodities which implies much of the transactions is done through credit,” Ashok Gulati, chair professor (agri), ICRIER, and former chairman, Commission for Agricultural Costs and Prices (CACP), told FE.
At Azadpur mandi — Asia’s biggest F&V wholesale market — an increase was witnessed in volume of cash transactions on Wednesday which were disrupted because of notes shortage since last one week. “We saw a sharp increase in cash transactions today (Wednesday) after a gap of one week which implies that there has been infusion of cash into the system,” Raj Kumar Bhatia, general secretary, chamber of the Azadpur Fruit and Vegetable Traders Association, said.
The Azadpur mandi supplies more than 15,000 tonnes of F&Vs to Delhi and the National Capital Region (NCR) on a daily basis, besides catering to consumers in most north Indian cities.
Meanwhile, the farmers who have just commenced sowing of rabi crops — wheat, pulses, and oilseeds — have been facing cash crunch due to demonetisation and have delayed purchase of vital inputs like pesticides and fertilisers for a week or so.
Bharat Krishak Samaj chairman Ajay Vir Jakhar said seed prices have firmed up a bit, but the overall rabi crop sowing has not been largely impacted. “Although there are inconveniences, it has not impacted the sowing of rabi crops as farmers had already purchased inputs in advance in most places,” Jakhar said.
Meanwhile, Fertiliser Association of India has written to the finance ministry for allowing farmers to buy fertilisers using old R500 and R1,000 notes.
Finance minister Arun Jaitley has called a pre-Budget consultation meeting with farmers and agriculture experts on November 19. Sources said the issue of demonetisation impacting the agriculture sector would be discussed extensively at the meeting.
Pronab Sen, former chairman of the National Statistical Commission, said although the government can offload wheat and rice from the official reserves to ease supplies of essential commodities if required, adequate availability of vegetables and pulses would be a key challenge.
As per the data released by the agriculture ministry last week, the rabi crops sowing so far has crossed 14.6 million hectare (mh) which is close to 16% more than the previous year. The area sown for wheat – the main rabi crop – has increased by 38% to 2.5 mh. The sowing of pulses and oilseeds have been reported at 4.9 mh and 4.2 mh, respectively.
The agriculture ministry has set the country’s grain production target at a record 270.10 million tonne (mt) for the 2016-17 crop year (July-June), up 6.7% from the output of 253.23 mt in 2015-16.