After demonetisation, the prices of wheat have spiralled because of low stocks and unavailability of cash
The prices of wheat have spiralled because of low stocks and unavailability of cash. IE reports that the spiralling wheat prices reflect the “precarious” domestic stocks. There are also concerns over production of new crop as farmers are facing problems in arranging sufficient cash for cultivation activities after the November 8 demonetisation of Rs 500 and Rs 1,000 currency notes by the Modi government.
During the latest e-auction of stocks by the Food Corporation of India’s (FCI) on November 17, wheat was sold at prices ranging from Rs 2,338-Rs 2,379 per quintal.
According to the report, the prices on November 17 were higher than the Rs 1,943-Rs 1,959 and Rs 2,124-Rs 2,129 rates during previous weekly e-auctions on November 11 and November 3.
Trade sources told IE that the demonetisation led to an initial fall of prices as it was believed that the millers and traders would face cash shortage and it would become difficult for them to make purchases.
“But now, it seems that lack of cash with farmers, which could potentially impact sowing and cultivation operations of the new crop, is a real concern,” the report quoted trade sources as saying.
The latest Ministry of Agriculture Ministry data shows that wheat was sown in 79.40 million hectares (mh) land in the current rabi season. This was a bit higher than the 78.83 mh covered during the same period of last year.
According to sources, the demonetisation would not affect the sowing as farmers generally use a portion of grain retained from the last year’s crop as seed.
However, farmers are worried if they would have enough cash for buying other inputs and paying the labourers.
According to the Centre, however, the cash crunch after the sudden demonetisation would ease out soon.