The currency crisis due to demonetisation is hurting the farming community very badly, and also delaying sowing for the crucial Rabi season, which could push up prices later, say farmers' leaders.
In India's agricultural system where most transactions happen in cash, farmers have been faced with a double whammy due to demonetisation. They are either saddled with scrapped 500 and 1,000 rupee notes received for their farm produce before the November 8 demonetisation announcement, or are left with mounds of unsold agricultural produce as the grain merchants don't have the required legal tender, says Sudhir Panwar, President of Kisan Jagriti Manch.
“The grain merchants always pay in cash, never with cheque. There are no currency notes with the farmers. And in rural areas hardly any of the new (currency) notes has arrived,” Panwar, also member of the Planning Commission of Uttar Pradesh, told IANS.
“The least served areas in terms of availability of new currency notes are the rural areas… The rural areas are the least priority (of the authorities). Farmers have to queue in front of banks in nearby towns and villages for cash. They are wasting their time, especially as the Rabi sowing has already been delayed by 10-15 days,” he said.
According to Panwar, the time for sowing Rabi crops is from end October to November end. “This (demonetisation) is affecting farmers badly. Every farmer is affected across northern India,” said Panwar.
Jaipal Reddy, of the Federation of Farmers Organisation of Andhra Pradesh, concurs that the currency crunch is hurting the farming community.
“We farmers are facing a lot of problems. This is harvest time, in some places there is no market (due to demonetisation); the traders have closed the markets. We are not getting the Minimum Support Price, and nobody is coming forward to purchase our crop because of lack of money. The government should have planned for issuing more 50 and 100 rupee notes, which is needed,” Reddy told IANS over phone.
Reddy said the Rabi sowing season was “very delayed” due to lack of currency and hardly any labour, who have all gone with no cash left to be paid to them.
“What is the use of (the new) Rs 2,000, who is going to give the change? The farm labourers want day-to-day cash. And if you give them 2,000 rupees what will they do with it?” he asked.
According to Panwar, though the Finance Ministry announced that farmers can purchase seeds with old notes, “85 per cent of the seeds are purchased from private traders (who don't accept old notes), so it hardly has any impact”.
“And along with seeds, farmers need fertiliser and insecticide and so many other inputs, which are not available with the old notes. This demonetisation is hurting everybody,” he added.
Panwar said the government announcement that National Bank for Agriculture and Rural Development (Nabard) has sanctioned Rs 21,000 crore for credit to farmers is not the issue. “The issue is of currency crunch.”
“If they allow use of old currency notes for purchase of seeds from IFFCO and KRIBHCO, the two cooperative societies run by government, it will help the farmers a lot,” Panwar suggested.
He says initially farmers welcomed the announcement of demonetisation as they are “severely affected” by black money or parallel economy. “But now as they find their daily routine or livelihoods hit, and are spending most of their time standing in queues, they are turning against it as their farming operations are getting affected,” Panwar said, adding that farmers are also turning “rather violent or hostile in several places”.
Farm labourers are also hit as farmers don't have money to pay them. In the informal sector, non-agricultural operations, like road construction, building construction, have come to a halt — so everybody is stranded in this vicious cycle, said Panwar.
In another fallout of the demonetisation, farmers who are depositing the cheques given by traders in banks find to their dismay that the banks are deducting money against the credit taken, said Reddy.
“Generally farmers take money directly from traders, but now they are giving cheques. If I deposit a cheque in the bank, the banks are deducting the credit amount,” he added.