Demonetisation: Farm produce supply chains feel the pinch

The currency note ban has disrupted business for the largest APMC markets, farmers in Maharashtra, Gujarat, Delhi and Kerala


Arrival of farm produce, including fruits and vegetables, at APMC markets has declined since the ban on Rs500 and Rs1000 notes were announced. Photo: HT
Arrival of farm produce, including fruits and vegetables, at APMC markets has declined since the ban on Rs500 and Rs1000 notes were announced. Photo: HT

Mumbai/New Delhi/Bengaluru: On 7 November, a day before Prime Minister Narendra Modi scrapped high-value banknotes, the regulated wholesale fruit market at Vashi in Navi Mumbai checked in around 250 trucks, each carrying 10 tonnes of farm produce. Around the same number of trucks arrived the next day at the market run by the Agriculture Produce Marketing Committee (APMC). But the number dropped to 170 trucks the next day

“There has been a drop of nearly 30% in the inflow of fruits since 8 November. Consequently, there has been a proportionate reduction in the revenue that the APMC receives,” said S. C. Kawarke, APMC deputy secretary for the terminal market .

The demonetisation of Rs500 and Rs1,000 notes has disrupted business at some of the largest APMC markets in states where the regulated markets are still major landing ports for farm produce. Likewise, the turmoil it unleashed has squeezed farmers in several states and even delayed the transfer of dues to rice growers in Kerala as banks cited a cash crunch.

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At Delhi’s Azadpur, Asia’s largest wholesale market dealing in fruits and vegetable, the acute cash crunch has more than halved daily business volumes. “Arrivals have reduced by more than half as we are not able to pay farmers,” said Methi Ram Kriplani, president of the Chamber of Azadpur Fruit and Vegetable Traders’ Association. “During this time of the year about 350 trucks of apple arrive but now between 150 to 200 trucks are coming,” he said, adding, “Despite lower supplies prices have fallen as people have reduced their consumption of apples.”

Navi Mumbai’s Vashi APMC, India’s top regulated wholesale market for farm produce in terms of annual revenue, has five vertical terminal markets—vegetables, onions and potatoes, fruits, grains, and spices and dried fruits. APMC officials and wholesalers said arrivals at all five markets had declined by 20-40% since 9 November.

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Elsewhere in Maharashtra, the cash crunch has hit APMC markets even harder. In Nashik district, transactions at all four APMC markets, including India’s biggest regulated wholesale market for onions at Lasalgaon, came to a halt on 9 November. After assurances from credit societies and the government, APMCs in Nashik are resuming business from Friday, and contracts will be realized through online transfer of payments to farmers.

The Azadpur market clocks around Rs20 crore of trade every day and a 50% loss in business means traders, farmers and vendors have taken a big hit. It is the same story at Bengaluru’s Yeshwantpur APMC. This market, which typically sees average transactions of around Rs70-80 crore per day (across all commodities, from vegetables to pulses), has seen it fall to an average of Rs7-8 crore per day. “Where is the currency or money for us to sell or buy? We can’t draw money or pay. Transactions have come down almost 90% in the last few days,” said Ramesh Chandra Lahoti, president of the Bengaluru Wholesale Foodgrain and Pulses Merchants Association. “In a few days, we are expecting stocks of togare (tool dal, or pigeon pea) of around 5,000-10,000kg. Now who has the money to buy from the farmer and then sell to us and then to the trader?”

In Kerala’s paddy-rich Palakkad district, P.V. Rajappan is one among the many farmers who have not got a single rupee transferred to their accounts, although it has been a month since he delivered his paddy yield of 10,250kg to the state-run Civil Supplies Corporation, popularly known as Supplyco. Rajappan says the payment of Rs2.25 lakh was supposed to come to his account last week, but Supplyco officials have told him and others not to expect payment soon. This comes at a time when a deficient north-east monsoon has left all southern states dry.

Maulik Pathak in Ahmedabad and Sharan Poovanna in Bengaluru contributed to this story.

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