Notes Ban: Farmers suffer, commodity prices weaken

Notes Ban: Farmers suffer, commodity prices weaken
NEW DELHI |PUNE |CHANDIGARH: Agriculture commodity prices have weakened significantly after the demonetisation of 500 and 1,000-rupee notes, as farmers took the brunt of the sudden government move to check black money. Traders and companies expect the downward trend in the agriculture market to continue in the short term as the harvest season is on and the country is looking at a record kharif crop.
Farmers were among the worst affected as they had to either accept the demonetised notes or delayed payment on their produce, a double whammy coming on top of the price fall.

Many farmers who planned to buy inputs to plant rabi crops from wheat to chana with their receipts also felt being duped by shopkeepers who demanded higher rates for seeds against accepting Rs 500 and Rs 1,000 notes.

Those selling horticulture crop took a big hit because the commodity is perishable, said traders and farmers.

Prerana Desai, vice president at EdelweissBSE -5.20 % Agri Research, said compulsion to sell is much higher than buying and hence the market has gone down.

“The smallest player in the entire system, the farmer, is panicking. We expect prices can go down further, in the short term. Normally kharif crop prices bottoms down by November, but this time the downside will be exaggerated,” she said.
In Delhi’s Azadpur mandi, amidst the peak arrival of onion, tomato and other seasonal vegetable crop, traders said farmers were left in the lurch waiting for the cash.

“The entire mood in the mandi was of panic and chaos,” Rajender Sharma, former chairman of Azadpur Agricultural Produce Marketing Committee in Delhi, said. “There was major correction in prices in wholesale on the second day too. We are concerned that supplies are not curtailed as farmer may try to hold back crop,” he said on Thursday. Onion prices have come down by Rs 3-4 kg since Tuesday at Rs 5-11 a kg while potato prices have corrected by Rs 4-6 a kg at Rs 8-10 a kg, Sharma said. “The onions are coming from Rajasthan, MP, Maharashtra and Karnataka and potato from Punjab and Uttar Pradesh.
They (farmers) only wanted Rs 100 and other lower denominations notes, which were not in major supply,” he said, adding that prices could further crash as supplies and arrivals are expected to increase.

At Mumbai APMC, prices of fresh produce fell by about 25 per cent. “We initially rejected to accept the banned notes and hence no trade could take place till 10 am. Later, prices fell by about 20 per cent to 25 per cent at Navi Mumbai APMC on Wednesday while some trade took place on credit,” said Sanjay Pansare, former director of Vashi APMC. The demonetisation move is also expected to impact procurement of kharif crops, mainly paddy and cotton, as cash-dominated payments to farmers by arthiyas and commission agents face disruption.
Source: ECONOMIC TIMES