Demonetisation: Vegetable growers feel the pinch

Fertilisers and pesticides dealers shift to credit sales

Onion prices in most retail markets have softened by Rs 1-3 a kg in the past fortnight. Tomatoes have become cheaper by Rs 3-10 a kg since the Centre's demonetisation disruption.

This might mean a money problem for farmers, in buying seeds for the next crop. The recent decision to allow farmers old Rs 500 notes to purchase seeds from select state-run outlets might not help much, as a little more than 80 per cent of vegetable seeds used in the country are sold by private traders.

Cauliflower, cabbage, okra, brinjal, tomatoes and green chillies are among those produced during the rabi season, the big one for vegetables as it comes immediately after the monsoon.

"In Maharashtra, almost 99 per cent of the vegetable seeds industry is in private hands. Sowing area will get adversely impacted if the situation continues for a few more days," Sriram Gandhve, president of the Vegetable Growers Association of India, told this newspaper.

"Trade has come to the virtual halt in many parts," says Satish Kagliwal, founder-head, National Seed Association of India. "We have written to the government seeking relaxation in seed and fertiliser purchases, even with some riders. We are waiting for the response."

He said if the norms were not losened, rabi vegetable sowing would take a massive hit, as almost 90 per cent of high yielding hybrid seeds, fertiliser or other agricultural inputs are sold by private players.

In Delhi's Azadpur mandi (wholesale market), though the situation has improved in recent days, traders say supplies can dry up at any time. "Though fruit and vegetable arrivals have come down, prices have been fairly stable so far but the same can't be said about goods which are forward-sold from the mandi," said a senior official from Mother Dairy's Safal, one of the biggest organised retail trading chains in North India.

For fertiliser and pesticides, most retailers and dealers have shifted to a system of credit, with some charging a premium of 15 per cent for farmers who aren't able to pay upfront.

If farmers don't have adequate cash till the middle of December, that might mean an end to the prime sowing season, with large tracts left fallow. "The Centre's directive to fertiliser companies to sell on credit to farmers can only happen if it releases a supplementary budget for subsidies, as the entire budgeted subsidy of Rs 70,000 crore has been exhausted. The government has paid subsidy for DAP and NPK only till July and for urea up to September," said Ravi Prasad, former president of the fertiliser division of Coromandel International, now spokesperson for the company.

He said in some parts, dealers were charging up to 24 per cent interest from farmers who are unable to pay cash upfront, forcing many growers to switch to the less expensive NPK (costing around Rs 700 a bag) as compared to DAP (Rs 1,200 a bag).

Ankur Aggarwal, managing director of agro-chemicals company Crystal Crop, said there had been a 10 per cent rise in credit sales.