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Farmers go cashless in APMCs

Mandis in MP, Maharashtra, Gujarat moving to bank payment but Rajasthan growers refuse

Farm goods trade graduating to cashless payment

Farmers harvest cotton in a field in Nana Viramgam village in Gujarat

Dilip Kumar Jha Shashikant Trivedi Vimukt Dave Sanjeeb Mukherjee Mumbai/ Bhopal/ Ahmedabad/ New Delhi
The demonetising of high-value currencies had initially disturbed trade at agricultural mandis (wholesale markets). Now, farmers seem to have begun accepting payment for their produce through banking channels, setting the stage for cashless agri-trade. “Farmers in most APMC (Agricultural Produce Market Committee) mandis in Madhya Pradesh have shifted to real-time gross transfer (RTGS) or cheque mode of payment. Those requiring instant cash to meet their emergency requirements are withdrawing it within the limit the Reserve Bank of India has fixed. Traders are adjusting among themselves to meet immediate cash requirements for payment to labourers,” said Rakesh Shrivastava, commissioner of the state’s Mandi Board.
 
Trade sources, however, said that since November 8, transactions had declined 70%, due to the liquidity crunch. Minimum Support Price payment is also being made through RTGS. “Small traders, farmers and those who sell perishable commodities are in trouble. Sometimes, these farmers accept old currency notes. Soya growers are waiting, as they are expecting normalcy to return and better prices; this is now Rs 2,800-3,000 a quintal,” said another official in the board.

Madhya Pradesh has 257 mandis that largely buy soya, paddy, cotton and maize during the kharif season.

In Maharashtra, farmers at Lasalgaon, Vashi and Amravati APMC mandis have started accepting cheques in both forms, account payee and bearer’s favour. Sanjay Sanap, owner, Shivkrupa Traders, an onion trader at the Lasalgaon (Nashik) mandi, said: “Almost all farmers have bank accounts. So, transfer of funds directly into the account or cheque payment is accepted. In fact, they are happy that the entire cash amount is not coming at one go.”

While business in most mandis in Maharashtra has declined, it is steadily normalising with the easing of liquidity.

In Rajasthan, however, “Farmers’ protest continues. Arrival of commodities into mandis has disappeared. This is likely to continue till easing of cash supply into the system, that is, in one to two months,” said Hari Narayan Yadav, secretary, Rajasthan State Agricultural Marketing Board. Mandis are open but trade has come to a standstill — farmers are not willing to accept online transfer of funds or cheques.

And, with the cash shortage, most APMCs in Gujarat are not operational. Traders are ready to pay by cheque but farmers are not accepting it — they have accounts in cooperative banks, which still face several restrictions. “Farmers cannot get sufficient cash from co-op banks and that’s why they are not accepting cheques,” said Raman Patel, chairman, Gujarat State Agricultural Marketing Board.

In mandis where farmers have agreed to accept cheques, business has started. Gondal is one of these. The Rajkot APMC is optimistic. “We have asked farmers to bring their commodities and take payment by cheque till the situation improves. We hope they will come from tomorrow,” said D K Sakhiya, its secretary, on Wednesday.

At Unjha, largest jeera (cumin) mandi, the season (and for coriander seed and isabgul) is yet to begin but trading happens among traders and exporters through banking channels.

Mother Dairy, one of the biggest sellers of milk in North India, has decided to insist on making payments directly into the Jan-Dhan account of farmers. Amul from Gujarat had already shifted to that model prior to demonetisation. Mother Dairy procures around 3.5 million litres of milk daily, of which 30-40% is contributed by farmer producer companies where farmers have their accounts. Another 15% of milk comes from cooperatives and they have their own methods of making payment. The rest is private procurement, where payment is made through banks.

“We usually make payment to farmers in two-three cycles a month. The first payment has been made and the second payment cycle will begin in the next few days. We need to see what impact demonetisation is having in the rural sector,” S Nagarajan, managing director of Mother Dairy, told this newspaper. An estimated 700,000-800,000 farmers, mostly in the north, are associated with Mother Dairy.

Fertiliser major Iffco said in places where retailers have a direct and long-standing relationship with farmers, sales are on credit. Where this arrangement does not exist, it is insisting on same day or post-dated cheques from farmers, verified through their bank accounts. “Through this method, we ensure farmers have made payment in cheques for which they have adequate balance in their accounts,” a senior official said.

About 100 APMCs in the south, led by most of those in Karnataka, had already  shifted to the electronic online platform operated by NCDEX eMarkets Ltd. However, payment to farmers in electronic form is present in very few mandis.

Even so, after the demonetisation, Rajesh Sinha, chief executive at NCDEX eMarkets, said: "We have started getting requests from mandis in Gujarat and Andhra, in addition to Karnataka, for shifting to electronic fund transfer for farmers who are selling their produce on the electronic platform."

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First Published: Nov 24 2016 | 1:28 AM IST

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