Indian Queen Basmati Rice by Bharat Industrial Enterprises Limited
Indian Queen Basmati Rice by Bharat Industrial Enterprises Limited

The warehousing industry has been hard by the recent demonetisation of high value currency. According to a big warehousing company it has not only hurt farmers but also hit the hard the warehousing business. The Indian government’s move to demonetize Rs 500 and Rs 1000 currency notes has come at a time of arrivals of major kharif crops such as paddy, soybean, groundnut, pulses and cotton to the market. Prices of most of these crops are trading at a discount as the wholesalers and brokers who buy the produce from farmers by paying cash and then store it in the warehouses are not able to execute deals due to shortage in cash circulation. It is about a month since demonetisation was implemented but there is no sign of normalcy returning anytime soon in terms of volumes of goods at the warehouses.

270 million tonnes of record production was expected of farmers at the start of the sowing season but now they are in a fix amidst the havoc created by demonetisation. The huge import of agriculture produce such as pulses and edible oil has caused strain in economy and farmers were given a call by the government to grow more pulses and oilseeds. Markets were expecting that the stress caused due to two consecutive year of deficient monsoon would disappear this time around. Lack of ability, due to cash crunch, to buy seeds, fertilisers and other inputs for sowing have dented any prospects of bumper crop in the coming year.

Arrivals of major kharif crops such as paddy, soybean, groundnut, cotton and pulses in Punjab, Haryana, Rajasthan, Madhya Pradesh, Maharashtra and Gujarat have been impacted due to lack of large (cash) transactions in mandis. Soybean, one of the important kharif crops in Rajasthan, Maharashtra and Madhya Pradesh, are delayed due to the cash crunch. Knowing well that they will not get payment in cash, farmers are holding back soybean which has a longer shelf-life. Even if farmers are willing to take payment by cheques, they are finding it difficult to pay cash for meeting expenses such as transportation and labour due to withdrawal limits. The current trend may impact Rabi sowing though the government has allowed farmers to buy seeds using demonetised currency notes.

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