A bumper crop is not always a boon. Farmers in Karnataka are realising this as they are unable to get reasonable prices for perishable commodities given the liquidity crunch.
Trade in the farming sector happens mainly in cash. Given the cash shortage, farmers are forced to either accept the scrapped notes or sell the produce on credit without any documentation. This makes them vulnerable to cheating. The first few days after demonetisation were particularly bad. Vegetables were sold at throwaway prices as cash-strapped traders stayed away.
Take onion, for instance, which can be stored for up to 60 days. There has been a bumper crop in Karnataka this year and APMC yards across the state have been flooded with the produce. The minimum support price (MSP) offered by the government for a quintal of onion is Rs 624, according to farmers.
The APMC yard at Yeshwantpur was a picture of utter chaos from November 9 to 12. Onion was sold for as low as Rs 100 and Rs 200 per quintal. Krishnappa, who brought a truckload of onions from Bagalkot, said he saw the commodity being sold at Rs 200 per quintal at the Yeshwantpur yard. Kumar, a farmer from Chitradurga and district secretary of Bharatiya Kisan Sangh (BKS), said demonetisation badly affected the business in the first week.
“Things are now looking up,” he said. Ironically, the BKS is affiliated to the Rashtriya Swayamsevak Sangh (RSS), the BJP’s ideological parent.
Bharat Shah, a wholesale merchant, said that at least Rs 1.5 crore worth of vegetables and fruits were destroyed in Bengaluru in the last one week because of the liquidity crunch.
“Both farmers and traders have incurred huge losses. We could not sell these commodities because people didn’t have money to even buy them at the lowest possible prices. This is a rare phenomenon,” Shah added.
N Manjunath, a coconut wholesale dealer, said, “Low-denomination notes are either unavailable or soiled. Farmers accept them unwillingly. The day they reject these notes, we will also discard them.”
Aware of the distress in the farming sector, the Prime Minister’s Office (PMO) has directed all states to assess the impact of demonetisation on farmers. Karnataka’s Department of Agricultural Marketing has started the work accordingly, a senior officer said.