Agri Business

Markets come to a standstill as cash crunch hits traders and farmers

Our Bureau Ahmedabad/Bengaluru | Updated on January 15, 2018 Published on November 14, 2016

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Liquidity crunch continued to take a toll on the trades at the Agricultural Produce Market Committees (APMCs) across the country as farmers, by and large, refrained from bringing their crops to the markets.

In some markets like in Erode in Tamil Nadu, traders unable to deal with the currency shortage decided to declare holiday for a week and re-open on November 21.

As market arrivals take a hit, trade sources expect the current crisis to continue till normal cash flow resumes in mandis.

“The transaction at most APMCs take place mainly in cash and very few depend on cheque. The yard was closed for past four days and it will remain close for some more days if the liquidity situation doesn’t improve,” said Hareshbhai Dave, Chairman of Mahuva market yard in Bhavnagar district.

Trade sources in Gujarat expressed helplessness to make payments due to withdrawal limits from the banks. As market arrivals start for cotton and volumes increase for groundnut, the need for cash is much beyond the weekly withdrawal limit of ₹24,000 set by the RBI.

“In the peak arrival seasons, traders are out of cash. Trading at the yard may not take place for the next 15 days as it is a complete mess with discontinuation of the most widely accepted notes,” said Raghavjibhai Patel, a farmer leader in Saurashtra and chairman of Hapa – Jamnagar APMC.

Across the State, only Gondal market yard had groundnut arrivals on Monday at 14,400 bags (each of 40 kg), and Vankaner and Rajkot yards had cotton arrivals in the range of 11,000 to 17,500 bags respectively.

In Indore mandis, trading activities continued to remain paralysed. Sanjay Agrawal, a local commodities trader, said that with acute cash crunch and absence of new denomination with traders, arrival of commodities remained negligible and farmers stayed away from mandis.

APMC officials at Gadag in North Karnataka said the volumes of arrivals has taken a hit due to the prevailing liquidity crunch. “While several farmers were accepting payments through cheque, several others have decided to defer their realisations. Some farmers, who were not happy with the prevailing market rates, left their produce with the commission agents in anticipation of better prices,” officials said.

At Erode, when markets opened on Monday, only 500 bags of (sixteen lots) turmeric arrived for sale in all four markets. Turmeric farmers demanded cash in the form of ₹100 or ₹2,000 currencies; the traders could not fulfill their demand.

The Regulated Marketing Committee insisted on cheques. This was not accepted by traders and farmers. So, a stalemate ensued in the turmeric selling and buying. Subsequently, the Turmeric Merchants Association declared holiday until November 21.

Turmeric traders said already that they are facing problem of non-receipt of fresh upcountry demand for the turmeric, and also that only medium and poor quality turmeric are arriving for sale.

(with inputs from market reporters in Erode, Indore)

Published on November 14, 2016
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