Three days before currency ban, Gujarat govt told dairies to go cashless

The Indian Express has a copy of a circular, dated November 12, 2016, issued by the Banaskantha District Co-operative Milk Producers Union (BDCMPU), Palanpur, asking all milk collection centres and unions to deposit dues in bank accounts by Wednesday, and that all buyers pay the unions by cheque.

Citing the Gujarat government circular of November 5, 2016, the dairy union circular stated, “All those consumers/milk producers who have not opened accounts should, with immediate effect, open accounts at the nearest bank branch in the village and operate it for settling milk dues.”

Most dairy farmers attached to Banas Dairy get their dues in two instalments in a month and on November 16, they were due for their first instalment of the current month.

Rajabhai Prajapati, 32, a resident of Nani Gharnal village of Banaskantha’s Deesa taluka, has six bigha of land besides two buffaloes and a cow. He gets paid Rs 12,000 per month for the milk, in two instalments, the last of which he received on October 27, which is nearly exhausted.

“We have no money to grist the grain, to buy groceries or seeds and fertiliser. No one is accepting the old currency notes I have,” said Prajapati, who has a five-member family. They had queued up at Dena Bank’s Bhildi branch for exchange from 8 am to 4 pm on Wednesday, but the bank closed before their turn.

Branch Manager at Dena Bank’s Bhildi Branch Ashutoshkumar Anand said: “Rush from the rural areas is tremendous here. People are protesting when they get notes of high denomination (Rs 2000 bills). We have limited stock of lower denomination notes.”

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Asked about payment of dues to dairy farmers, Anand said, “Those customers who have bank accounts will get it by bank transfer. I will send a BC (business correspondent) to collect the account numbers and will transfer the amount in those accounts.” And for those dairy customers who don’t have accounts, he said on Wednesday, that he would send BC to the villages for opening new accounts “which may take one or two days.”

Gujarat Minister for Health and Family Welfare Shankar Chaudhary, also chairman of Banas Dairy, confirmed that his government had put out a circular to turn all transactions on milk to the bank. “We did it so that the money goes directly into the accounts of the women,” said Chaudhary. Most of the dairy farming accounts are in the names of women, some of whom are also farmers themselves.

Seventy-year-old Ravji Chavda, a small-scale milk-producer who sells two litre of milk daily to the country’s biggest dairy brand Amul, is struggling for make ends meet after a local milk-cooperative society at his village Dhundi in Kheda district delayed weekly cash-payment. Short on money, Chavda is among the sizeable 40 per cent of milk-producers in Gujarat who currently do not have a bank account.

“Farmers like us hardly have any old denomination currency to exchange. I am borrowing money on credit for our daily needs. I have a son who is fighting cancer and I have been using the money from sale of milk to run the daily expenses,” said Chavda, lying on a wooden cot parked in a corner of his thatched hut, a space that is usually occupied by the lone buffalo that his family owns in a village of 200 milk-producing farmers. Chavda is one of the 36 lakh milk-producing farmers in Gujarat who make up the dairy cooperatives at the village-level.

R S Sodhi, managing director of Gujarat Co-operative Milk Marketing Federation (GCMMF), the umbrella body that owns Amul, said, “On an average, in a week we pay Rs 450 crore to milk producers in Gujarat. Before the demonetisation, 99 per cent of this amount used to be dispensed in cash. This was done because secretaries and the other office-bearers of village-level cooperative societies preferred to deal in cash. Now, they are being forced to pay through bank accounts.”

Banas Dairy with 1,250 village-level milk cooperative societies, having around 3.2 lakh farmers, is the largest of the 18 dairies under GCMMF, supplying 4.5 million litre milk per day. “Currently only 50-60 per cent of the farmers have bank accounts… The big farmers are being given money through their respective accounts. The smaller farmers do not have bank accounts and so we are helping them open one. There is definitely a handicap in paying the farmers, as on an average each milk-cooperative society has to be paid around Rs 2-2.5 lakh every week,” Sodhi said .

Amul daily procures nearly 17 million litre milk from 18,545 milk cooperative societies in villages. Stopping of cash payment has started to hurt smaller milk producers like Laxman Chavda who is forced to buy vegetables on credit from a grocer in Dhundi, where the nearest bank is five kilometer from Thasra town. “For the past 10 days, we have not received any payment. We have been asked to furnish identification documents for opening accounts. It appears that it will take a while before the money finally reaches me,” said Laxman.

The big farmers with more livestock are taking it easy. Around 10-km from Dhundi in Haripura village, dairy farmer Diptesh Patel has 80 cows and supplies 500-600 litres of milk to Amul. “I do not face any problem with regards to payment for milk. I supply directly to Amul and they credit my account on a weekly basis,” said Patel, whose employs 10 labourers to run and manage his farm .

The situation is similar at Thamna village in neighbouring Anand district that houses 300 farmers who produce 3,000 litre milk daily. “I am not sure how many farmers connected with my village’s milk-cooperative society have bank accounts. Our cash transaction is about Rs 5 lakh in every five days. Now, we are not able to pay the farmers in cash anymore,” said Vipul Patel, head of the milk cooperative society in Thamna that has just one bank.

Bavabhai Desai, 40, a farmer at Chatra village in Bhabhar taluka, who owns two cows and five buffaloes relies completely on Banas Dairy payments. He deposited his last payment which was in de-circulated currency in a bank near the village and is yet to receive the cash. “The bank is 13 km away and I went twice but could not withdraw because the bank and ATMs ran out of cash,” said Desai.

“The dairy secretary told me that cash payments would be possible only after December 1 and offered to give a cheque if there was urgency. But things are critical right now without the payment being realised.”

Prakashbhai Chaudhary, supervisor of Banas Dairy, said, “Banas Dairy transfers the dues to the bank accounts of respective dairies. The dairy secretary has to withdraw money from the accounts and pay the customers. However, due to the demonetisation, the secretary can withdraw only Rs 24,000 a week.”

Kanjibhai Korat, assistant general manager, milk department, Banas Dairy, said as per the circular, they had credited the amount in the respective dairy’s bank account. “Those who don’t have an account should get one opened. Dairies will pay the rest of the customers in cash”.