Coping with demonetisation: Cheque-mating the farmer

Coping with demonetisation: Cheque-mating the farmer

Agricultural markets are functioning again, with farmers being forced to accept cheque payments in place of cash.

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Crates carrying tomatoes at the Nashik agriculture produce market committee. (Express Photo: Mayur Bargaje)

Suryabhan Kusare hasn’t come to terms with the method of payments at the Pimpalgaon Baswant APMC (agriculture produce market committee) yard that’s barely a fortnight old. “Earlier, we were getting hard cash. Now, the traders and commission agents pay us by cheque. The new system, we’re told, would ensure that buying will go on and our payments are on time. But effectively, it means standing for hours in front of banks, first to deposit these cheques and then withdraw whatever little we are allowed to,” says this farmer from Sawargaon village in Niphad taluka of Maharashtra’s Nashik district.

Soon after the Centre’s November 8 announcement, demonetising all existing Rs 500 and Rs 1,000 denomination currency notes, traders in all of Nashik’s 17 wholesale produce mandis ceased operations, citing shortage of cash to pay farmers. On November 20, the district collector convened a meeting of stakeholders, wherein it was decided that farmers would henceforth be paid either by cheque or through electronic bank transfer. The markets have since opened — with most traders opting for payment through cheques.

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Kusare, who had harvested around 100 quintals of late-kharif season onions from his 2.5 acres holding, isn’t happy at all with the new arrangement. Only last week, he sold 25 quintals at the Pimpalgaon Baswant market, fetching him Rs 7,500 at Rs 300 per quintal. The trader wrote out a cheque for this amount drawn on ICICI Bank, which Kusare then took to deposit in his account at the Nashik District Central Cooperative Bank’s Sawargaon branch. “Depositing the cheque took me four hours. The bank people told me it would be cleared only in 4-5 days. After five days, I stood in the queue again and, at the end of it, got just a Rs 2,000 note,” complains Kusare.

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Farmer Pandit Gaikar with his cauliflower produce at the Nashik APMC. (Express Photo: Mayur Bargaje)

Pramod Kusare, a fellow-farmer from the same village, has a similar story to narrate. About eight days back, he took 50 crates of tomatoes (each of 20 kg) to Pimpalgaon Baswant and got a cheque of Rs 4,000 for it: “I stood for three hours to deposit the cheque and queued up for another two hours after four days to collect a single Rs 2,000 note. I was informed that the bank’s cash position did not permit me to get more”.


For farmers like the Kusare, November-December happens to also be the peak planting time for rabi season crops — mainly onions, tomatoes, and wheat. For them, the move from instant cash to receiving cheque payments has translated into productive time in the fields getting diverted to standing for hours in serpentine bank queues.

Just as Lasalgaon is for onions, Pimpalgaon Baswant — also in Nashik district — is known as the market that sets the price for tomatoes in the country. With an annual turnover exceeding Rs 1,000 crore, this APMC last year recorded total produce arrivals of over 76 lakh quintals, mostly tomatoes, onions and pomegranate. During the peak season, which is from November through the first week of December, daily tomato arrivals are in the range of 20,000-30,000 crates. Even now, 15,000-20,000 crates are arriving every day, with nearly 100 per cent payments to farmers being done though cheques issued by traders either on the same or following day.

Somnath Nimse, one of the 557 traders/commission agents at the Pimpalgaon Baswant APMC, admits that clearing of cheques takes 5-6 days. “We were willing to adopt electronic bank transfers, but the internet connectivity here isn’t good to enable that,” he notes. Tomato prices have crashed post-demonetisation; the average quoted rate, last Friday, at Nashik’s primary produce markets was as low as Rs 20 per crate or Rs 1/kg. “It’s not just farmers. We ourselves are struggling to sell in other (terminal) markets, as the traders there are finding it difficult to arrange funds for making purchases,” claims Nimse, who, in the past, has also exported tomatoes to Bangladesh. “That trade has completely stopped after November 8. During the peak season, I myself make tomato purchases of Rs 25-30 lakh in cash per day. As against this, the government has specified a weekly cash withdrawal limit of Rs 50,000 for traders, which is a cruel joke,” he adds.

Traders at Lasalgaon, a market that is synonymous with onions and deals in some 40 lakh quintals of the bulb annually, have also moved almost entirely to cheque payments post-demonetisation. “Right now, about 97 per cent of transactions are being done through cheques. We are quite happy having done away with cash payments. Our attempt would be next to go in for direct bank transfer,” states Nitin Jain, a commission agent-cum-exporter based in this APMC that is 30 km from Pimpalgaon Baswant.

Jagdish Apsunde, a trader and director at the APMC in Nashik — not far from the main city — has already taken the step of electronically transferring money into the accounts of farmers supplying to him. “I’ve got them to submit their bank account details along with a cancelled cheque to enable me to remit payments directly. This way, farmers are ensured of getting their money the very next day, saving them at least the trouble of having to deposit cheques,” observes Apsunde, whose daily peak business in tomatoes and onions runs to over Rs 10 lakh.

The Nashik APMC, which handles around 84 lakh quintals of produce annually, was closed for three working days after the demonetisation announcement. “Since the meeting with the district collector, the bulk of the 1,300-odd traders here have adopted non-cash means to pay farmers. We are also in the process of getting a public sector bank to open a branch within our mandi premises, which should help farmers,” informs KB Shevale, assistant secretary of the APMC.

Arun Govindrao Wagh, chairman of the smaller APMC at Sinnar, isn’t as enthusiastic about produce trading going cashless. “Although we have moved to cheque payments, it doesn’t help farmers, as they need cash for purchase of farm inputs and labour payments. How can one expect them to embrace debit or credit cards, leave alone internet banking?” he points out.

Farmers, on their part, seem resigned to accepting payments now largely through cheque. Pandit Gaikar recently sold 25 crates of cauliflower at the Nashik APMC, for which he received Rs 1,000. “The nearest bank is 15 km away from my village. I couldn’t possibly have gone all that distance to deposit a cheque for such a paltry amount, and further await payment. My trader was fortunately kind enough to agree and pay me Rs 1,000 in cash,” remarks this farmer from Gangavhare near Nashik.

Gaikar has harvested just a quarter of his cauliflower crop on one acre and has another two acres of brinjal almost ready to be picked and sold. “I don’t know what price I am going to get in today’s cashless market. Even I get a price, will I be able to lay my hands on cash from the sale? Without cash, how am I going to fill diesel in my tractor and make labour payments for my next crop, within the little planting time available now?” asks Gaikar. That’s a question bothering most farmers today.