There are four major crops currently being planted or in the early stages of growth — wheat, onion, potato and chana (chickpea) — whose status needs close monitoring in the coming weeks, to ensure least production disruptions from demonetisation-imposed cash crunch.
In three of the four commodities, tight supplies have already led to price rise. Wheat is now retailing in Delhi at Rs 24 per kg, up from Rs 19 at this time last year. This, even as stocks in government warehouses have depleted to a 9-year-low. Retail prices of milled chana dal and potato are, likewise, averaging Rs 140 and Rs 20 per kg, respectively, as against their corresponding levels of Rs 70 and Rs 12 a year ago. Consumers are paying about Rs 15/kg for onions — half of what they were last year at this point — but low plantings this rabi season can be a source of worry over the next 4-5 months.
Thankfully, data from the agriculture ministry shows area sown under both wheat and chana so far in the ongoing rabi season to be higher than the progressive coverage during the same period last year. Available indications are that there will be no shortfall in planted acreages for three reasons. The first is the improved soil and sub-soil moisture levels. Second, high prices are themselves an incentive for farmers to plant. In the case of wheat, the Rs 100 increase in MSP to Rs 1,625 per quintal is an added motivation. Third, both wheat and chana are non-hybrid crops, whose grain saved from the previous year’s crop can be used as seed for the current season. Most farmers would, therefore, not be buying seed. Lack of cash shouldn’t in any case be a deterrent for sowing.
Cash can, however, be an issue when it comes to purchase of other inputs like fertiliser, pesticide and labour. Farmers need to give three 50-kg bags of urea and one bag of di-ammonium phosphate for every acre of wheat. In potato, the requirement is even more: 3 bags urea and 1.5 bags each of DAP and muriate of potash. The cost of these works out to Rs 2,000-3,300 per acre. While there is no dearth of availability of fertilisers, whether farmers have the cash to purchase these isn’t clear. Also, the application has to be timely — farmers, for instance, need to give one bag of urea per acre 20-25 days after sowing. With cooperative banks not being allowed to accept the old notes, there is also a question mark on availability of sufficient credit for farmers in the current rabi season.
Farmers also need cash to pay labour, whose requirement is particularly high in onions and potatoes. In potato, the sowing operations were completed in Punjab by end-September, and by end-October in Uttar Pradesh. Right now, planting operations are taking place mainly in West Bengal and Bihar, and there are reports of farmers struggling to raise cash to pay labour.
The next few months will decide the fate of these four crops and also sugar, where, too, supply situation is tight —though that precedes monetisation. Preventing a flare-up in prices before Assembly elections in UP and Punjab would pose a huge challenge to the government at the Centre.