Farmers selling produce 20% cheaper than normal: Ex-Agri Secy

Due to a lack of buyers in the market, farmers of perishable goods are selling their produce at 20 percent cheaper, says Former Agriculture Secretary Siraj Hussain. He says the farmers may also use poor quality seeds for sowing as they do not have the money to buy superior ones.Farmers will require more money in two weeks time, when they have to apply fertilizers on their crop, says Hussain. They have only till then to get cash in their hands to buy urea. But money may not be very easy to come by for them as co-operative banks refuse to exchange or deposit money into accounts in villages, says Ajay Vir Jakhar, Chairman, Bharat Krishak Samaj. "These State run co-operative banks in rural areas are in the pockets of politicians who make farmers suffer for their wrong doings. Co-operative banks have been instructed to not deposit money," says Jakhar.Although demonetisation may seem like a shock for the agricultural society, Hussain says the yields may remain unchanged due to this Narendra Modi decision. The yield will instead depend on the weather.Jakher too says the produce quantity may remain the same. He however is not pleased with how international commodity players have created mass hysteria in the media with rumours that India will import wheat and corn mainly from the US due to poor yields.Below is transcript of Siraj Hussain and Ajay Jhakar’s interview to Latha Venkatesh, Sonia Shenoy and Latha Venkatesh on CNBC-TV18. Latha: Any reports on sowing? Has rabi sowing gone on smoothly? Jhakar: If you talk in terms of area zone, it will go on smoothly. Farmers will manage to sow whatever needs to be sown, but that is not the right question. The right question that needs an answer is that the sowing cost for farmers will be higher. They will be using their own seeds so the quality of seeds being used may not be as good as last year and the third thing is that they may be using lesser inputs because of lesser credit available. So these are things that need to be taken into consideration while this is happening. Latha: But why would credit be poorly available. Banks are so flush with cash. They would be glad if credit was asked. Jhakar: For example, I have myself banked with a cooperative bank in my village and cooperative banks have been ordered and it has been notified that they cannot accept money from farmers. So, until and unless, farmers repay their old loans, they will not be able to get new loans. They are not even allowed to exchange their own old notes, even if they have accounts. I will give you an example for Punjab specifically where I farm. There are one million kisan credit cards in the cooperative banks. There are 1.8 lakh revolving cash credit accounts. Now, all those account holders are unable to deposit money in their own accounts. So, obviously they cannot avail of new loans, they are not even allowed to exchange money in their own accounts and not only that. These account holders, these 11.8 lakh people who have taken loans from cooperative banks, who are farmers who have taken loans from cooperative banks are being charged interest by the cooperative banks and they are unable to deposit money in their own accounts. And similarly, also what will happen is interest of pension, because normally farmers repay their loans once they have harvested the crop. So, they harvested the crop in the last one month and all those farmers who are now unable to deposit money in their accounts will also lose out on the 4 percent interest on pension. So, this demonetisation is actually having an impact on the ground. Sonia: How much could demonetisation hit some of these essential crop productivity like wheat for example because we hear and we read reports that although the centre has allowed using old notes for seeds, there is absolutely no cash in the system for other essentials like fertilisers, pesticides or even labour. How bad is the situation currently? Hussain: It will have some impact because if we see the data of fertiliser consumption, urea consumption is substantially lower than even last year, even though last year was a drought year. Similarly, the farmers will need application of fertiliser for potato crop, wheat crop, in another 15-20 days time. So, it is absolutely necessary that the cooperative system starts functioning again as Mr Jhakar was saying just now. Presently, the cooperative banks, the primary agricultural cooperative societies are not able to function because the district cooperative banks do not have cash which they can give to farmers. And as he has mentioned, from November 8 to November 14, the district cooperative banks were accepting old notes. But from November 14, they are not doing that. So, the farmers are stuck, especially the farmers who are members of the cooperatives. The farmers may have used old seed, last year’s seeds saved for wheat crop, etc. but it is going to affect productivity. In fact, even the area is down, wheat area is down about 15 percent, paddy area is down about 26 percent. Pulses are up because of good minimum support price (MSP). So, it is affecting the agricultural sector rather adversely. Sonia: What percentage of the states’ fertiliser requirement is supplied by private dealers and if the government provides farm inputs through these agric cooperative societies that you just pointed out, something that the Punjab government said that they will do, is there any kind of respite? Hussain: If the cooperative sector starts functioning then the farmers who are members of the cooperative sectors will be able to purchase fertiliser by using their crop loans. The difficulty is that in the backward areas in the Uttar Pradesh for example, he cooperatives are about the only source of fertiliser and other inputs. And more than that, the farmer needs cash to pay to labour. How does he pay the labour? So there are a number of plus points also which can emerge out of this. If we discuss marketing, then probably we will come to that. But as far inputs are concerned, we still have about two weeks to sort it out. So, it has to be done on an emergent basis. Latha: What is the non-agricultural rural experience? Increasingly, agriculture is a smaller part of the rural income and we have a lot more of dairy farming, forestry, that part? Jhakar: You need to go back to what Mr Siraj Hussain just said who I consider my mentor is that the RBI has now notified that the cooperative banks, if they have collected any old notes between November 8 and November 14, they will not change those, they will not accept those from primary agriculture societies. It gets worse. I have been watching your channel even before this interview started and question you were asking were what stocks to pick up. But what is happening is because of less money supply in city, people are buying less fruits and vegetables. And there is less demand in the cities and there is less supply. So obviously it has not led to inflation, but what has happened is that the demand for farmers fruits and vegetables has fallen and because of that, there is a difference. Farmers are getting around 25-30 percent less than what they would have normally expected at this time of the year with these conditions. Farmers are not only losing a lot on the credit part, they are also losing out on value for perishable commodities which cannot be, if somebody wants to buy a fridge, he may not buy it today, he will buy it a few months down the line. But the fruits and vegetables that he has not consumed today, the demand is gone forever. This is the thing that has taken place.