Agriculture mandi comes to halt due to liquidity crisis

Trade in mandis or Agriculture Produce Market Committees (APMC) in many parts of the country has come to a standstill because of spiralling effects of demonetisation move. Farmers, who’re used to accepting money only in the form of cash, resist money in any other form and traders don’t have cash with them to buy farm products. It is only in those mandis that are computerised and where payment is made electronically, is trade going on smoothly. 
According to traders, it would take a few weeks before the situation is back to normal when farmers start accepting electronic fund transfer or accept cheque payment.
There are about 200 mandis that are integrated with the electronic national agriculture market. However, trade on the electronic platform is very small. 
Rajesh Agrawal, former chairman of The Soybean Processors Association of India (SOPA), said: “APMCs in Madhya Pradesh were closed following the demonitisation move. These are set to open gradually, but it’ll take a while before trade becomes normal and farmers bring their produce as usual.” 
The closure has not impacted soya bean prices because market has been over-supplied. 
Madhya Pradesh Chief Minister Shivraj Singh Chouhan had to intervene to convince farmers that traders would transfer money into their bank accounts. In MP, such electronic payment would be easy as farmers in the state were registered for the wheat procurement programme four years ago and procurement money was deposited in their accounts. 
A Mumbai-based trader from Vashi APMC dealing with Rajasthan traders said that 14 mandis, where farmers have been convinced to accept electronic fund transfer, would open in one or two days. The rest start functioning gradually as acceptance among farmers increase. Mandis in Gujarat are no better as problems faced by them are similar. 
Devendra Vora of Friendship Trading, a wheat trader at Vashi APMC, said: “In Vashi, trade has fallen 90 per cent due to liquidity issues and later arrivals of trucks, which were held up on the roads due to various reasons following withdrawal of currency notes. The issue here is with transporters who brought commodities from producing centres are not accepting cheques and want cash, which is not available. This could be sorted out as systems develop.” 
Notably, more and more farmers are being convinced to accept digital payment. They have their Jan-Dhan accounts, if not other bank accounts. But for the common electronic agriculture market to develop and local mandis to discover transparent pricing, electronic fund transfer has to get acceptance among farmers and transporters. 
Rajesh Sinha, CEO of NCDEX E-markets Ltd, which has been developing e-APMCs in tie-up with the state government and has developed some 100 mandis in several states, said: “We have seen that some e-markets are yet to implement electronic payment transfer where liquidity issue has hurt the operations in the past few days while those mandis where trade has accepted electronic fund transfer are working smoothly.”

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