Allowing farmers to buy seeds with old notes will have limited impact

Experts claim impact of breather limited as most hybrid vegetable seeds are sold by private companies.

With sowing in the rabi season slowing down because of acute cash crunch in rural areas thanks to the demonetisation drive, the Centre on Monday allowed farmers to use old Rs 500 currency notes to purchase seeds.

But, they would be able to do so only from central and state government outlets and agriculture universities.

That apart, Finance Minister Arun Jaitley also directed  banks to provide funds to farmers through cooperative banks.

The easing of norms would, however, have only a limited impact on farmers except those who grow cereals, said players in the seeds sector and experts, as more than 80 per cent of the hybrid vegetable seeds are sold by private companies.

For wheat, rough estimates showed of around 3 million tonnes of seeds required, almost 50 per cent is reused, while the remaining is purchased from the markets.

In 2016-17, official sources said, the total requirement of wheat seeds had been estimated to be 1.17 million tonnes, while the total requirement of chana (chickpeas) seeds have been estimated to be around 0.17 million tonnes.

“Wheat sowing in many parts of Punjab is already over as the time till November 15 is considered ideal for sowing, which also implies that farmers there might have tied up their seeds and fertiliser requirements before demonetisation. But in areas where sowing hasn’t started yet such as eastern India, this decision might have some impact,” R K Gupta from the Indian Institute of Wheat and Barley Research told Business Standard.

The official order, which marks the second major relaxation the Centre announced for farmers, after allowing them to withdraw up to Rs 25,000 per week from their own KYC complaint bank accounts to buy seeds, has come at a time when rabi sowing has been completed in more 37 per cent of the normal acreage.

Though, officially, the Centre believes the slowdown in sowing has nothing to do with the cash crunch on account of demonetisation, ground reports from the major wheat-growing states of Punjab, Haryana, and Uttar Pradesh showed sowing had come to virtual standstill in many parts, as farmers don’t have money to purchase seeds, pesticides and fertilisers.

If the crunch continues for next few weeks and sowing is delayed further, it might have a severe impact on the final harvest as November is the most important month for sowing rabi crops.

Good residual moisture in the soil, along with filled reservoirs, has brightened the prospects of a bumper rabi harvest. However, the crisis generated in rural India due to demonetisation could derail all the gains.

“Hopefully, the definition of ‘units or outlets belonging to the central or state governments’ would imply state cooperative federations such as MARKFED in Punjab and HAFED in Haryana. Though, this is not sufficient. The norms need to be eased further as of the total seed sale, the private sector also has a substantial share,” Ajay Vir Jhakhar of Bharat Krishak Samaj said.

The vegetable farmers are unlikely to be benefitted from this relaxation as most hybrid vegetable seeds are produced by the private sector.

“In case of vegetables, the seed business is dominated by private players. Vegetable seeds are expensive. Hence, it would be difficult for farmers to make payment in lower denomination notes to the private outlets, given the current situation. The government should allow farmers to purchase agri inputs paying by Rs 500 and Rs 1,000 denomination,” said Kalyan Goswami from the National Seed Association of India.

Sameer Sawant, general manager, Namdhari Seeds, too, said move won’t have any impact on vegetable and other farmers and nothing will move at the dealers’ end.

Earlier, the Centre besides relaxing the withdrawal limit for farmers had also permitted APMC-registered traders to withdraw up to Rs 50,000 per week.

Image used for representational purposes only. Photograph: Reuters.