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India govt directs fertiliser manufacturers to sell on credit as farmers face cash crunch
Nov. 22, 2016
Taking cognisance of complaints that farmers are unable to get fertilisers post-demonetisation due to non-availability of cash, India’s ministry of chemicals and fertilizers has asked all fertiliser manufacturers to make available crop-nutrients to farmers during the ongoing rabi season.
The Narendra Modi-led government on 8 November announced that all Rs.500 and Rs.1,000 denominated banknotes cease to be legal tender which has led to massive cash crunch across the country.
“It came to our notice that only cooperatives including Indian Farmers Fertiliser Cooperative Ltd (IFFCO) and Krishak Bharati Cooperative Ltd (KRIBHCO) are providing fertilisers to farmers on credit, while private and state-owned entities are not selling crop nutrients to farmers. Farmers are facing cash shortage as they are not able to sell their farm produce post-demonetisation,” said a senior government official on condition of anonymity.
Another government official, who also did not want to be named, said all fertiliser firms, including state-run and private, have been asked to provide key fertilisers to farmers at this point of time so that they are able to tide over this temporary crisis.
InfraCircle on 22 September reported that India’s fertiliser demand for the kharif season had remained subdued despite the country receiving near-normal monsoon after two successive years of drought. The primary reason behind low demand was low purchasing power of farmers.
The ministry of chemicals and fertilizers, IFFCO and KRIBHCO could not be contacted immediately.
Analysts believe fertiliser companies may come ahead and help farmers by selling fertiliser on credit.
“To an extent, government firms and cooperatives will be more sensitive towards giving away fertiliser through credit. But, in case of private firms, it will be the retailers who will have to take a call. As it will be a temporary situation, I won’t be surprised if retailers also start giving credit to farmers,” said K. Ravichandran, senior vice-president and co-head, corporate ratings at Icra Ltd.
If that does not happen, secondary sales of fertilisers will go down and will lead to piling up of inventories at the retailer level, he said, adding farmers’ income as well as farm productivity may go down.
In a significant development, the National Democratic Alliance government also allowed purchase of seeds using old Rs.500 notes by farmers from government outlets, national or state seeds corporations, central or state agricultural universities and the Indian Council of Agricultural research.
Earlier, the government permitted farmers to draw up to Rs.25,000 per week from bank accounts subject to the normal loan limits.
Source: vccircle fertilizer
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