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Chilli prices still hit by demon effect
The drastic drop in chilli prices to Rs. 4500 per quintal in Asia\'s biggest Mirchi Yard and the consequent losses incurred by the farmers is being attributed to demonetisation and introduction of e-procurement system.
Guntur: The drastic drop in chilli prices to Rs. 4500 per quintal in Asia's biggest Mirchi Yard and the consequent losses incurred by the farmers is being attributed to demonetisation and introduction of e-procurement system.
Earlier, traders who have black money purchased chilli stocks from the farmers and kept the stocks in the cold storages to make a fast buck. Likewise, commission agents also used to purchase huge chilli stocks from the farmers and sell it after hiking the prices.
Due to demonetization, there is no free flow of money resulting in the traders facing problems. The chilli agents are not purchasing chilli stocks from the farmers. Due to over production of chillis, its demand is on the decline. The commission agents are also not ready to do business with white money.
Similarly, the government introduced e- procurement system to enable the farmers get a better price. Tobacco Board has already introduced this system. This system requires buyers to make payments through bank to the farmers. All the transaction will be recorded and the traders have to pay tax on the transactions. There is no scope for zero business, as was the case earlier, to avoid taxes.
Traders have to now show accounts for their investments. After the introduction of e-procurement system, traders are also not purchasing chilli stocks from the farmers. Due to reduction of demand, price of chilli has dipped from Rs.8000 to Rs.4,500 per quintal. If the same situation continues, chilli price is expected to decline further. Meanwhile, banks are not sanctioning loans on chilli stocks due the decreasing chilli prices.
A chilli trader on the condition of anonymity said, "Due to demonetization, there is no free flow of money. Earlier, businessmen who had black money purchased chilli and tobacco stocks and them in cold storage units. At present, businessmen and commission agents are not purchasing chilli stocks. Due to e-procurement system, traders now have to account for chilli purchases and pay taxes to the government. There is no chance to pump black money. This is also one of the reasons for the fall in chilli prices."
An official in the Agriculture Marketing Yard, T.Bhaskar Rao said, "Due to demonetization and e-procurement, traders have to do business with white money. There is no chance to do business with black money.
If they purchase chillis, there is no space in the cold storage units to keep chilli stocks." If the government procures chillis through Markfed, the farmers will get a better price. TDP government in 2004 purchased chillis from farmers through Markfed, at a better price.
