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Paddy stocks may pile up as millers face cash crisis
Paddy purchase by rice millers, which typically begins in the second week of December, is likely to be hit by the cash crunch.
Guntur: Paddy purchase by rice millers, which typically begins in the second week of December, is likely to be hit by the cash crunch.
The millers are worried on how to get cash to pay not only farmers, but also for transportation and labour. A mill owner needs cash in lakhs only to pay lorry owners and hamalis.
And then, the big test comes: payment of cash to farmers within a week of paddy purchase. Sources in rice milling industry, they cannot issue cheques or transfer money electronically as most millers do zero business and do not show genuine accounts fearing taxes.
Highlights:
- Paddy purchasing begins in the second week of December and continues till June next year. But business is brisk in the first three months only as farmers need cash urgently to repay loans and meet their expenses
- Millers say due to cash crunch, they may not be able to pay even to lorry owners and hamalis, let alone farmers who ask for at least 25 per cent of money immediately after the sale
- Issuing of cheques and electronic transfer to farmers is ruled out as both millers and farmers have their own fears regarding them
Apart from this, farmers too would not accept no-cash mode of money payment as many of them have no accounts or reluctant to deposit money in account fearing adjustment towards loans by banks.
Rice millers say it is difficult for them to get cash in the prevailing circumstances. They say farmers demand at least 25 per cent of the cash as soon as they sell paddy to meet their immediate needs. If they can’t pay, the farmers may not sell the produce.
The rice millers, who normally continue to buy paddy till June next year, feel that the cash crunch may continue for at least three months.
But paddy purchasing is more in the first three months only. Milling industry sources say purchasing activity will pick up very slowly this season due to shortage of cash and this will make both millers and farmers suffer.
The district administration decided to open 37 paddy purchasing centres in the district from December 14. Depending upon the requirement, some more centres will be opened.
Guntur city Rice Millers Association president Chekuri Sambasiva Rao said it was not possible to make payments to farmers by cheques.
“When they demand cash, we should give some cash immediately. Only then they sell paddy. It is difficult to purchase paddy without cash.
We have to pay transport charges, unloading, loading charges immediately. If we export to other States, we will get payments after some time.
With demonetisation having its impact in all States, it may take more time than normal. We home some relief is on the way as bank officials are planning to liberalise the current accounts,” he added.
District Supply Officer E Chittibabu said, “Civil Supplies Corporation will issue cheques to the farmers who sold their paddy its counters.
They cheques will be handed over to farmers within three days for paddy purchase”.
