The Indian Government’s abolition of smaller-denomination bank notes has not only put great strain on citizens wishing to purchase basic items, but it’s also making business harder for the nation’s fruit traders.
With the aim of clamping down on tax evasion, Prime Minister Narendra Modi announced on Nov. 9 that 500 and 1,000 rupee notes would no longer be considered legal tender.
According to the BBC these notes represent four-fifths of India’s currency in circulation and are an important source of savings for the population, who have until Dec. 30 to deposit the cash in banks.
“Until a few weeks back even the normal person with cash back at home thought he was rich, but now he says that all the money he has at home is mere paper,” said EDS Agro imports and operations manager Vijay Mathew, speaking with www.freshfruitportal.com during industry event Interpoma in Italy last week.
“Nobody comes to the fruit market with their debit card or credit card, or does a bank transfer to pick up a box of apples.
“We are a wholesale company and there are huge amounts of cash being paid. So that’s totally stalled.”
Before the announcement Mathew visited China to shore up apple supplies from what he claimed had been a bumper crop with low prices, incidentally during a season where another apple source the USA also had a large crop with good quality.
The executive ordered “many containers” and put them in Chinese cold stores to try and get a price advantage, which his company can command to an extent given it is one of India’s top four importers of the top fruit.
“But with the demonetization in India which happened that totally stalled businesses in India – we stopped loading from China,” he said. Since this interview took place, Mathew clarified that orders have now gradually picked up pace.
“We have it stowed back at the port waiting for the situation to set up properly so we could bring in fruits and start selling them in the market.
“It is not about uncertainty – it will get back to normal but we don’t know how soon.”
Mathew was hopeful the government would find a compromise with a more workable solution to the problem, but said “let’s sell everything electronically” in a worst case scenario.
“We will still be importing because we need fruits in India for people to eat but the situation will get better – it is in the coming future, say in a month or two.”
Regarding the apple market, Mathew said the low prices of domestic apples meant imports were practically off the cards between June and November, but this month the trade of foreign apples would start and last until mid-2017.
“The Chilean season starts from February or March, and Washington pretty much starts as early as November but pretty much nobody imports it then, so slowly by the first week of December we start ordering and we have orders by the middle of December,” Mathew said.
He added the market was very price sensitive, which meant countries of origin for India’s apple market in this period could change significantly depending on how seasons transpire around the world.
“A few years back we did a huge supply from Chile – we brought 600 containers from a single supplier in Chile, and the year after that we did 50 containers, so we had a step down, it was a total lay-off.
“The year after that we did a similar load from the U.S. and the year after that we stopped from the U.S., from 400 to 20 because China had an upper hand.
“This year China has an upper hand where they have apples at throw-away prices – they have it say from $12-15 a box for premium apples. Again, India is a price sensitive market, so they look at quality as well as price.”
News website Mid-day.com has also reported the cash restrictions could take their toll on mango growers as well, and most likely farmers of a range of crops, due to the difficulty in paying laborers.
Freshfruitportal.com was a guest of the Italian Trade Agency, which invited more than 80 buyers and journalists to the trade fair.