Trade: Farmers and exporters in Phuentsholing are taking a hit as a result of the demonitisation of INR 500 and 1,000 notes which has led to cardamom and potato sales dropping drastically.

Indian traders still adjusting to the demonetisation process that the Indian government announced on November 8, and are struggling to find cash to make payments. Traders say there is less cash available for the export oriented business in Phuentsholing.

Traders from across the border said they get to withdraw only INR 2,500 from ATMs in a day which is not enough. This, as a result, has affected the export market because most transactions are cash based.  

The price of cardamom has hit a record low of Nu 700/kg today. Just about a week ago the price hovered between Nu 800-900. An exporter, Yeshey Wangchuk, said the cardamom business has been badly affected by the demonitisation process. “Our buyers said they would be able to buy only after three months.”

Yeshey Wangchuk said he has not been able to export any cardamom since November 8. Another exporter in Phuentsholing, requesting anonymity, said cardamom exports has drastically gone down in Silliguri, India, which is a major market for Bhutan.

“This has led to Bangladeshi importers taking advantage,” he said. “If this continues the cardamom price will decline further.”  The exporter also said that the cardamom business cannot continue if there is no cash in the market.

Although Letter of Credits can be used, Bangladeshi importers, he said wanted to offer lower prices.

Meanwhile, there are more than 100 truckloads of potatoes at the Food Corporation of Bhutan Ltd (FCBL) auction yard in Phuentsholing waiting to be unloaded. Many have been there for more than eight days and are still waiting for their turn to unload.  Potato grower Yeshey Lham of Jabana, Paro was into her ninth day of waiting yesterday. “Today we were able to unload the potatoes,” she said yesterday. Yeshey Lham, who had 210 sacks of potatoes with her, said it could take a long time until the potatoes are auctioned. “It’s a problem.”

The farmers are also expecting a Nu 20 increase on transportation for every sack of potatoes as a result of vehicle charges. Each sack of potatoes usually sells for Nu 100.

Another potato grower, Mithey, also from Jabana, had no idea when his 152 sacks of potatoes would be unloaded. “By this time we would have returned home,” he said. “I have spent money waiting in Phuentsholing.”

Baiju Shah, an Indian trader, who buys produce from the farmers and then auctions it to other parties across the border, said buyers continue bringing INR 500 and 1,000 invalid notes.  “It has become difficult to find Ngultrums and do business,” he said, adding that there was no option but to accept the invalid notes.

Manindra Nath Roy, a buyer from Dhupguri, said it is difficult to find new notes. “I paid the buyers with old notes,” he said.

Meanwhile, mineral exports to Bangladesh is also being affected. While Letter of Credits are being used for payments, transportation is proving a challenge.  Trucks from Phuentsholing and Samdrupjongkhar take minerals until Burimari, on the India and Bangladesh border. Although trucks are fuelled in Bhutan, Indian Rupees is needed for other logistics.

Rajesh Rai | Phuentsholing