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The Procurement Preponed by Agri Processing Firms

New Delhi: As the prices of agriculture commodities have crashed after the demonetisation, agriculture processing firms, which had entered into procurement contracts with farmers at higher prices earlier, are under pressure, the demonetisation move forcing them to prepone their procurement season.

Pradipta Sahoo, business head, Safal products said, "Usually, processors enter the market in late December-early January. But now, with prices crashing, it's the right time to enter the market."

According to companies, the prices crash is because of the inability of traders to procure produce or make payments and good supply of the produce in the market. French beans costs Rs 9 a kg which is 50% cheaper than last year, while green peas price is currently 25%-30% lesser than last year at Rs 12-15 a kg.

Under the 'Quick Treat' brand, Gujarat-headquartered Vadilal which sells frozen vegetables, will procure over 9,000 tonnes of vegetables. This year prices are 10%-12% lesser than last year, said Rajesh Gandhi, MD, Vadilal. Gandhi said, “We are watching the price movement and will start peas processing soon."

According to Rakesh Chand Gupta of Sahu Khan Chand Food, Cauliflower prices have come down to Rs 1 a kg and green peas prices were being quoted at Rs 10-12 a kg compared to Rs 25 a kg a year back, in Amritsar mandi. "We expect peas prices to crash to Rs 5 a kg by the month-end," said Gupta, who supplies frozen vegetables to ITC, Cream Bell, Godrej and Reliance. To process in the four month season, the company buys 40,000 tonnes vegetables.

Pawan Inder Singh from Punjab-based Pagro Foods processes 30,000 tonnes of vegetables. He said, "We have done contract farming with farmers to procure French beans at Rs 18 a kg whereas the current price is Rs 9 a kg. Luckily, only a small quantity of green peas was contracted and we are keenly watching the price movement."