CHENNAI: After the Centre announced the surprise move to introduce confiscatory demonetization early last week, there were hundreds of trucks filled with paddy that had lined up near Red Hills, the biggest paddy ‘mandi’ (market) in northern part of the State.
The business was in a big crisis, as farmers refused to accept old currency notes from traders. Over the weekend, however, all this have been cleared and business has become brisker, not for the established traders, but for new faces who have entered the field ever since demonetization.
The mandi, added irked traders, has become an easy point to launder black money where the farmers are offered double the amount that the traditional traders are offering. With the failure of monsoon, local traders fear that this paddy might be hoarded and sold at a higher price later next year when the demand shot up.
Almost all northern districts in Tamil Nadu, including Chennai, Vellore and Kancheepuram, buy paddy from the markets at Red Hills. Nearly 95 per cent of paddy comes from Andhra and Telangana, particularly Naidupeta and Sullurpet in Nellore. Though a registered association of local traders is handling the day-to-day affairs, brokers with inside info on quality play a key role in fixing the best deals.
On an average, 150 to 180 lorries, each carrying 20 to 22 tonnes of paddy, reach the Red Hills ‘mandi’ around 4 in the morning. Auctioning-cum-sale gets over within a matter of a few hours. That, however, was the routine. This dynamic trading point almost came to a standstill after Centre’s demonetization announcement.
“None of the farmers were ready to accept Rs 500 and Rs ,Rs 1000 currency notes. Consequently, supply to other districts in the State was affected,” said E Govindasamy, a local trader who was into the business for the past 20 years. As confusion reigned, hundreds of fully-loaded lorries were parked along the highway.
Taking advantage of this situation, strangers claiming to be traders from Madurai, Tiruchy and Kallakurichi approached the brokers here to buy the paddy in the stock. Even though they too were dealing with demonetized currencies, the brokers lured the farmers by offering a higher rate than what the association had fixed and commission on top of that, said Yuvaraj, a shop owner.
Unlike the cooperative societies in Tamil Nadu, banks in AP and Telangana which offered crop loans to farmers accepted demonetized currency notes from them, he added.
“While we offered Rs 1,600-Rs 1,800 per sack, the outsiders paid twice the rate,” said R Deva, a trader. He also raised suspicions that these people were trying to launder black money without falling under government radar.
When Express posed as a potential buyer, one of the brokers in Red Hills said that he can help in procuring up to 20 tonnes of paddy in a day for 10 per cent of the profit as his commission. Locals alleged that some brokers from Nellore caught hold of the farmers and truck drivers as they proceeded to Red Hills along the Chennai-Tada Highway before they entered the State to convince them to sell the consignment by offering commission ranging from Rs 2,000 to Rs 5,000 per trip.