Farmers and exporters in Bhutan’s Phuentsholing town, on the border with India, have been hit hard as the demonetisation of high-value currency by India has led to cardamom and potato sales dropping drastically.
Indian traders have been struggling to arrange cash for making payments, following the November 8 move by Indian Prime Minister Narendra Modi to crack down on black money, Bhutan’s Kuensel News reported.
According to the traders, sufficient cash is not available for the export-oriented businesses in Phuentsholing market.
Traders from across the border said they get to withdraw only Rs 2,500 from ATMs in a day which is not enough.
The trade has been severely affected in the export market as most of the transactions are cash based.
The price of cardamom on Friday hit a record low of Nu 700/kg, which was between Nu 800 and 900 a week ago. Ngultrum is the currency of the Kingdom of Bhutan. One Bhutanese Ngultrum equals One Indian Rupee.
Yeshey Wangchuk, an exporter, said the business has been badly affected by the demonetisation of 500 and 1,000 rupee notes by India. “Our buyers said they would be able to buy only after three months.”
Wangchuk said he has not been able to export any cardamom since the November 8 decision.
According to another exporter in Phuentsholing, cardamom export has drastically gone down in Silliguri, 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 the business cannot continue if there is no cash in the market.
Meanwhile, more than 100 truckloads of potatoes at the Food Corporation of Bhutan Ltd (FCBL) auction yard have been waiting to be unloaded in Phuentsholing.
Many have been there for more than eight days and are still waiting for their turn to unload.
Potato grower Yeshey Lham from Paro was into her ninth day of waiting on Friday.
“Today (Thursday) we were able to unload the potatoes,” she said. 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.
Mithey, another potato grower 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 Rs 500 and 1,000 notes which are no more legal tender, Kuensel reported.
“It has become difficult to find Ngultrums and do business,” he said, adding that there was no option but to accept those notes.
Manindra Nath Roy, a buyer from Dhupguri, said it was difficult to find new notes. “I paid the buyers with old notes.”
Meanwhile, mineral exports to Bangladesh has also been affected. While Letter of Credits are being used for payments, transportation has been proving a challenge.
Trucks from Phuentsholing and Samdrupjongkhar, on the border with India’s Assam state, take minerals until Burimari, border area between India and Bangladesh. Although trucks are fuelled in Bhutan, Indian Rupees is needed for other logistics which is not available in the market, the daily said.