Demonetisation impact: Flower sales across the country down 80% after cash flow dries up

Flower market, one of the industries dealing in the perishable goods segment, has seen sales volume decline by 80 percent in the last week or so, following the post-monetisation cash drought across the country, said merchants and smaller traders Firstpost spoke to on Monday. This has, in turn, impacted the daily earnings of thousands of small traders, who had to abandon significant chunk of their stock after failing to find buyers.

Demonetisation impact: Flower sales across the country down 80% after cash flow dries up

Thirteen days have passed since Prime Minister Narendra Modi announced one of the biggest demonetisation exercises in the country to crack down on the fake currency market and the black money network. But, the lack of planning on the implementation front has had cascading impact on several sectors that primarily deals with the cash economy. Flower business is one such. Modi withdrew Rs 500,Rs 1,000 currency notes in a televised statement on the evening of 8 November.

According to industry officials, flower merchants and boutiques have seen sales dropping since PM’s announcement. Horticulturists and those in the wholesale and retail business of flowers, bouquets, garlands, floral decorations have lost almost 80 percent gross turnover. "From a daily sales of Rs 12 to Rs 13 lakh a month, the business has now come down to a mere Rs 3 lakh," said Shashikant Viswanath Auti, a qualified horticulturist, in Pune, who is a wholesaler of roses.

Sales drop

Mumbai’s phool galli in Dadar, wears a desolate look on Monday morning. There is neither any rush at any of the flower stalls nor haggling for prices to buy the many-hued flowers in the market.

With Rs 100 denomination currency in short supply at the banks and the ATMs, too, and the new currency in Rs 500 denominations just trickling in to the system, customers are hard pressed to buy flowers. That is not a priority for now as daily essentials have to be stocked.

Marriage functions too have started curtailing the scale of flower decoration and the ones who are into lavish floral decorations simply thrust the annulled notes into the hands of the florists. “What do you want me to do? Say, I can’t accept it,” asks Shyam Pandurang Bhagat, a fifth generation flower seller at Dadar.

Most of the florists at the Dadar market are retailers who live in homes on rent with extended family members -- wife children, brother and his family. Bhagat pays Rs 15,000 as rent and has to pay for electricity and water bills, too. Either his children or nephews stand in queues at the bank to deposit the cash while another stands in the queue for exchange of old notes. When the queue gets closer to the bank counter, the children call either Bhagat or his brother who then go to the bank and deposit cash or exchange the annulled notes.

Business is only 20 percent of what it was before the monetisation announcement. “We have customers who come to us daily and pay at the end of the month,” said Bhagat, who are the only faithful to be seen outside the stall now. The big ticket buyers have thinned down considerably.

The same plight that Bhagat is facing since 9 November, plays across the country in the flower business.  Though almost all in the business of flowers hailed the PM’s decision to root black money, they also complained that the ‘devil’ in the details was missed.

Auti, a qualified horticulturist, who worked in Nigeria for many years returned to India a few years ago and decided to set shop in Pune.  He cultivates almost 4 acres of farm where he grows only roses. “It was a good business with a turnover of Rs 12 to Rs 13 lakh a month,” he said. The  business has now hit bottom with a turnover of a mere Rs 3 lakh.

Auti does not own the farm and has to pay the owner of the land rents ranging from Rs 30,000 to Rs 40,000 a month depending on the location of the land holding. Each acre of land yields 2,000 to 2,500 flowers daily and he had a workforce of 16-18 people. However, with the drastic drop in business, Auti has cut down the workforce to just 6 people and has started working in the farm himself.

“I cannot pay Rs 9,000 a month to my labourers when the business is down by one-third,” he said.

Since all the roses are not sold on a daily basis, Auti dumps the flowers in his farm after plucking them so that they become manure to his field. He also 'manipulates' the leaves so that they can bloom late. The physical intervention in the growth of flowers will affect its cycle for six months, at least, he said. "But I have no choice. I can't sell all that blooms here," said Auti.

Auti said that the Modi government’s poll plank was sab ka vikaas which has, with the announcement on monetisation, not factored the drop in business and drastic change in lifestyle in a mere 13 days. “Did the government not know that the ATMs were not capable of accepting the new currency notes? Could the government not have printed more Rs 100 currency notes?”

He feels that though the money is slowly trickling into the economy with new currency notes, it will take at least three months if not more, to get businesses like his back on an even keel.

Farmers upset

On 17 November, Shaktikanta Das, Economic Affairs Secretary, announced that the government had decided to permit farmers to draw up to Rs 25,000 per week against crop loans sanctioned and credited to their accounts. The government also decided that the time limit in crop insurance premium cases would be extended by 15 days.

Under the new concessions offered to the farmers, they can withdraw Rs 25,000 per week from their account which farmers receive either by cheque or which is credited by RTGS accounts. Kisan Credit Cards will be subject to the same new limit, Das added.

But Auti disagrees that government benefits have benefited the actual farmers.

“Who is the farmer? I am the one who is tilling the land and giving the farmer or landowner a rent for using his land. The government is not offering me any credit or concession but to the owner of the land," he said.

Down South, in Chennai, where wearing flowers on hair is a daily habit of women in the metro city, flowers are now sold at a premium. The women who brought over two or three handspans of flowers have settled for half a handspan, says Muthumariappan of Venkateswara Flower decorators, Chennai. He sells flowers in retail too, besides focusing on his main business of decorating at weddings and events.

Muthumariappan has been in the business for a decade but says he hasn’t seen such hard times like he has witnessed in the past 10 days. “Everything has changed and the business has seen a drop of almost 75 percent,” he said.

People give him old notes which he refuses to accept though that severely impact his business. He says that he has to focus on the business and can’t wait in queues in the bank to deposit or exchange old notes. He has also made a decision to only accept cheques now. “I cannot afford to risk this old and new currency note business. It is better to take cheques and deposit them and not fear when or if the government will decide to go on such a move again,” he says.

He also sells flowers in the retail in small quantities. “That is to ensure the sale of flowers and get some fixed money,” he said.

Horticulture picks up

India produces 2.158 million tonnes of flowers during 2015-16 due to favourable agro-climatic conditions prevailing in the country.  Flower crops are grown in almost all the states. The major flower growing states are Tamil Nadu, Karnataka, West Bengal, Madhya Pradesh, Mizoram, Gujarat, Andhra Pradesh, Odisha, Jharkhand, Haryana, Assam, Chattisgarh, Himachal Pradesh and Maharashtra. Flowers are being exported from India to about 150 countries in the world and India’s share in the world floriculture trade and exports is less than 1 percent.

The flower business in the country was doing marginally lower last year. Despite the deficit monsoon, unseasonal rains and hailstorm in  major part of the country, the production of horticulture crops have outpaced the production of foodgrains since 2012-13  as seen in the chart below:

There has been an increase of 1.3 percent in horticulture production and reduction of 4.9 increase in food grains production in 2014-15 as compared to 2013-14, according to Mohanbhai Kalyanjibhai Kundariya, Minister of Agriculture. He revealed these figures in Lok Sabha in May this year.

However, this increase can change since flowers have to be plucked and then destroyed without any takers. In Kolkata, a wholesaler flower seller, who refused to reveal his name, said that the market has been completely battered by PM Modi’s announcement.

“I have lost almost 99 percent of my business. From a daily sale of Rs 25,000, my sales now are only Rs 5,000,” said the the seller who owns a shop in Salt Lake. “I have switched to accepting only cheques now,” he said. “What did PM Modi think he would achieve by this scheme? We, the traders in small businesses, who deal in cash will be wiped out by this announcement while the big fish he was ‘supposedly’ after has long slipped the net,” he said.

(Data support from Kishor Kadam)

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Updated Date: Nov 21, 2016 18:12:45 IST

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