The Centre should explore the creation of a new public private partnership (PPP) institution to undertake procurement, stocking and disposal of pulses as part of official minimum support price (MSP) operations, a committee headed by Chief Economic Adviser Arvind Subramanian has recommended.
The new organisation — in which the Centre may have 49 per cent stake, an “anchor” private investor 26 per cent, and other public/private sector institutional entities holding the balance 25 per cent — would not replace the Food Corporation of India (FCI), Nafed and other state procurement agencies, but “provide competition to them”. Expanding the scope of buyers will ultimately benefit farmers, the committee has said.
For the immediate kharif season, the panel has called for additional allocation of Rs 10,000 crore to the existing agencies, in order to launch a “war effort to procure moong, tur and urad at their respective MSPs”. Prices of moong, currently at around Rs 4,500 per quintal in Rajasthan, have already fallen below the MSP of Rs 5,225. “For tur and urad, current prices are a little above MSP, but there is a good chance that they will go down further,” the committee has said, in its report for ‘incentivising pulses production through MSP and related policies’ released Friday.
The report has suggested that the MSP for the chana (chick-pea) crop in the ensuing 2016-17 rabi season be immediately at Rs 4,000 per quintal (against Rs 3,425 for 2015-16), along with Rs 6,000/quintal for both tur and urad to be grown in kharif 2017. It has defended the higher MSPs on grounds that farmers need to be compensated for the greater inherent risks in growing pulses because of weather, pest and price shocks, apart from the “social externalities” from their using less water and nutrients relative to paddy, wheat or cotton. The Commission for Agricultural Costs and Prices should also “comprehensively review” its existing MSP framework to “incorporate risk and social externalities”.
The committee has also advocated immediate elimination of the current export ban and stock limits imposed on pulses. During bumper harvests – as is expected this time – private players will not purchase beyond a certain point because of stock limits. Consequently, farmgate prices will crash, seriously hurting producers.
“Short term actions that apparently benefit consumers end up hurting them because production and availability of pulses decline over time”, the report had added while projecting India’s demand for pulses to increase from 26.57 million tonnes (mt) in 2016 to 31.89 mt in 2020 and 38.96 mt by 2014.