Dal costs too high: Why the government should have its finger on the pulse crisis

Only 15 per cent of the 25 million hectares area sown annually for pulses in India is irrigated, compared to 60 per cent for paddy and 90-95 per cent for wheat and sugarcane.

Written by Harish Damodaran | New Delhi | Updated: October 20, 2015 5:39 pm
dal prices, pulses price, monsoon rains, price pulses, pulses rate, rainfall, monsoon, food inflation, Mustard oil, india news, nation news, business news Punjab, Haryana and western Maharashtra farmers need to be induced to grow pulses.

We have a ridiculous situation today of ‘premium’ Pusa basmati paddy trading below the minimum support price (MSP) for ‘regular’ parmal varieties, even while consumers are paying Rs 160-plus per kg for arhar/tur (pigeon-pea), Rs 125-plus for urad (black gram) and Rs 110-plus for moong (green gram) dal.

For those who don’t see the connection, here are some facts. Pulses are “orphan crops”, largely cultivated in marginal lands prone to moisture stress. Only 15 per cent of the 25 million hectares area sown annually for pulses in India is irrigated, compared to 60 per cent for paddy and 90-95 per cent for wheat and sugarcane. Also, the moment farmers have access to irrigation, they tend to shift from chana to wheat or from arhar to paddy and cane.

Watch Video: Has Dal Become The New Pyaaz? Explaining The Rise In Pulse Prices

It is not surprising, therefore, that pulses cultivation is very much a gamble on the monsoon. Last year, the monsoon failed and, so, production fell to 17.20 million tonnes (mt) from 19.25 mt in 2013-14. Rainfall was deficient in the current season as well, impacting the arhar, urad and moong that farmers planted this kharif. Coming on top of the damage that unseasonal rains and hail in March did to the earlier rabi chana (chickpea) and masoor (lentil) crops, it has provided ample opportunity for speculators and traders – both domestic and international – to drive up prices.

 There has been a similar firming up in landed (cost & freight) prices of Australian chana (chickpeas) from $640 to $780 a tonne. There has been a similar firming up in landed (cost & freight) prices of Australian chana (chickpeas) from $640 to $780 a tonne.

There is an additional factor here. Unlike edible oils, wheat or sugar, pulses aren’t easily importable. India is the world’s largest producer and consumer of pulses. The annual global trade in pulses, at around 15 mt, is less than what the country produces. In 2014-15, India spent $ 2.79 billion for import of 4.58 mt. That included matar (yellow/green peas) and masoor from Canada and the US; moong and urad from Myanmar; arhar from Myanmar, Tanzania and Mozambique; and chana from Australia and Russia.

Clearly, there are limits to how much a predominantly non-vegetarian world can supply to a country with a significant population that derives its protein requirements mainly from pulses. In such a situation, any domestic production shortfall would only lead to a flare up in international prices. We are actually seeing this: landed prices of imported arhar are now around $ 2,100 per tonne, as against $ 700-800 a year ago, while similarly soaring from $ 900 to $ 1,850-1,900 for urad. This, in an otherwise bearish global market for agri-commodities.

How does this link up with basmati losing its premium tag? The answer is simple: India is producing too much rice, be it basmati or otherwise. Rice stocks in public warehouses, at 14.2 mt as on October 1, are way above the required minimum normative buffer of 8.25 mt at the start of the new marketing season.

The same goes for wheat where inventories of 32.5 mt are nearly twice the necessary 17.5 mt. Similarly, even as crushing for the new sugar season is set to commence, mills owe growers roughly Rs 12,000 crore for the cane they had supplied in 2014-15 – courtesy, a worldwide glut of the sweetener.

What we require today is a shift in crop area from surplus rice, wheat or sugarcane to pulses and oilseeds. The urgency is even more in pulses, where the scope to import is limited, unlike in edible oils. Such an area shift should take place primarily in irrigated areas where paddy, wheat and sugarcane have become the default cropping option for farmers.

daal

Punjab, Haryana and western Maharashtra farmers need to be induced to grow pulses. This is also the only way to raise average pulse yields, which are an abysmal 750 kg per hectare. These can easily go up to over 2 tonnes under irrigated conditions and through use of high-yielding varieties/hybrids that are also pest and disease-resistant.

But for this, farmers have to be guaranteed an assured market as in the case of paddy, wheat or sugarcane. The government should, in the next few days, announce a sharp MSP increase for chana and masoor to be planted in the coming rabi season. Moreover, it must commit to procure these pulses at the announced MSP. If over 28 mt of wheat and 32 mt of rice could be bought by government agencies last year, surely it is no big deal to procure 2-3 mt of pulses.

Finance Minister Arun Jaitley has recently said that the government plans to create a buffer stock for pulses “preferably by imports”. It is a bad idea that will only benefit importers and farmers in Canada or Australia.

Pulses are better “made in India”. A buffer stock should be built by procuring from farmers here. And if 3-4 million hectares of irrigated paddy, wheat or sugarcane area can switch to pulses, there will be enough to procure as well.

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