Weak govt finger on the pulse: Dal pinches for farmers

The woes of pulses farmers and traders like Kagi can be put down to all-time-high imports of 6.6 mt (valued at Rs 28,524.05 crore) on top of a record domestic production of 22.4 mt in 2016-17 — made worse by the weak, behind-the-curve policy response whether to do with trade or stockholding restrictions.

Written by Harish Damodaran | Updated: August 10, 2017 11:37 am
maharashtra farmers, bumper harvest, pulse harvest, dal crop, harvest price crash, oversupply, agriculture, indian express Whole urad or black gram is now selling at under Rs 4,000 per quintal in major mandis of Madhya Pradesh

Agriculture in India has always suffered from lethargic and uncoordinated policy response. And there can be no better example of that than pulses in the present context. Whole urad or black gram is now selling at under Rs 4,000 per quintal in major mandis of Madhya Pradesh such as Indore and Jabalpur. Moong (green gram) is, likewise, fetching Rs 3,700-3,800 per quintal at Jaipur and Bikaner in Rajasthan, while the corresponding prices of arhar/tur (pigeon-pea) in Karnataka’s Gulbarga and Maharashtra’s Latur and Amravati markets are Rs 3,800-3,900.

The above rates are considerably below the respective minimum support prices (MSP) of Rs 5,400, Rs 5,450 and Rs 5,575 per quintal fixed for urad, arhar and moong by the Narendra Modi government in the ongoing 2017-18 kharif season. The striking part is that this is happening when plantings have just about been completed in June-July and harvesting is still some time away: The new moong and urad crops — generally of 65-75 and 80-90 days duration, respectively — would start arriving in the markets only towards end-September/early-October. Arhar is of even longer 160-180 days duration, harvested over December-February.

 

If ruling market prices are over a quarter lower than MSPs even well before harvesting — and they have been in bear territory since late 2016 — one would expect some urgency and coordinated response from policymakers. What we have seen is quite the opposite. Stockholding limits on both raw pulses and milled dal were lifted only on May 17 this year — well after farmers had harvested a record 22.4 million tonnes (mt) crop of 2016-17. The Indian Express had written a piece last December on the need to lift all restrictions on pulses exports — in place since June 2006 — given a bumper crop flooding the markets (http://bit.ly/2ihfM8z).Well, those curbs remain. “We had made a representation to the Union Minister of State for Commerce and Industry Nirmala Sitharaman on June 28 to free up exports, which would help improve domestic realisation. But nothing came out of it,” says Suresh Agarwal, president of the Indore-based All India Dal Mills Association.

While the prohibition on export of pulses continues, imports were until recently permitted duty-free sans any quantitative restrictions. On March 28, the Modi government clamped a 10 per cent import duty on arhar. On August 5, it brought import of arhar under the “restricted” list. Arhar imports would henceforth be subject to an annual (fiscal year) quota of 0.2 mt. This quantitative cap will, however, not apply to the government’s imports commitments under any bilateral/regional agreements or memoranda of understanding signed with countries such as Mozambique and Myanmar.

Moreover, no tariff hikes or quantitative restrictions have so far been placed on other pulses. That includes urad and moong, where the current kharif crop’s market arrivals are due at least a couple of months earlier than for arhar. “The restriction now imposed may temporarily raise prices, but that will only help importers to liquidate stocks already contracted and lying with them. Farmers would have benefitted had the import curbs come along with the removal of the ban on exports during the last marketing season,” points out Ashok Kumar Kagi, a pulses trader in Gulbarga.

The woes of pulses farmers and traders like Kagi can be put down to all-time-high imports of 6.6 mt (valued at Rs 28,524.05 crore) on top of a record domestic production of 22.4 mt in 2016-17 — made worse by the weak, behind-the-curve policy response whether to do with trade or stockholding restrictions. The government, too, has been a loser in the bargain. During the 2016-17 season, state agencies procured 1.47 mt of pulses, which included 1.17 mt of tur, 0.22 mt of moong and 0.09 mt of urad. They now face a huge challenge in disposing of these stocks, which have the potential to further depress prices in the coming marketing season.

“At this rate, the farmer will have little incentive to plant and you can expect the consumer to pay the price in 2018-19,” warns Kagi.

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