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Explained: Why we need to sharply raise MSP for pulses

There is no alternative to boosting domestic production, farmers desperately need the incentive, and the country could do with saving on urea.

Written by Harish Damodaran |
Updated: May 29, 2015 6:13:02 am
Arun Jaitley, storage of grains, farmers bonus, farmers minimum support price, minimum support price, MSP, foodgrain production, Narendra Modi, farmers issue, farmer, crops ruined, rain destroy crops, india news, Unseasonal rainfall, Agriculture Ministry, Indian express, Pulses prices, Pulses  production, Indian farmer, minimum support prices, MSP The government should commit itself to procuring pulses at the announced MSPs, as it has done for wheat with even 10 per cent shriveled and broken grains and 50 per cent lustre loss content this time.

Pulses are once again on the boil, with consumers paying around 50 per cent more for tur (pigeon pea) and urad (black gram) dal than they did a year ago. Even chana (chick pea), which had turned cheaper in the past three years, has seen a 40 per cent jump — much of it in just the last three months.

Finance Minister Arun Jaitley has blamed the price spike on supply disruptions, which “is an issue with pulses these days”. He is partially right. The chana crop, badly affected by unseasonal rain and hailstorms in March, is over a fifth lower compared to last year. Overall pulses production is officially estimated to have fallen from 19.25 million tonnes (mt) to 17.38 mt in 2014-05.

But this assessment ignores a more fundamental problem with pulses that ought to be addressed. There is, indeed, no better time to do it than now.

India is today the world’s biggest producer as well as consumer of pulses. It also imports some 4 mt annually — mainly yellow/green peas (matar) from Canada and Russia, chana from Australia, lentils (masoor) from Canada, urad and moong (green gram) from Myanmar, and tur from Myanmar, Tanzania, Mozambique and Malawi.


But unlike edible oils, wheat, corn or sugar, there aren’t really too many global suppliers of pulses. As a result, international prices tend to shoot up the moment there are supply concerns in India. We have seen it this time, with imported Australian chana and Burmese ‘lemon’ tur currently quoting 56-66 per cent higher than a year ago even in the midst of a general global crash in agri-commodity prices.

Given the limits to world supplies, this means there is simply no alternative to increasing domestic production to meet India’s pulses requirements that will only grow in the years ahead. This is an opportune time to announce a sharp increase in minimum support prices (MSP). It should be done immediately, ahead of the monsoon’s onset, and well before kharif plantings begin, so as to send the right signals to growers.

farmerThe MSP of tur, for instance, is now Rs 4,350 per quintal. There is no harm raising this to, say, Rs 5,000. At that price, and taking 70 per cent dal recovery — the costs of de-husking and splitting the raw grain can be recovered from sale of the balance 30 per cent by-products (husk and brokens) — the milled final product could be sold within Rs 75 per kg. Consumers won’t mind that, when tur dal is already retailing at Rs 100-plus.

Bridging the domestic demand-supply gap — India’s pulses imports were valued at $ 2.79 billion in 2014-15 — is, however, not the sole reason why MSPs need to be substantially hiked to boost production. Being leguminous plants whose root nodules harbour bacteria that naturally “fix” atmospheric nitrogen, pulses can save roughly one bag of urea per hectare for the succeeding crop. Promoting pulses cultivation is, therefore, good both from the standpoint of soil rejuvenation and correcting nutrient imbalance through reduced consumption of over-subsidised urea.

There is also the equity dimension. Pulses are largely grown in marginal lands prone to moisture stress. Offering remunerative prices would not only help the less well-off producers of these regions, but may even induce farmers in irrigated areas to switch from more water-guzzling paddy and sugarcane to tur, or from wheat to chana. That is not a bad thing when the country is sitting on surplus wheat, rice and sugar stocks, even as dal prices have gone through the roof for want of supply.

But merely announcing higher MSPs isn’t enough. We know how for three years, open market prices of chana hovered at Rs 2,600-2,700 per quintal, as against the official MSP of Rs 3,000-3,100. When farmers did not get the price that was promised, they simply diverted their chana area to other crops. The price of that is now being paid by consumers.

The government should commit itself to procuring pulses at the announced MSPs, as it has done for wheat with even 10 per cent shriveled and broken grains and 50 per cent lustre loss content this time. If 30 mt each of wheat and rice can be bought by state agencies every year, there’s no reason why 3-4 mt of pulses cannot be purchased and sold through the public distribution system for the protein-starved masses.

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