Distress sale of Pulses: At Maharashtra hub, MSP just a miragehttps://indianexpress.com/article/india/distress-sale-of-pulses-at-maharashtra-hub-msp-just-a-mirage-5106346/

Distress sale of Pulses: At Maharashtra hub, MSP just a mirage

Forget Swaminathan formula, chana farmers this time are getting barely three-fourths of the existing minimum support price.

Maharashtra farmers, Swaminathan report, farmers distress, chana dal, dal prices, minimum support price, Maharashtra farmers protests, Devendra Fadnavis, indian express
Labourers sorting chana at the Latur mandi. (Photo: Partha Sarathi Biswas)

Last March, when Manoj Ufade sold 12 quintals of chana (chickpea) from two out of his six-acre farm holding, he realised an average price of Rs 5,000 per quintal at the wholesale agricultural produce market in Latur. This year, Ufade has not gone to the mandi, despite harvesting 18 quintals from the same two acres.

“How can I sell when rates today are at Rs 3,300-3,400 per quintal? At these levels, my total revenue from 18 quintals will be just about what I got from selling 12 quintals last year,” points out this farmer from Takali (B), a village in Latur city’s outskirts.

Ufade, however, considers himself to be lucky. The reason for that is the 130 tonnes of sugarcane grown in his remaining four acres, which he sold at Rs 2,000 per tonne (net of harvesting and transport charges) to the nearby Manjara cooperative sugar mill. “I disposed of my entire cane at that rate by early-January. Since then, the factory has slashed the price to Rs 1,800/tonne. It is only the cane money that has enabled me to hold on to my chana crop for now,” he states. But the 42-year-old harbours no illusion about a price recovery in the near term. “I initially hoped that prices will cross Rs 4,000 by mid-April, but that looks unlikely. I need to sell soon before they slide further,” he adds.

Ufade’s call may be right. The Union Agriculture Ministry has estimated India’s chana production this year at an all-time-high of 111 lakh tonnes (lt), as against 93.80 lt for 2016-17. The total pulses output of 239.50 lt, too, is assessed to surpass last year’s record of 231.30 lt. On top of this is the significant volume of imports, especially of chana and white/yellow peas, used as a substitute for the former. From a mere 4.19 lt in 2014-15, chana imports (mostly from Australia) have soared to 10.31 lt in 2015-16, 10.81 lt in 2016-17 and 9.58 lt during April-January 2017-18. During the same period, white/yellow pea imports (mainly from Canada) have also risen from 19.52 lt to 22.45 lt, 31.73 lt and 27.08 lt.

Maharashtra farmers, Swaminathan report, farmers distress, chana dal, dal prices, minimum support price, Maharashtra farmers protests, Devendra Fadnavis, indian express
A trader examining chana samples prior to auctions at the Latur APMC.(Photo: Partha Sarathi Biswas)

Bumper domestic production, coupled with large-scale imports, has resulted in chana currently trading even below the government’s minimum support price (MSP) of Rs 4,400 per quintal. With mandi arrivals in key producing states such as Madhya Pradesh (MP), Maharashtra and Rajasthan yet to peak, there is fear of prices falling further. “Our annual chana consumption is around 80 lt, whereas output and imported stocks are over 125 lt. If you add white/yellow peas, there is enough material now to feed the country for almost two years,” says Pasha Patel, chairman of Maharashtra’s State Commission for Agriculture and Prices.

The Narendra Modi government at the Centre has sought to address the glut situation by clamping a 50 per cent import duty on white/yellow peas. This move, on November 8, was followed by a similar levy of 30 per cent for chana imports on December 21, which was raised to 40 per cent on February 6 and 60 per cent on March 2. But these may have come well after a substantial quantity of imports had already arrived.

Traders at Latur – Maharashtra’s largest market for both chana and tur/arhar (pigeon-pea) – expect prices to crash further in the coming weeks, as arrivals pick up in MP, where the state government is implementing a Bhavantar Bhugtan Yojana scheme. Under it, farmers are paid the difference between the MSP and the average modal market rate for the quantity of crop sold, with this amount directly credited into their bank accounts. The scheme, it is feared, may lead to traders in MP beating down rates further and farmers, too, selling more in order to avail of the price difference benefits. That could, in turn, depress prices in Maharashtra and other states as well.

One indicator of where prices are headed is futures quotes at the National Commodity & Derivatives Exchange. On Tuesday, chana for delivery in June 2018 was trading at Rs 3,744 per quintal, with the closing price of even the August 2018 contract at Rs 3,848 – well below the MSP of Rs 4,400.

Amit Deshmukh, the Congress legislator from Latur, makes a strong case for a Bhavantar-like scheme in Maharashtra. But that is opposed by Patel. He believes it will be taken advantage of by traders, who would further force prices down. Patel also dismisses the feasibility of a government subsidy on exports. “How can you do it, when Australian chana is selling at Rs 3,600 per quintal? Can we afford to pay a per quintal subsidy of Rs 1,200, including Rs 400 towards transportation?,” he asks.

That leaves the option of government procurement under the Centre’s Price Support Scheme (PSS). For the current marketing season from March 1, Maharashtra has been given a target to procure three lt of chana under the scheme, but only 432 tonnes has been bought as of now. Even for tur, hardly around one lt has been procured since the start of this season from February 1, as against the target of 4 lt. Moreover, the Maharashtra State Cooperative Marketing Federation and the Vidarbha Cooperative Marketing Federation are yet to pay the 105,367 farmers from whom some Rs 691 crore worth of tur has been bought. The reason: they are still to receive funds from the National Agricultural Cooperative Marketing Federation of India (Nafed), the nodal agency for the PSS!

However, Nitin Kalantri, CEO of Kalantry Food Products, a leading Latur-based dal miller and pulses trading firm, feels that even government procurement will not really help. In 2016-17, Nafed and other state agencies procured 11.66 lt of tur, which was nearly a quarter of India’s total production of 48.70 lt. Despite that, tur prices in markets such as Latur and Gulbarga (Karnataka) are now at Rs 3,900-4,000 per quintal, which is again much below the MSP of 5,450. “There is a fundamental problem of over-supply in pulses and I don’t see that improving in the immediate future,” sums up Kalantri.

No wonder, all government schemes have proved ineffective in arresting the price decline. That includes a special pledge loan scheme of the Maharashtra State Agricultural Marketing Board, which allows farmers to store their produce and borrow up to 75 per cent of its value at the prevailing price. Only 335 farmers have pledged about 1,487 tonnes of chana under the scheme so far this season. There aren’t takers for the loans even at 6 per cent annual interest, simply because growers don’t expect prices to firm up in the coming months. Besides, chana, unlike soyabean, is not amenable to storage in normal godowns, as it is prone to weight loss and quality degradation.

On Tuesday, Siddharam Patil travelled over 80 km from Nandgaon, a village in Tuljapur taluka of the neighbouring Osmanabad district, to sell his eight quintals of chana at the Latur market. “Last year, I sold my produce at Rs 4,000 per quintal, only to see prices jump to Rs 5,000 a few days later. This time, I expected a minimum Rs 4,000/quintal, but only got Rs 3,496. And I am told that prices may fall even more, so it is better to sell now,” he notes.

Now, that’s what is called a bear market — in which farmers are barely receiving three-fourths of the existing MSP, forget the rates as per the Swaminathan formula.