The Hindu Business Line : Coarse cereals rule below minimum support price

Chennai, Nov. 12 A month-and-a-half ago, prices of maize (corn) touched Rs 1,000 a quintal despite a ban on its export. The ban lapsed on October 15 but the price scenario has just turned upside down. Maize prices are currently ruling at Rs 760-825, lower than the minimum support price (MSP) of Rs 840 fixed by the Centre for the current kharif marketing season.

A similar situation prevails in other coarse cereals too. Be it jowar, bajra or ragi (finger millet), current market prices are lower than MSP.

Jowar prices, which had ruled at Rs 1,200 a quintal 45 days ago, are currently quoted at Rs 810 a quintal. Bajra prices are ruling between Rs 720 and Rs 735 against the MSP of Rs 840.

Prices of coarse cereals have come under pressure mainly on increased arrivals. But importantly, the global economic scenario is having a telling effect on these cereals.

Last year around the same time, maize exporters were busy signing orders from buyers abroad. They are reported to have shipped out at least 35 lakh tonnes of maize between January and September this year. But since October, they have pratically got no orders.

Export orders

In view of the huge export orders, maize price had increased last year despite a record 19.31 million tonnes production. As maize prices soared and the domestic user industry such as the poultry sector looked to alternatives, prices of crops such as bajra and jowar also gained.

The bullish trend, in turn, led to the Centre increasing the MSP of all crops. For coarse cereals, the support prices were increased between 35 and 40 per cent.

Sources in the poultry industry concede that maize prices have declined to Rs 817 a quintal but they say in comparison, prices last year were Rs 650-660 only. On the other hand, the poultry sector is currently enjoying a bull run with prices rising to a record Rs 2.25 for an egg.

Maize exporters say prices could come under more pressure during the later half of this month as arrivals increase. Arrivals in the South have been delayed by rains in September and had the crop hit the market in October like last year, the prices could have declined even more.

Untold scenario

What is untold in the whole scenario is that prices are far lower in the main marketing centres or markets closer to the growing areas. That means, farmers are paid even less and perhaps, the trend has already led to those with cash buying and storing the crop for sale later when the Centre activates market intervention purchases by the State-owned agencies such as National Agricultural Marketing Federation.

Till now, there have been no signs of such market intervention operations. Officials were unavailable for comment on the issue.

According to the Government data, bajra prices are ruling higher at centres such as Bangalore (Rs 1,050 a quintal) but in places such as Aligarh in Uttar Pradesh, it is ruling at Rs 610. Jowar prices are averaging Rs 1,100 in Bangalore, Rs 1,000 at Bijapur and Rs 1,070 in Gadag (all in Karnataka) but are quoting at Rs 665 a quintal at Chalisgaon in Maharashtra and Rs 721 at Baran in Rajasthan.

Maize prices are averaging at Rs 900 in Bangalore; Rs 865 in Belur and Rs 850 in Doddaballa Pur and Somvarpet (all in Karnataka). But in places such as Hunsur or Jagalur in the same State, prices are below Rs 650. Industry sources said the crop could get discounted due to higher moisture, which is currently being witnessed in arrivals from places such as Maharashtra but wonder if the discounts could be so steep.

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