Bonus, high prices likely to spur pulses acreage

The Centre today hiked the minimum support price (MSP) of a range of pulses between ₹50 and ₹75/quintal with an additional bonus of ₹200, while also increasing the procurement price of paddy, the main Kharif crop, by ₹50/quintal.

In percentage terms, however, the increases continue to be miles away from the BJP’s promise of providing farmers with a procurement price that ensures a 50 per cent profit over the cost of production.

The MSP is the minimum price at which produce is procured by Food Corporation of India (FCI) and other State agencies.

The Cabinet Committee on Economic Affairs (CCEA) – on the recommendation of the Commission for Agricultural Costs and Prices – gave its assent to raising the MSP for paddy by 3.7 per cent to ₹1,410. The price of superior grade paddy was up ₹50 or 3.6 per cent to ₹1,450/quintal.

Procurement prices for arhar (tur), moong and urad dals were raised by 6.3 per cent, 5.43 per cent and 6.3 per cent to ₹4,625, ₹4,850 and ₹4,625 respectively. The new rates will be applicable from October 2015.

“This (increase in pulses MSP) is expected to give a strong price signal to farmers to increase acreage and invest for increase in productivity of pulses…Last week, a decision to import pulses was taken. These measures are expected to complement efforts to keep a check on the price rise in pulses,” said an official statement.

Bullish price trend Wholesale prices of the three pulses in New Delhi as of this week is ₹10,000, ₹8,600 and ₹9,800, respectively, according to Consumer Affairs Ministry data. In retail price terms, urad is selling at ₹112/kg from ₹72 a year ago; moong is at ₹103 (₹97), and arhar is being quoted at ₹113 (₹72).

The price rise is mainly attributed to supply constraints with an estimated 25-30 per cent of the Rabi crop damaged due to unseasonal rain while arhar and urad have also seen output drops in Myanmar, a major exporter of pulses.

“It’s interesting to see the government taking note of the drop in pulses output and also consumption per capita over the last 20 years. A bonus has never happened in the history of pulses so it is encouraging,” said Pravin Dongre, Chairman, Indian Pulses and Grains Association.

He added that current prices are likely to remain firm till November when the crop from Canada, Australia and Myanmar will hit the Indian market.

Experts said while the Centre’s move was in the right direction, until its capabilities to store pulses and establish effective distribution channels were enhanced, it would do little to spur production or help keep prices in check.

“The MSP increases are marginal, the effect will only be on paddy which is procured by the Centre. Pulses are not procured at present since capabilities are limited given the short shelf life of pulses,” said Tejinder Narang, a grains trade analyst.

Acreage may rise The Centre’s move should see increased pulses acreage by as much as 10 per cent this Kharif at the expense of cotton and soyabean, given the prevailing returns and assured prices.

“The bonus formula has worked well earlier, for example, in Madhya Pradesh for wheat. Efforts to procure pulses earlier through NAFED had not been successful. The Government needs to develop warehouses and processing facilities for pulses,” said NP Singh, Director, Indian Institute of Pulses Research, Kanpur.

Growers unhappy However, the farmers are not happy with the MSP and bonus announcements.

The All India Kisan Sabha alleged that it did not even cover the cost of production. “...despite the much-hyped ₹200/quintal bonus for pulses, the cost of production of moong was ₹4,970.77 while the MSP including bonus is ₹4,850,” it said in a note.

Basavaraj Ingin, President of Karnataka Tur Growers Association, said the government has deliberately neglected the factual position of demand-supply, market price of previous years – both domestic and international – and also the forecast of deficit rainfall, while announcing the MSP and bonus.

Including the bonus, the support price announced does not even cover the production costs, pegged at ₹5,000 for tur.

“The bonus is just an eye wash. We demand the government to reconsider and fix the MSP for tur at ₹6,500. In addition, we demand that the government levy import duty of 30 per cent on pulses if interested in protecting the farmers’ livelihood,” Ingin added.

(With inputs from our Bengaluru bureau)

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