Agri Business

Pulse prices are rising, but only a little

TV Jayan New Delhi | Updated on January 24, 2019 Published on January 24, 2019

Buffer stocks resulting from Centre’s incentives have kept prices in check

The prices of pulses may have improved slightly since government agencies began procurement, but normalisation of market prices may have to wait till the end of the year, experts have said.

“The government’s efforts of encouraging farmers through higher minimum support prices (MSPs), which were much higher than the prices that the market can sustain, and creating buffer stocks of pulses much beyond the 1 million mt requirement, resulted in a sharp rise in pulses production during the 2016-17 season (23.13 mt ), but pulse prices suffered a huge setback on account of this,” said Sanjay Kaul, MD & CEO of National Collateral Management Services Limited (NCML).

Prices have still not fully recovered from that setback but government efforts like announcing schemes such as the Merchandise Exports from India Scheme (MEIS) and curbing imports has to some extent absorbed the production surplus, Kaul said.

According to him, the excessive production has resulted in filling up of pipelines and hence lowered prices since then. “But since last year the situation is normalising and as the acreage and production is reducing owing to the lower prices the supply-demand situation is expected to take a normal course by the end of this year,” Kaul told BusinessLine.

The annual commodity year book brought out by NCML, India’s largest private-sector agriculture post-harvest management company, has dealt extensively with the pulses scenario in the country.

Per the first advanced estimates brought out by the government last August, production of most pulses (tur, chana, urad and moong) is estimated to be on the lower side as compared to the previous year. The production is estimated to be lower due to adverse weather conditions in States such as Maharashtra, Madhya Pradesh, Karnataka and Andhra Pradesh. But the prices may remain subdued because of the ample stocks maintained by government agency NAFED and also with the recent rains improving the chances of a better crop than anticipated, according to Kaul.

Market rates rising: NAFED

However, NAFED officials maintained that the prices of pulses are rising in the market. “In the last four months, there has been an increase in the market prices of major pulses across most markets in the country. Even though NAFED made a similar intervention in last year too, we didn’t see a similar uptick in mandi prices in the previous year,” said Sanjeev Kumar K Chadha, NAFED MD (see chart).

India’s chana (gram) production in 2018-19, for instance, is estimated to be 10.5 mt, nearly 6.5 per cent lower than the 2017-18 production. Similarly, at 4.08 mt, tur production this year too is expected to be 9.33 per cent lower than that in the previous year.

According to NCML, Indian traders had consumed the full tur import quota of 2 lakh tonnes in 2017-18 as in Myanmar tur was cheaper and parity was in favour of importers despite the 10 per cent import duty. Moreover, corporate buyers who are hoping that the government will open up imports in the lean season, have already booked 3-4 lakh tonnes of tur in Myanmar. “The buyers are planning to store their inventory in Myanmar till the Indian government lifts restrictions on imports,” it said.

Urad production in 2018-19 is projected to be lower than the previous year’s 3.56 mt. According to the firm, despite the government increasing the MSP of urad to ₹5,600 from ₹5,400 a quintal, farmers shifted away from urad due to lower domestic prices throughout the year, it said.

Time for more schemes

According to Kaul, it’s time that the government announced additional schemes with export incentives not only on chana but on the exports of processed products made of chana, such as dal and besan.

Besides, the government should leverage its bilateral and free trade agreements with South Asian and South-East Asian countries. For instance, Bangladesh imports about 12-15 lakh tonnes of pulses, while Sri Lanka imports roughly 3 lakh tonnes.

Published on January 24, 2019

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