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Conditions for a decline in pulses acreage in the upcoming kharif planting season are developing. This can potentially lead to a spurt in prices in the coming months.
The combination of elevated levels of crude oil prices and rapidly weakening rupee is already seen disturbing the so far benign inflation situation.
Pulses could add to upward price pressure, especially in the context of some belated trade and tariff interventions by the Centre and now, the looming risk of lower harvest in 4-5 months. Tur/arhar (pigeon pea), urad (black matpe) and moong (green gram) are the main pulses planted in the kharif season.
Acreage, output
Kharif acreage, which used to be 10-11 million hectares (mh), spurted to 14 mh in the last two years because of high open market prices that the growers witnessed until 2016. That level of planting is unlikely to materialise for 2018-19.
In particular, the most important of kharif pulse crops — tur/arhar — is vulnerable to a decline in planted acreage to the extent of 10-15 per cent. It would potentially result in a lower harvest of about 500,000 tonnes.
From the record 5.3 mh in 2016-17 that resulted in a harvest of 4.9 mt, tur/arhar acreage slipped to 4.3 mh and an output of 4 mt in 2017-18, as per Agriculture Ministry data. Acreage could further shrink and so would production. The emerging picture for urad and moong is no different. Any aberration in weather can aggravate the fragile situation.
Crop shift imminent
Pulse growers have been extremely unhappy over low prices for two years in a row — 2016-17 and 2017-18. The government’s procurement efforts have been unequal to the daunting challenge. In many regions, growers are most likely to shift to more remunerative crops. Soyabean is surely an option in some regions.
A saving grace is the inventory of about one million tonnes of tur/arhar with the procurement agencies. This should be released gradually during the ensuing festival season. Liquidation of stocks will ensure market prices are under check.
It is most unfortunate that while the government tinkered with trade and tariff policies, it failed to boost consumption. Much of the adverse consequences of low prices could have been averted by pursuing policies to boost consumption rather than constrict trade. That is a reflection of the poverty of ideas among the country’s policymakers.
September will be a good time for the government to undertake a serious review of the trade and tariff policies relating to not only pulses, but the entire food sector because general elections would be a few months away and inflation control will become the primary focus.
Inflation fears
Inflation risks are already looming because of three ‘C’s — crude, crops and currency. With an imminent rate hike by the US Federal Reserve in June, the rupee risks further depreciation. Despite forecast of a normal South-West monsoon, there is no guarantee kharif crops will be normal.
It is important for New Delhi to recognise the emerging risks. The farming community already stands alienated because of inadequate support, while urban consumers are not happy with high fuel prices. It is a cause for serious concern.
The writer is a global agri-business and commodities market specialist. Views are personal.
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