News Analysis

Mandi arrivals drop sharply, raise concerns about hoarding

Rajalakshmi Nirmal BL Research Bureau | Updated on July 26, 2020 Published on July 26, 2020

Arrivals in wheat, chana and mustard seed are sharply down in the January-June period this year compared to the same period last year.

With farmers selling more produce outside mandis, there is no record of transactions

Arrivals in mandis across the country are significantly lower this year. Only five-to-seven bags out of every 10 of grains, pulses and spices, produced by farmers, have come to the market in the last six months.

An analysis of the production, procurement and mandi arrival numbers indicates that there is a large quantity of unaccounted floating stock in many agri commodities. Data from agmarknet.gov.in show that arrivals in wheat, chana and mustard seed are sharply down in the January-June period this year compared to the same period last year. These numbers are corroborated by the data from APMCs (Agriculture Produce Market Committees), which show a similar trend.

 

 

Arrivals of castor seed in Gujarat, chana in Madhya Pradesh and chana and mustard in Rajasthan are down over 40 per cent in the January-June period over last year. Similarly, mandis in Telangana, Andhra Pradesh, Karnataka and Tamil Nadu, too have seen a fall in arrivals in turmeric, maize, dry chillies, copra and cotton. As per the third advance estimates of the Ministry of Agriculture for 2019-20 released on May 15, production across crops was higher. With higher production and lower arrivals, something seems to be amiss.

Why the gap?

BusinessLine’s interaction with trade channels reveals that there are many reasons for the decline in arrivals at the mandis. First, the good news.

Due to the supply-chain issues caused by the Covid-19 lockdown, farmers have been selling directly to buyers, side-stepping mandis, across the country. Yogesh Thorat, MD, Maha FPC, a consortium of Farmer Producer Companies in Maharashtra, added that the increase in procurement under Price Support Scheme operations over last year was also a reason for lower mandi arrivals.

Observers also indicate the possibility of increased food consumption at villages with migrant labourers returning home and farmers stocking more to meet this increased requirement. However, it is not clear whether these reasons explain the huge drop in arrivals this year.

Market observers fear hoarding of stocks by traders and intermediaries in anticipation of a price rise. If this is the case, then food prices may shoot up in the next one-two months, and may see the return of the Essential Commodities Act.

Who is keeping the stock?

The unaccounted stock, based on our calculation, is quite large in most commodities. In gram (chana), the Agriculture Ministry estimates production of around 109 lakh tonnes. NAFED’s procurement, at 22 lakh tonnes, and mandi arrivals of 10.94 lakh tonnes, account for 33 lakh tonnes. The balance of about 76 lakh tonnes is with farmers/traders/processors, and there is no way to track these stocks.

Similarly, in the case of mustard seed, the government’s production estimate is 87 lakh tonnes and market estimates are about 68-70 lakh tonnes. While HAFED and NAFED have procured about 14 lakh tonnes and mandi arrivals till June is about 15 lakh tonnes, the balance of 40-60 lakh tonnes is floating in the market.

Given that trade outside the mandi may only increase hereon as the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 is implemented across the country, there is a need to track who buys agri commodities and where it is stocked, say observers. Making it mandatory for all warehouses to register with WDRA may help track stocks, they say.

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Published on July 26, 2020
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