Rising Pulses Prices

What is the issue?

• Kharif pulses prices are rising after a gap of two years, due to production dip.
• It calls for policy measures to reconcile producer as well as the consumer interests.

How did it evolve?

• Generous increases in procurement prices led to a spike in pulses acreage and output in 2016-17 and 2017-18.
• E.g. tur MSP has been raised by about 30% from 2014-15 to 2017-18, to Rs. 5,675 per quintal now
• Moong MSP was raised 25% to Rs. 6,975 over the last year, and chana MSP too was up 10% over this period.
• However, the resulting rise in output led to prices falling way below these MSP levels, affecting producers/farmers interests.
• Also, drought conditions are prevailing in Maharashtra, Karnataka, Andhra Pradesh and Gujarat.
• These have impacted the standing crop of tur, urad and moong.
• As a result, tur prices have crept up from Rs. 3,500-3,600 a quintal in mid-October, 2018 to about Rs. 4,500 now.
• Kharif pulses output has come down to 9.22 million tonnes this year, against 9.34 million tonnes last year.

What are the challenges?

• Being a protein-deficient country, it is essential to sustain producer interest in pulses cultivation.
• A shift from cereals to pulses is also critical to correct the nutrition imbalance, and water and fertiliser use over time.
• However, recent reports suggest that a production dip in kharif may well extend to rabi pulses.
• As, the area sown in Karnataka and Maharashtra are falling over the year-ago period.
• Two good crop years have, however, ensured an inventory build-up in pulses of over three million tonnes.
• Hence, an inordinate spike in prices does not seem very likely.
• While favourable for the consumers, it is certainly not so for the producers.
• The policy challenge is thus to balance both the interests.

What could be done?

• The key is to develop a procurement infrastructure in coordination with the States.
• Also, use of real-time data is advisable to calibrate procurement in order to smoothen out price volatility.
• While procurement agencies are clearing stocks to make way for arrivals, they should ensure price stability.
• The recommendations of the Arvind Subramanian committee on pulses should be implemented.
• These include

1. removing stock limits and curbs on exports
2. allocating an additional Rs. 10,000 crore for pulses procurement
3. raising MSP for tur and urad to Rs. 60 a kg
4. creating a new institutional arrangement for pulses that facilitates coordination between all stakeholders

Source: BusinessLine