BackThe pulse of pulses
Though pulsations may eventually ease, it is time to think of long-term cures
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Pulses have been throbbing hard and loud in India for sometime now. And not only because of prices, but also the pace in which it accelerated to 30% annually last month, three times the rate of increase six months ago. Besides angry television anchors and electoral evocations, hoarding, raids and truck thefts have set hearts thumping too. The mounting anxiety keeps the government pounding as well, as it does whatever it takes to bring down dal prices. Palpitations are easing a bit although the price of the queen of all pulses, tur dal, refuses to go down but a few notches. Though pulsations may eventually ease, it is time to think of long-term cures.
Pulse prices and the gap in availability has been discussed threadbare by many in the past few months. Commentators have flagged that this particular shortfall in pulses’ output wasn’t entirely unanticipated given the below-normal monsoon forecast; timely imports could have then averted the extraordinary price spike to quite an extent. However, emergent responses such as levy of and further increase in stockholding limits, raids to restrain and prevent hoarding by traders, increasing import amounts, etc. have checked prices and expectations.
These, however, are temporary quick-fixes, and policy increasingly needs to focus long-term now. There is a trend rise in pulses’ demand as incomes rise, inducing shifts in dietary patterns; a development that is expected to sustain, and even accelerate in future. Some reflection of structural change did come earlier in June, when the government increased the minimum support price (MSP) for pulses by ₹ 250-275 a quintal, restricting simultaneously that of paddy to just ₹ 50 per quintal. It is reasonable to realign price incentives for farmers, who do need encouragement to grow more pulses. But pulse production characteristics show that policy needs to extend itself beyond commonplace MSP policies.
Output trends in pulses’ production are not indistinct from those in rainfall. These fluctuate along with the monsoons, dragged down by shrinkage in sown area and yields if rains fail. A bountiful, well-distributed monsoon, on the other hand, lifts all three. Which means that farm, or at least pulses’ policies, must aim to delink the two. In other words, get farmers to shift pulses’ cultivation towards irrigated areas for a more, regular production stream. Another dimension for policy attention is how to boost land productivity, or yields, which remain abysmally low in international comparisons. The latter, however, can be safely left to the farmers in this age of information technology. If farmers do get to realize those throbbing prices, why wouldn’t they get the best out of their land?
The important question to be asked then is if the price signals are reaching right up to the farmers or not? Looking at the rich hauls of pulse stocks reportedly brought out by the raids and the rapid-fire price spiral that preceded them, one suspects as to where exactly the transmission starts or ends. Price pointers are possibly not getting back to the farmgates? Or insufficiently enough, if they are, given the fat margins in wholesale-retail trade? Market structures then—in the case of pulses, these would extend from the farmers to millers, and then traders—need re-examination and fixing too. Without a structural, long-term focus of policies surrounding the production of pulses, frequent eruptions such as the recent episode will continue otherwise.
Renu Kohli is a New Delhi based macroeconomist.
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