Record buffer stock of pulses fails to lift prices for farmers

Despite the record stocks built up through domestic procurement and imports, farmers are selling pulses in wholesale markets at lower than the MSP


Data on wholesale prices show that higher procurement as claimed by the government has failed to lift domestic prices. Photo: Pradeep Gaur/Mint
Data on wholesale prices show that higher procurement as claimed by the government has failed to lift domestic prices. Photo: Pradeep Gaur/Mint

New Delhi: India’s publicly managed buffer stock of pulses that was set up to check price volatility has surpassed a million tonnes, or close to 5% of the domestic production. However, despite the record stocks built up through domestic procurement and imports, farmers are selling pulses in wholesale markets at lower than the minimum support prices (MSP) announced by the government.

Public procurement has helped farmers get remunerative prices for (rain-fed) kharif pulses, an official food ministry statement said this week, adding that state agencies will continue to procure from farmers at support prices as an incentive to grow more pulses.

Data on wholesale prices show that higher procurement as claimed by the government has failed to lift domestic prices. For instance, arhar (tur or red gram) is currently selling between Rs3,500 to Rs 4,500 per quintal in wholesale markets in Gujarat, Karnataka and Maharashtra, lower than the government declared MSP of Rs5,050 per quintal.

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The fact that prices are below MSP despite a record buffer stock implies inadequate procurement in a bumper crop year. Moreover, duty free imports which surged in the last few months, coupled with stock limits imposed on domestic traders, have contributed to lower price realisation by farmers.

According to the first advance estimates of production released by the agriculture ministry in September, production of pulses is expected at a record 8.7 million tonnes in 2016-17 (for the summer crop), 57% higher than the year before. The government has set a target of 21 million tonnes production for the entire year, and higher planting of winter pulses means the target is likely to be achieved.

In comparison to domestic Kharif production of 8.7 million tonnes, a little over half a million tonnes has been procured by the government so far, about 45% lower than the target of 0.95 million tonnes.

Data from the food ministry further shows that the government has contracted imports of 0.4 million tonnes, of which 0.29 million tonnes has arrived in different ports. This is in addition to the 2.45 million tonnes of pulses imported by traders between October and December, nearly 30% higher than the quantity imported the year before.

Domestic procurement of pulses is lower than required due to paucity of funds, said Siraj Hussain, former secretary at the agriculture ministry and a visiting fellow at the Delhi- based Indian Council for Research on International Economic Relations.

Government agencies are not interested to gear up procurement as they have to depend on the price stabilisation fund and do not have the flexibility to borrow from banks, Hussain said, adding, “sale of procured pulses has been slow as states are not interested and the government is yet to frame a clear policy on open market sales.”

Hussain further said the government should stop importing for the buffer stock and lift stock limits on traders to boost domestic prices.

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