Arhar prices fall below MSP after bumper crop

Prices may dip further once the harvest from Maharashtra, Gujarat and Madhya Pradesh hits markets in January


In June, the central government had raised the minimum support price for arhar from Rs4,625 a quintal to Rs5,050 a quintal. Photo: Mint
In June, the central government had raised the minimum support price for arhar from Rs4,625 a quintal to Rs5,050 a quintal. Photo: Mint

New Delhi: After moong, prices of arhar, a major rain-fed kharif crop, have plunged below support prices in major growing states such as Karnataka and Andhra Pradesh where the crop has reached markets.

The dip in wholesale prices follows a record crop due to a normal south-west monsoon and farmers increasing its acreage, taking a cue from retail prices which shot up to Rs200 per kg earlier this year.

On Wednesday, in several wholesale markets, arhar or pigeon pea, was sold by farmers at prices lower than the support prices announced by the centre. In Gulbarga district of Karnataka, average wholesale rates were Rs4,572 per quintal, lower than the minimum support price (MSP) of Rs5,050 per quintal, while in Gadag district prices were as low as Rs3,666 per quintal. In Andhra Pradesh’s Kurnool, wholesale prices were Rs4,450 per quintal.

Worryingly, prices may dip further once the harvest from Maharashtra, Gujarat and Madhya Pradesh hits markets in January.

In September, the agriculture ministry estimated a record 4.3 million tonnes of arhar production for 2016-17, a 74% rise compared with the 2.46 million tonnes harvested last year when a widespread drought severely dented production and led to a spike in retail prices.

“Wholesale rates dipping below MSP show that government procurement is very limited,” said Pravin Dongre, chairman of India Pulses and Grains Association, a traders’ association.

“Also, all major states like Maharashtra and Karnataka have imposed stock limits on traders which affect natural price discovery at the time of harvest,” Dongre said. “Farmers may shift away from pulses in the next season if they do not receive a fair price and therefore the government must step up procurement,” he added.

In June, ahead of the rain-fed planting season, the centre raised the MSP for pulses. MSP of arhar was raised from Rs4,625 per quintal (in 2015-16) to Rs5,050 per quintal and that of moong was raised from Rs4,850 to Rs5,225 per quintal. Farmers across India have sold their harvested moong at less than support prices since September.

In September, the cabinet approved creation of a 2 million tonne buffer stock of pulses, which is about 10% of annual production. However, the food ministry last week said that so far, the centre has procured only about 6.95 lakh tonnes.

“In Karnataka, only the best grade arhar is procured at MSP from farmers while they are forced to sell the rest at lower prices in mandis,” said Vijoo Krishnan, joint secretary of the All India Kisan Sabha, the farmers’ wing of the Communist Party of India (Marxist).

“It is odd that the Indian government is undertaking assured procurement of pulses from countries like Mozambique (Africa) at support prices, incurring costs of carriage and technical assistance, while farmers at home are not able to recover costs,” Krishnan added.

In September, a committee set up by the government and headed by the chief economic advisor Arvind Subramanian recommended an MSP of Rs6,000 per quintal for arhar for the 2017 kharif season.

“The worst case scenario for farmers is weak procurement and stock limits which force them to sell most of their output at market prices that are well below MSP,” the committee report said, adding, “as prices decline, government procurement must be on a war footing.”

More From Livemint