Will higher support prices fix India’s pulse problem?
Farmers see pulses as a low yield and risky crop due to volatile prices and production
New Delhi: Pulse prices are rising. In June, wholesale prices for pulses were 34% more than last year, and some varieties are selling at over ₹ 100 per kg in the retail market.
Unlike anywhere else in the world, pulses are a staple in Indian diet and India is the largest consumer of pulses. Yet, every year, nearly a quarter of our demand is met through imports. In the past decade,domestic production of pulses grew from 13.4 million tonnes (mt) in 2005-06 to 17.4 mt last year (2014-15), a jump of nearly 30%.
During this period, imports more than doubled, from 1.7 mt to 4.58 mt. But with nearly a quarter of our consumption dependent on imports, we are still a long way from being self-sufficient in pulses.
Even the increase in minimum support prices (MSPs) announced by the government last month is unlikely to solve India’s pulse problem. Unless the government steps in and procures pulses, farmers are unlikely to grow pulses as an irrigated crop.
Why is production low?
“Pulses are a risky crop both in terms of productivity (as it is mostly grown in rain-fed conditions) and due to volatile prices,” according to Ramesh Chand, director of National Institute of Agricultural Economics and Policy Research.
Pulses are mostly grown in non-irrigated and rain-fed areas of the country, in the poorest regions, according to experts. Productivity is low as there has been little research in developing high yielding varieties and prices are volatile,making farmers reluctant to grow pulses.
Only 16% of the area for cultivation of pulses has access to irrigation. In comparison, nearly 93% of area under wheat cultivation and 59% of the area under rice cultivation has irrigation facility. This shows up in the lower productivity of pulses—6-7 quintal per hectare—that could double with access to irrigation.
But then why don’t farmers with access to irrigation like those in Punjab want to grow pulses? And why did farmers in Madhya Pradesh,who once grew pulses, prefer to grow soybeans now?
The answer is volatile prices. In June 2012, wholesale prices of chickpea (gram), which accounts for nearly half of India’s production and consumption of pulses, were 61% more than the previous year, and in June 2013, the year-on-year growth fell to -21%, whereas in June this year, gram prices again shot up by 49%.
(See the chart on year on year change in wholesale price index of gram and arhar)
What explains price volatility?
“While supply in terms of domestic production is volatile, prices are fluctuating more as the opportunity to stabilize domestic prices through trade is very limited since only a few countries in the world grow pulses,” said Chand.
(See Chart on pulses production and imports)
For instance, when domestic production of pulses dipped in 2014-15 by over 12% due to unseasonal rains ahead of the winter harvest and deficit rains in the kharif season last year, prices shot up.
However, in the past few years, international prices of chickpea and arhar (pigeon pea) were lower than domestic prices. While it is cheaper to import pulses from countries like Canada, Australia or Myanmar as imports are duty-free, it is risky for farmers in India to grow pulses.
“In the past, India has imported pulses at prices lower than support prices—and farmers did not find any buyers,” said Ashok Gulati, agriculture chair professor at Indian Council for Research on International Economic Relations, New Delhi.
“The world is not interested in pulses and India has not developed improved varieties. And without any marketing support, farmers are shifting away from this risky crop,” he added. The priority of the government is to keep the urban consumer happy by keeping prices in check, said an official with the agriculture ministry, who did not want to be named.
“It has not created a robust MSP based procurement system for pulses like it did for rice and wheat. Why is it that rice or wheat prices do not fluctuate as much and the market behaves itself?” he asked.
“It’s time we understand that free trade in pulses in not a solution for food security. Traders are holding on to huge stocks and the government must also hold strategic stock of pulses for price intervention (in times of volatility),” he added.
It’s time India fixes its pulse problem for it is home to a quarter of the world’s hungry—195 million out of 795 million globally. Moreover, India has high prevalence of protein energy malnourishment among children under five and every second child is stunted, meaning they have low height for their age.
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First Published:16 Jul 2015, 05:55 PM IST
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