Business News/ Industry / Agriculture/  Tur prices up 22% in Q4, may rise further on tight supply

New Delhi: Prices of mill-quality tur (arhar or pigeon peas) have experienced a sharp increase in the March quarter and are expected to rise further, driven by an anticipated decrease in domestic supply.

Tur production is expected to fall by 20-30% due to factors such as unseasonal rainfall in October and farmers shifting to cultivating crops such as soybean and cotton. This has raised concerns over insufficient stocks in the central pool and driven up tur prices by 22% in the past three months and 32% over the past year, industry officials said.

Key wholesale markets in Maharashtra, the largest tur grower, reported mill-quality tur trading at 8,400-8,500 per quintal, against the minimum support price of 6,600 a quintal, according to spot market sources. This marks a significant increase from last year’s corresponding period, during which fair average quality (FAQ) tur variety was sold at 6,000-6,231 per quintal, as per data from the government’s agriculture marketing portal Agmarknet.

Graphic: Mint
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Graphic: Mint

“Rainfall in October damaged standing tur crop in Maharashtra, which is likely to reduce yield by 20%, weighing on India’s total production this year," said Naresh Biyani, Akola-based Radha Udyog, a processor of pulses.

Tur production in 2022-23 (July-June) is estimated to decline to 3.7 million tonnes (mt) from 4.2 mt in the previous year, according to the second advance estimate by the agriculture ministry. However, the industry expects output to be even lower at 2.7-2.8 mt for the year.

“Currently, daily supply of tur in key markets of Karnataka, Maharashtra and Gujarat are pegging at 21,000-25,000 quintals, which is seen falling to 10,000-12,000 quintals by June," said Indrajit Paul, assistant general manager at DeHaat, an agri-tech company. “Supply this season remains 25-30% lower than last year."

Inflation in the pulses category has been steadily increasing over the past few months, with a 4.3% rise in March from a year earlier. Pulses inflation made up 4% of food and beverages inflation for the month, compared to an average contribution of less than 2% in 2022.

“Tur prices may firm up further by 8-10% and hover at around 9,300-9,500 a quintal by July-August when there is clarity about monsoon rainfall. The spike will depend on how El Nino impacts monsoon and next year’s kharif sowing," said Tarun Satsangi, agriculture research head at Origo Commodities India Pvt. Ltd, an agri-tech company.

Daily food prices in the first half of April indicate a drop in vegetable and edible oil prices compared to March. Meanwhile, a pickup is witnessed in the prices of pulses in the first two weeks of April.

Overall, food and beverages inflation in April is expected to moderate to 3.9% on year from 5.1% in March, said Gaura Sengupta, an economist at IDFC First Bank.

Monsoon performance will be a key factor in determining the food inflation trajectory in FY24. Though the first forecast on monsoon by IMD indicates a normal monsoon, the risk persists with the likelihood of El Nino developing during the monsoon season.

“The impact on food inflation will depend on a confluence of factors such as monsoon distribution (temporal and spatial), rural wage growth and global food inflation. There have been periods in the past when monsoon was weak, but food inflation moderated as rural wage growth slowed and global food inflation was softer. For now, we expect normal monsoon and headline CPI inflation to average at 5.5% in FY24," Sengupta said.

Rising prices of certain agriculture commodities such as milk, sugar and pulses, coupled with deficient rainfall during the monsoon season because of a possible El Nino weather pattern, could stoke inflation further in India, potentially forcing the Reserve Bank of India to keep interest rates higher for longer. Further, surging food prices may jeopardize the central bank’s efforts to keep the economy growing.

Tur, a crucial kharif variety, accounts for 13% of India’s pulses basket. India heavily depends on Myanmar, Tanzania, Mozambique, Malawi and other East African countries to meet its domestic consumption of about 4.2-4.5 mt of tur. India, in April-January of FY23, imported 731,349 tonnes of tur, according to the latest data by the commerce ministry. Tur has a share of 45% of India’s total pulses import basket.

Queries sent to the food ministry and consumer affairs ministry remained unanswered till press time.

Puja Das
Puja Das is a New Delhi based policy reporter covering food, farm, fertiliser, water, and climate policies for Mint. Puja reports on farmers' distress and how the agriculture sector is impacting India's rural economy and policy initiatives to help meet the pledges made at COP27. Puja holds a post-graduation degree in Broadcast Journalism from the Indian Institute of Journalism & New Media, Bangalore.
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Updated: 14 Apr 2023, 12:07 AM IST
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