Rising Pulses Prices

What is the issue?

Kharif pulses prices are rising after a gap of two years, due to production dip.
It calls for policy measures to reconcile producer as well as the consumer interests.

How did it evolve?

Generous increases in procurement prices led to a spike in pulses acreage and output in 2016-17 and 2017-18.
E.g. tur MSP has been raised by about 30% from 2014-15 to 2017-18, to Rs. 5,675 per quintal now
Moong MSP was raised 25% to Rs. 6,975 over the last year, and chana MSP too was up 10% over this period.
However, the resulting rise in output led to prices falling way below these MSP levels, affecting producers/farmers interests.
Also, drought conditions are prevailing in Maharashtra, Karnataka, Andhra Pradesh and Gujarat.
These have impacted the standing crop of tur, urad and moong.
As a result, tur prices have crept up from Rs. 3,500-3,600 a quintal in mid-October, 2018 to about Rs. 4,500 now.
Kharif pulses output has come down to 9.22 million tonnes this year, against 9.34 million tonnes last year.

What are the challenges?

Being a protein-deficient country, it is essential to sustain producer interest in pulses cultivation.
A shift from cereals to pulses is also critical to correct the nutrition imbalance, and water and fertiliser use over time.
However, recent reports suggest that a production dip in kharif may well extend to rabi pulses.
As, the area sown in Karnataka and Maharashtra are falling over the year-ago period.
Two good crop years have, however, ensured an inventory build-up in pulses of over three million tonnes.
Hence, an inordinate spike in prices does not seem very likely.
While favourable for the consumers, it is certainly not so for the producers.
The policy challenge is thus to balance both the interests.

What could be done?

The key is to develop a procurement infrastructure in coordination with the States.
Also, use of real-time data is advisable to calibrate procurement in order to smoothen out price volatility.
While procurement agencies are clearing stocks to make way for arrivals, they should ensure price stability.
The recommendations of the Arvind Subramanian committee on pulses should be implemented.
These include

removing stock limits and curbs on exports
allocating an additional Rs. 10,000 crore for pulses procurement
raising MSP for tur and urad to Rs. 60 a kg
creating a new institutional arrangement for pulses that facilitates coordination between all stakeholders

Source: BusinessLine