After onions, it is now the turn of lentils to send the pulse racing. Prices of all major pulses have shot up in the last month, on the back of speculation over a poor harvest in this year’s kharif crop.
The price of tur/arhar dal (pigeon pea) has doubled in some cities, crossing the ₹200/kg mark. Others such as urad dal (black gram), moong dal (green gram), chana (chickpea) and masur dal (lentil) have become pricey too.
In a country where dals are an important source of protein and with this being the festival season, the outrage among the people is not surprising. Behind this price rise is a sorry tale of inefficient planning and management by the government over the years. Just consider these facts.
India, biggest producer
India is the largest producer and consumer of pulses in the world. Current consumption is estimated at 23 million tonnes per annum. Yet, the country has never managed to produce enough to meet the demand, which has anyway been growing at a glacial pace.
Traditionally, between a fifth and sixth of the annual consumption has been serviced by imports and the government, over the years, has failed to take serious steps to bridge this deficit by increasing acreage in the country. India’s production of pulses has been stuck at 17-19 million tonnes in the last five years.
Unlike wheat, oilseeds and sugar, the international trade in pulses is rather small and imports at short notice are not easy. The entire global trade in pulses — at 15 million tonnes — is smaller than India’s production. The major producers are Canada/US (masoor dal), Myanmar (tur, urad and moong dals), Tanzania and Mozambique (tur dal) and Australia (chana dal).
The immediate cause for the rising prices now is that the output of pulses in India this year is expected to fall short of the 7-million-tonne target by 1.5 million tonnes. This follows two consecutive years of poor harvests — pulses production in 2014-15, at 17.2 million tonnes, was down by about 12 per cent, or 2 million tonnes.
Though the crop will start coming into the market only from late-November, traders have been quick to sense the expected shortage and have started hoarding stocks to gain from the anticipated upsurge in prices.
Government moves
And what has the government done? It has imposed stock limits on traders to combat hoarding and conducted raids across the country to ferret out hoarded stock. Besides, it is importing 7,000 tonnes of pulses and distributing them at subsidised prices using a ₹500-crore fund created for market stabilisation of agri commodities in the last Budget.
But all this is too little, too late. The quantum that the government plans to import is just about a day’s consumption of pulses and will not be enough to move the market. The stock limits and raids have had only a limited effect in bringing down prices. Traders are crying foul over the stock limits, pointing out that for a crop where the harvest season is just about 2-3 months in a year, stocking up is imperative if supplies are to be maintained through the year. But the government is not willing to listen, given its overweening objective of quelling prices.
With demand rising amid the ongoing festival season, dal prices are set to remain elevated, at least until the new crop enters the market in December. Besides, the regular imports will also start flowing into the market in the next few weeks. This is in the short term.
Long-term strategy
What is needed is a long-term strategy to increase the acreage of pulses and also to build up a buffer stock which can be used to tame prices when they move upwards.
Traditionally, pulses have been the poor cousin of other crops such as wheat, paddy and sugarcane, with farmers preferring the latter as yields and prices are higher. Experts have been advising that the government should set a MSP (minimum support price) that is lucrative for farmers to cultivate pulses.
Farmers also need to be assisted with high-yielding and hybrid varieties of seeds that can grow in a low-irrigation environment. It is ironic indeed that, despite large arrears from sugar mills, farmers still don’t mind producing sugarcane and overlook crops such as pulses.
The government should also procure pulses from farmers at the promised MSP and build up a buffer stock of at least 2-3 million tonnes that can be released into the market in times such as now.
Ultimately, if the present crisis results in a correction in the long-term strategy, it would have served its purpose.