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LATEST NEWS UPDATES | Emphasis on cereals prime cause of high pulse prices -Rajeev Deshpande & Dipak Kumar Dash

Emphasis on cereals prime cause of high pulse prices -Rajeev Deshpande & Dipak Kumar Dash

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published Published on Oct 26, 2015   modified Modified on Oct 26, 2015
-The Times of India

NEW DELHI: The current spike in pulse prices could have been anticipated, but India's cereal-centric food security policies emphasize rice and wheat while dis-incentivizing the production of pulses despite clear trends that show a declining preference for cereals.

Even though India's dependency on imported pulses grew as imports rose from 2.7 million tonnes in 2010-11 to over four million tonnes this year, minimum support price-driven procurement and the Food Security Act's commitment of 61 million tonnes a year drove cereal production despite overflowing godowns.

The MSP policies have resulted in buffer stocks of 61 million tonnes, largely rice and wheat, as of June this year - some 20 million tonnes more than the strategic reserve of 40 million tonnes (MTs). Though the NDA government has moderated the yearly increase in MSP, procuring cereals remains priority for the Centre and states.

The situation presents a widening demand-supply mismatch as while per capita consumption of cereals declined in both urban and rural areas (see chart), the demand for other protein food is rising, indicating emerging preferences for "high value" food across all income segments according to NSSO consumption expenditure data.

Analysis of NSSO data from 1993-94 to 2011-12 across three income segments - the 10-30, 30-70 and 70-100 deciles - broadly representing the lowest, middle and high income groups show the trend clearly. The monthly per capita consumption of cereals declined 8.2% in the lowest decile, 16.5% in middle decile and 21.6% in the highest in rural areas.

The decline in per capita consumption of cereals makes a strong case for more targeted support to the most needy rather than the food security scheme's coverage of 67% of the population or an estimated 82 crore individuals -- more than thrice the number of people below the official poverty line.

According to NSSO data, while consumption of cereals (as a proportion of proteins) fell from 69.42% to 62% in rural areas between 1993-94 and 2011-12, consumption of pulses went up from 9.76% to 10.57%. The trend was even more pronounced in urban areas.

At the same time, production of pulses fluctuated between 17.09 MTs and 19.2 MTs during 2010-11 and 2013-14. During 2014-15, it was 17.38 tonnes against the domestic requirement of about 22 MTs. The government estimates the production to increase to 18.32 MTs as the sown area has risen from 10.2 million hectares in 2014 to 11.5 million hectares this year.

As the population's middle income segment expands, the demand for more varied food will increase. Urgent policy corrections like re-focussing the MSP strategy on pulses and targeting the NFSA on the lowest decile classes in the NSSO surveys are needed in the light of rising demand for milk, milk products, eggs, meats and vegetables.

Food and Agriculture Organization's 2012 report shows India's per capita milk and dairy products consumption has doubled since the 1970s and may account for 21% of global consumption by 2050. FAO and ICAR studies show per capita meat consumption rising to 18 kg in 2050. India is the world's third largest producer of eggs and the fifth in poultry. Broiler demand is projected to grow 15-18% in the next couple of decades.

But production depends on the rain gods since little over 15% of area under pulses has assured irrigation. Moreover, traditionally, farmers have not taken up cultivation of pulses because of changes in production and prices in the absence of an effective price support mechanism by government.

The Times of India, 26 October, 2015, http://timesofindia.indiatimes.com/business/india-business/Emphasis-on-cereals-prime-cause-of-high-pulse-prices/articleshow/49532350.cms


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