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LATEST NEWS UPDATES | Falling wholesale prices of pulses show pitfalls of a bumper crop -Sayantan Bera and Prerna Kapoor

Falling wholesale prices of pulses show pitfalls of a bumper crop -Sayantan Bera and Prerna Kapoor

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published Published on Sep 27, 2016   modified Modified on Sep 27, 2016
-Livemint.com

The problem could be most acute for pulses with production hitting a record high but prices falling below the govt’s minimum support prices

New Delhi:
Following consecutive years of drought, India is set to harvest a record crop of foodgrains but farm incomes could take a hit due to falling wholesale prices. The problem could be most acute for pulses with production hitting a record high but prices falling below the government’s minimum support prices (MSPs).

For instance, according to the first advance estimate released by the agriculture ministry last week, production of rain-fed Kharif pulses will rise by 57% from 5.5 million tonnes last year to 8.7 million tonnes in 2016-17. However, the crop of green gram or moong, which has arrived in markets in several states, is ruling below government MSPs.

An analysis of market arrival data shows that the average price that moong is selling for in major growing states like Rajasthan, Maharashtra, Andhra Pradesh and Gujarat is around Rs.4,900 per quintal (weighted average of modal price), between 1 and 21 September, while the declared MSP is Rs.5,225 per quintal.

Kharif moong is a small crop of 1.35 million tonnes production but till 19 September, government agencies procured 3,273 tonnes of moong from just 330 farmers, according to a statement from the food ministry last week.

The real test will be when arhar or pigeon peas arrive in the markets. Prompted by high retail prices in the past year, farmers have planted a record area under arhar, and production is likely to rise by 74%, from 2.46 million tonnes in 2015-16 to 4.29 million tonnes in 2016-17.

This month the cabinet approved creation of a 2 million tonnes of pulses buffer stock or about 10% of annual production. However, farmers may lose interest if the government fails to step up procurement as planting could be lower for the Rabi or winter crop, sowing for which begins next month. The winter crop accounts for about two-third of the annual pulse output.

Why is procurement poor despite the Centre approving buffer stock? “States will have to step up procurement from farmers (of pulses) like for rice and wheat and the Centre needs to proactively bring them on board going beyond mere announcements (of buffer stock and higher support prices),” said Pravesh Sharma, former head of Small Farmers Agribusiness Consortium, a central agency which procured pulses from farmers in the past years.

Sharma added that states could also go ahead and declare a bonus over MSPs to give an added incentive to farmers. “In 2013, mandi (wholesale market) prices fell below MSP due to a large crop size. A repeat will mean that farmers will lose interest in pulses in the (upcoming) winter season,” Sharma said, adding, “Governments can also get into contractual farming arrangements with farmers as the Centre is getting into such arrangements with African countries like Mozambique.”

Earlier this month, a panel headed by chief economic adviser Arvind Subramanian to review India’s policy on pulses called for increasing the MSP of pulses. Recommending procurement on a war-footing, the committee said that “the worst case scenario for farmers is weak procurement and stock limits which force farmers to sell most of their output at market prices that are well below MSP.”

A crippling drought in 2015 cut India’s pulse output to the lowest in six years and imports surged to a record 5.8 million tonnes in 2015-16.

Livemint.com, 27 September, 2016, http://www.livemint.com/Politics/WZhGgxbuPQjTDhLhPSbf4M/Falling-wholesale-prices-of-pulses-show-pitfalls-of-a-bumper.html


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