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Here’s why prices of pulses are unlikely to cool anytime soon -Sayantan Bera
-Livemint.com

As long as farmers with access to irrigated land aren’t interested in growing pulses, supply and price shocks will keep haunting consumers and governments

New Delhi: The centre’s efforts to contain prices of pulses during the festive season is showing few results on the ground.

On Monday, retail prices of tur dal (arhar or pigeon pea) climbed to Rs.205 per kg in Mysore in Karnataka and Rs.210 per kg in Puducherry, while the all-India average price hovered around Rs.165 per kg, according to the consumer affairs ministry. That’s more than double the Rs.75 per kg that tur dal cost last year.

This, after the Centre decided to import 7,000 tonnes of pulses earlier this month and a further 3,000 tonnes on Monday, imposed stock limits for traders and even departmental stores, and last week said it would create a buffer stock of 40,000 tonnes. It also asked states to crack down on hoarders who it said are manipulating prices.

Despite all these steps, pulse prices are unlikely to cool down anytime soon. Here’s why:

1. Pulse production in India, the world’s largest grower and consumer, fell by nearly 2 million tonnes—from 19.2 million tonnes in 2013-14 to 17.2 million tonnes last year (2014-15)—due a deficit monsoon in 2014 and unseasonal showers destroying the rabi (winter) crop in April-May this year.

A deficit monsoon in 2015 means the kharif (summer) crop of pulses is going to take a hit. The centre has already lowered its production estimates from 7 million tonnes to 5.6 million tonnes. This implies three consecutive crop failures, back to back.

2. There is zero import duty on pulses. But this does not help. Global supplies are thin—the world produces an estimated 70 million tonnes of pulses—and international prices shoot up whenever India is in need. Last year, India imported nearly 4.6 million tonnes or a quarter of the domestic consumption, and a lower kharif output means imports could be higher in 2015-16.

3. Despite the rising prices, farmers are not interested in growing pulses. It’s a risky crop, they say; yields are lower due to lack of research on improved varieties. And prices are volatile: for instance, in June 2012, wholesale prices of chickpea (gram), which accounts for nearly half of India’s production and consumption of pulses, were 61% more than the previous year, and in June 2013, the year-on-year growth fell to –21%, whereas in June this year, gram prices again shot up by 49%. At times, even imported pulses cost less than home-grown ones at support prices, meaning farmers cannot compete with cheaper imports.

4. Growing pulses is also risky as they are mostly grown under rain-fed conditions (in the most drought-prone areas). For instance, the pulse crop has been hit this year by a drought in Maharashtra, Telangana, eastern Madhya Pradesh and Uttar Pradesh. Only 16% of the area for cultivation of pulses in India has access to irrigation. In comparison, nearly 93% of the area under wheat cultivation and 59% of the area under rice cultivation has irrigation facilities. This shows up in the lower productivity of pulses—6-7 quintals per hectare—which could double with access to irrigation.

5. The centre has to wait at least a month before it can start procuring the 40,000 tonnes for creating a buffer stock. Supplies of tur are expected to come in only after mid-December, while urad (black gram) is expected to hit the markets by November.

However, the government’s decision to create a buffer stock is a step forward. It will deter traders from manipulating prices, and farmers can be assured of better prices. But for the pulse buffer stock to have a significant impact, the centre might need to increase stocks beyond 40,000 tonnes, once the supply situation improves next year.

After all, it is mostly due to large public stock-holding in rice and wheat that price hikes for these grains are rare.

But as long as farmers with access to irrigated land aren’t interested in growing pulses, supply and price shocks will keep haunting consumers and governments.