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NEWS ALERTS | Incentivize pulses production to check spiralling prices
Incentivize pulses production to check spiralling prices

Incentivize pulses production to check spiralling prices

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published Published on Oct 26, 2015   modified Modified on May 6, 2016

The low rate of inflation of 3.88 percent in Consumer Food Price Index during September, 2015 actually hides the high prices at which various pulses (dal) are available in kirana / retail shops across India.

In terms of Consumer Price Index (combined), monthly rate of inflation in pulses and products during September 2015 (over September last year) stood at 29.76 percent as compared to the overall monthly retail inflation of just 4.41 percent.  

The prices of various dals vary across regions. For example, for the week ending on 23 October, 2015, the retail price of arhar (split) varied from Rs. 205 per kg in Gandhi Nagar (Gujarat) to Rs. 160 per kg in Bhubaneshwar (Odisha), as per the Weekly Bulletin on Retail Prices of Essential Commodities (released by Directorate of Economics & Statistics). Similarly, during the same time period, the retail price of urad (split) varied between Rs. 180 per kg in Kozhikode (Kerala) and Rs. 140 per kg in Bhubaneshwar (Odisha).

It needs to be mentioned here that the monthly rate of inflation in pulses in September, 2015 (over September last year) in terms of Wholesale Price Index reached 38.56 percent, up from 6.69 percent in September, 2014.

Barely a few states provide pulses through their public distribution system (PDS) like Tamil Nadu, Himachal Pradesh and Andhra Pradesh, as one can discern from Reetika Khera's EPW piece entitled Revival of the Public Distribution System: Evidence and Explanations. So when for some pulses like tur and arhar prices crossed the Rs. 150 per kg mark in retail shops, it actually hampered protein intake of majority of Indians, especially the poor.

The National Sample Survey 68th round shows that the contribution of pulses to protein intake was 10 percent in rural India and 11 percent in urban India in 2011-12. In rural areas, this contribution was in the range 9-12 percent for 12 of the major states while in urban areas it was in the range 10-13 percent for 13 of the major states.

Readers should note that the 17 states of India, which had a population of 20 million or more according to the Census of 2001 are referred to as ‘major states’ by the NSS.

The Economic Survey 2014-15 informs us that the bottom 3 deciles consume 36 percent of subsidized pulses sold through the PDS and the Central Government spends just Rs. 158 crore on pulses subsidy.  

Demand-supply mismatch

Recent media reports have highlighted that there are various reasons behind the rise in prices of pulses, the most important among which is the demand-supply mismatch in domestic availability of pulses, apart from hoarding.

The first advance estimate of production of foodgrains in 2015-16 done by the Ministry of Agriculture shows that kharif production of pulses is going to be 5.56 million tonnes in 2015-16, whereas kharif production of pulses stood at 5.63 million tonnes in 2014-15. Extreme weather conditions like unseasonal rainfall and drought have affected production of pulses this year.

The fourth advance estimate of crop production in 2014-15 by the Ministry of Agriculture shows that the production of pulses in the country has come down from 19.25 million tonnes in 2013-14 to 17.20 million tonnes in 2014-15, which is much lower than the target of 19.50 million tonnes set for last year.

Due to overall neglect of production of pulses, the per capita net availability per day of pulses has declined from 51.2 gm in 1971 to 41.9 gm in 2013, says the Economic Survey 2014-15.

A policy paper released in August 2015 by National Bank for Agriculture and Rural Development (NABARD) entitled Feeling the Pulse: Indian Pulses Sector shows that during the period from 1950-51 to 2013-14, the compound annual growth rate (CAGR) in area under total pulses at 0.08 percent was much lower than the total foodgrains (0.21 percent), rice (0.58 percent), wheat (1.7 percent) and oilseeds (1.4 percent). The introduction of Green Revolution technologies led to the substitution of pulses cultivation with high yielding varieties (HYV) of cereals in Punjab, Haryana and western Uttar Pradesh.

As against 0.64 percent growth in productivity of pulses, the CAGR of foodgrains was 2.23 percent, rice 1.9 percent, wheat 2.75 percent and oilseeds 1.53 percent. Thus, low productivity along with loss of area has affected the production of pulses, says the NABARD policy paper. The productivity of pulses has improved from 441 kg per hectare in 1950-51 to 764 kg per hectare in 2013-14.

Although the percentage of area under irrigation has increased from 38 percent in 1966-67 to 59 percent in 2012-13 in case of rice, and 48 percent to 93 percent in case of wheat, the same for pulses has increased from 9 percent to 16 percent during the corresponding period. We, therefore, find that pulses are still cultivated on marginal and sub-marginal land, predominantly under unirrigated conditions.

Although the CAGR in the minimum support prices (MSP) of all the pulses offered to farmers have been higher than that of paddy and wheat, the procurement has been negligible at about 1 to 4 percent of production of pulses compared to 28 to 30 percent of cereals during 2012–13 to 2014–15.

As per the NABARD paper, India is the largest producer (25 percent of global production), consumer (27 percent of world consumption) and importer (14 percent) of pulses in the world. The import of pulses has increased to more than 20 percent of the domestic production during 2009-10 and 2012-13.

Due to deficit in domestic production of pulses, India's import of pulses has increased from 2.7 million tonnes in 2010-11 to over four million tonnes this year.

Experts argue that systemic neglect of low input, sustainable agriculture that uses less water has affected production of pulses in India. Although pulse prices skyrocketed in wholesale and retail markets this year, producers/ farmers did not reap any benefit since they succumbed to distress sale due to drought and rainfall deficit.
 
Steps to increase production of pulses

It has been found by the NABARD paper that the small and marginal farmers, who form majority of pulse growers, can seldom enjoy the high MSPs offered to them by the Government since they have lower marketable surplus and limited holding capacity.

Although the pulses component has been allocated fifty percent of total funds under the National Food Security Mission (NFSM) in order to increase their production, much is required to support the small and marginal farmers who cultivate pulses. The NABARD paper asks for adopting value chain approach starting from the production at farm level and encompassing post-harvest processing, packaging, transportation and marketing to link the smallholders with the market and improve their incomes.

The paper emphasizes on research for creating novel innovative products using pulses. It says that in order to facilitate better price discovery and transparency, facilities for electronic trading of pulses have to be created.

The Economic Survey 2014-15 has suggested that the Government of India must provide better price support operations for pulses and oilseeds and dovetail their MSP policy with trade policy so that their landed costs are not below their MSP.

References

Feeling the Pulse: Indian Pulses Sector -Smita Mohanty and Dr. KJ Satyasai, NABARD Rural Pulse, Issue X, July-August 2015, please click here to access

Wholesale Price Index data (Base 2004-05=100), Office of the Economic Adviser, Ministry of Commerce, http://eaindustry.nic.in/home.asp
 
Weekly Bulletin on Retail Prices of Essential Commodities for the week ending on 23 October, 2015, Wholesale and Retail Price Monitoring System, Directorate of Economics & Statistics, please click here to access

Consumer Price Index Numbers on Base 2012=100 for Rural, Urban and Combined for the month of September 2015, MoSPI, please click here to access
 
First advance estimate of crop production in 2015-16, Ministry of Agriculture, please click here to access 

Fourth advance estimate of crop production in 2014-15, Ministry of Agriculture, please click here to access
 
Nutritional Intake in India 2011-12, NSS 68th round, (July 2011-June 2012), please click here to access

Economic Survey Volume-1 2014-15, please click here to access
 
Economic Survey Volume-2 2014-15, please click here to access

Economic Survey 2014-15, Statistical Appendix, please click here to access

Revival of the Public Distribution System: Evidence and Explanations -Reetika Khera, Economic and Political Weekly, November 5, 2011, Vol xlvi, No. 44 & 45, please click here to access  
 
Vision 2050 (published in 2013), Indian Institute of Pulses Research, please click here to access
 
2015 is likely to be a drought year, please click here to access
 
Emphasis on cereals prime cause of high pulse prices -Rajeev Deshpande & Dipak Kumar Dash, The Times of India, 26 October, 2015, please click here to access

Give pulses through PDS, States told -Gargi Parsai, The Hindu, 25 October, 2015, please click here to access

Pulse of the matter: Manufacturing a dal crisis, short-changing both farmer and consumer -Yogesh Pawar, DNA, 24 October, 2015, please click here to access

Nearly 75,000 tonnes of pulses recovered by States -Tomojit Basu, The Hindu Business Line, 24 October, 2015, please click here to access

A new inspector raj, The Indian Express, 24 October, 2015, please click here to access

Government in overdrive to rein in prices of pulses -Dilip Kumar Jha & Sanjeeb Mukherjee, Business Standard, 24 October, 2015, please click here to access

Importers offer to supply dal for Rs. 135 -Gargi Parsai, The Hindu, 24 October, 2015, please click here to access

How does India cope with rising pulse prices? By shifting to eggs -Sayantan Bera, Livemint.com, 23 October, 2015, pleaes click here to access

Bad cure for a racing pulse -Ashok Gulati & Shweta Saini, The Indian Express, 23 October, 2015, please click here to access

Price stabilisation fund for pulses can keep consumer budget in check, Hindustan Times, 22 October, 2015, please click here to access

36,000 tonnes of pulses seized from hoarders, says Jaitley -Sayantan Bera and Mayank Aggarwal, Livemint.com, 22 October, 2015, please click here to access

Finally, pulse price is a poll issue in Bihar, The Hindu, 21 October, 2015, please click here to access

Here’s why prices of pulses are unlikely to cool anytime soon -Sayantan Bera, Livemint.com, 20 October, 2015, please click here to access

Govt to import another 3,000 tonnes of pulses, The Times of India, 20 October, 2015, please click here to access

In Odisha, no dal for the dalma -Jayashree Nandi, The Times of India, 19 October, 2015, please click here to access

Recipe for failure, The Hindu Business Line, 18 October, 2015, please click here to access

Govt imposes stock limits on pulses held by big retailers, importers, Hindustan Times, 18 October, 2015, please click here to access

Why pulses are on fire: India's food math explained -Subodh Varma, The Economic Times, 17 October, 2015, please click here to access

Why the prices of pulses and dal have skyrocketed, DNA, 15 October, 2015, please click here to access

All dal prices skyrocket, arhar costs Rs 180 per kg, The Times of India, 13 October, 2015, please click here to access

An intel unit to track food prices -Dipak K Dash, The Times of India, 13 October, 2015, please click here to access

India faces shortage of pulses; to import from Myanmar, Australia and Tanzania -Sudhir Suryawanshi, DNA, 7 October, 2015, please click here to access

From plate to plough: Losing the pulses -Ashok Gulati & Shweta Saini, The Indian Express, 28 September, 2015, please click here to access

Biraj Patnaik: time to diversify PDS, start giving pulses, oil, fruits, eggs -Shriya Mohan, CatchNews.com, 13 September, 2015, please click here to access

Image Courtesy: Shambhu Ghatak


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