Pulses MSP and rising prices

While the government is encouraging an increased cultivated area of pulses, barely a month back, an all-out war had begun to control its prices.

When on June 9 the Centre announced the minimum support price (MSP) of this year’s kharif season, the highest absolute increase was reported for sesame (til), urad and tur.

The oilseed had seen an increase of Rs 453/quintal rise (increasing it to Rs 7,307 from the previous Rs 6,855), while urad and tur MSPs were raised by Rs 300/quintal to their present value of Rs 6,300.

The official release, issued by the Press Information Bureau, talked about a special initiative to be undertaken in the khairf season to attain self-sufficiency in pulses, which would include free distribution of seeds.

However, while the government is going all-out to encourage increased area of pulses, barely a month back, an all-out war was started to control the prices of pulses.

Steps to control the price of pulses started towards the end of March, when the Central government announced its intent to import pulses. This is a routine affair. The country imports around 10-15 lakh tonnes of pulses like tur, urad and moong, and this announcement is made towards the end of April or early May with a condition that the imports have to be completed before the start of the major kharif pulses.

The early announcement, trade sources said, was an indirect effort to cool down the prices of pulses, especially tur, just before the crucial state elections. A slight correction notwithstanding, pulses like tur and chana continued to trade well above or near their MSP almost all of April as a supply demand mismatch had hiked the prices.

On May 5, the Central government again waded to control the prices and allow free import of pulses. This was a major policy shift as earlier only licensed daal millers and traders were allowed to import.

Jitu Bheda, president of the Indian Pulses and Grains Association (IPGA), welcomed the move and explained how it will enable traders to quickly import the required quantity of tur, moong and urad to fulfil the shortage of pulses.

“We are expecting minimum 250,000 tonnes of tur, 150,000 tonnes of urad and around 50,000-75,000 tonnes of moong beans to be imported primarily from Myanmar, African and the neighbouring countries,” he had said.

With retail prices of most pulses still trading above Rs 110-130/kg, soon another step was taken, which sent out shockwaves in the markets. On May 14, Anupam Mishra, joint secretary of the Ministry of Commerce, Food and Public Distribution, directed chief secretaries of all states and Union territories to ask daal millers and traders to declare available stocks with them.

The ministry had directed the state governments to verify the same. Such orders were issued under the Essential Commodities Act, 1966, an act, which the Narendra Modi-led government had amended last year.

For the daal trade, this move was the penultimate step towards the final weapon in government’s arsenal and a step away from imposition of stock limits. The prices of tur and chana had corrected immediately in wholesale markets after.

This led to protest by the industry with the Maharashtra Dal Millers’ Association writing to the Prime Minister, expressing their displeasure against it.

In their letter, the association stated the government had toiled hard to increase the acreage of pulses and the country has reaped benefit of it. “..Also lower prices on the start of the sowing season will prompt many farmers to shift to other lucrative crops like oilseeds, maize and sugarcane. This will hamper the hamper the availability in coming years. We need to keep better prices so the farmers do not move away from pulses sowing,” the letter read.

Farm activist Vijay Jawandhiya said announcing a higher MSP was no guarantee of them being realised at the farm level. The present price rise both in pulses and oilseeds was mostly due international pressures than the government intervention, he added.

“If conditions changes, the government would be in position to guarantee MSP to farmers. My grouse against the Congress announcement was that they had allowed cheap food grains to city dwellers at expense of the rural farmers. Unfortunately, the present government is doing the same,” he said.