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| Food inflation cools, but no respite from pulses |
| Sanjeeb Mukherjee & Ajay Modi / New Delhi Dec 29, 2011, 00:52 IST |
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Low kharif output, slow import squeeze supply of poor man’s nutrient; prices remain at elevated levels.
 Amid all the brouhaha over a fall in food inflation to a four-year low of 1.8 per cent during the week ending December 10, there is one commodity that has been consistently defying the trend: pulses. What’s more, if experts are to be believed, its northward trip could continue in the coming months as well.
The prices of pulses have remained at their elevated levels despite a sharp fall in the prices of other food commodities. Also, the supply of this vital poor man’s nutrient has squeezed in the last few months on account of low output during the kharif season and slow imports that are turning costlier.
Equally worrying is that the situation is not expected to change soon. In fact, the acreage of pulses, of which gram comprises almost 80 per cent, has been less this rabi season as compared to that of last year. Gram has witnessed inflation to the tune of 40 per cent in wholesale price index in the last six weeks. However, other pulses, such as tur and moong, have seen price pressure declining in this period.
As per the latest data from the agriculture ministry, the area under rabi pulses has shrunk by 0.69 per cent till December 23 this year, as compared to the same period last year at 13.41 million hectares. The acreage of gram, which is the biggest pulses grown during the rabi season, is almost 4.34 per cent down till last Friday -- as compared to the same period the previous year at 8.57 million hectares. This, on top of a roughly 10 per cent fall in kharif pulses production at 6.43 million tonnes year-on-year, which has squeezed its supply.
National Centre for Agricultural Economics and Policy Research (NCAP) notes that if the country had last year registered a record production of pulses, it was largely because of area expansion. “This year if we don’t have adequate rainfall in the coming few days, then there could be a shortfall in rabi output,” notes NCAP director Ramesh Chand. “This, on the back of the fall in kharif production, could push up retail prices of pulses more in the coming months.”
The option to augment supply through imports has also ceased, as the Indian rupee has fallen sharply against the dollar in the last few weeks. India annually imports around 2.5-3 million tonnes of pulses of which almost half is yellow pea while the other pulses like tur, urad, moong and chana make up for another 50 per cent. The pulses are imported from Canada, Myanmar, Australia and some African countries.
Industry officials say importers, who had contracted large quantities of pulses when rupee was stable in relation to dollar, are now paying almost 20 per cent more for their imports. This is further pushing up retail price of pulses. In the case of pulses, most importers do not hedge their risk, experts note.
“Pulses importers have not burnt their fingers. They have burnt their bodies this year,” says Bimal Kothari, vice-president of India Pulses and Grains Association. “The impact on importers could be in excess of Rs 500 crore,” he told Business Standard.
At present, none has entered into an import contract. Kothari cites a reason, “The landed price of pulses at the current rupee exchange rate and international prices will be significantly higher than the prevailing domestic prices to make imports viable.”
Gradually, imports will have to be contracted. To make that possible, international prices should come down more to offset for rupee depreciation against the dollar.
The industry expects this year’s pulses production to drop to around 17-17.5 million tonnes —almost 7 per cent less than the record output of 2010-2011. The high domestic output had crimped imports to just around 1.5-2.0 million tonnes last year. This year, it is back to square one.
Kothari says if pulses traders import yellow pea on Wednesday, the landed price in Mumbai will be Rs 25 per kg, compared to the prevailing price of Rs 21 per kg.
“That is why they have stopped entering into new contracts,” he adds.
Despite this, the prices of yellow peas in the international markets have dropped 800-850 per tonne to $600 per tonne in the last one-year. “The gain in international markets has been offset by aweakening rupee,” laments Kothari.
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