Five reasons why pulses cost so much more

Representatives of pulse and grain importers associations met Union Finance Minister Arun Jaitley today to discuss the prices of pulses, which are expected to go down after Diwali next month.

The importers said in a statement that they would make available one lakh kilograms of Tur Dal to the government every day at a cost of Rs. 135 per kilogram.

About 36000 tonnes have been recovered from hoarders in over 3000 searches across the country. 

Let's look at five reasons why prices of pulses shot up this year.

1) Production of pulses in the 2014-15 crop year that ended in July was estimated to be around 17.38 million tonnes -- around 9.5 per cent less than last year -- because of  drought in Maharashtra and Karnataka, the two big states that lead in cultivation of pulses.

2) The crop is cultivated on around 23-25 million hectares of land across the country. Only half of that is under irrigation; in some pulses like tur(arhar) -- which is selling at over Rs 200 per kilogram in some cities -- less than 5 per cent of the total sown area is under irrigation.

3) The shortfall in production is actually  small, but in a market where demand is almost 4-5 million tonnes more than domestic production every year, even a minor blip in supplies can push up prices sharply.

4) India imports almost 4-5 million tonnes of pulses every year, but unlike wheat, rice and oilseeds, the global marketable surplus is limited to around 13 to 15 million tonnes. This makes international prices shoot up even at the slightest increase in demand from India. The landed price of imported tur is today around $2,100 per tonne, as against $700-800 a year-ago.

5) On top of all this, there is the element of hoarding and black-marketing, which big traders and wholesalers might have been indulging in, knowing fully well that prices will increase. Recent raids have recovered around 36,000 tonnes of pulses hoarded by traders.