Wholesale prices fall as mandis prepare to welcome fresh kharif harvest

Arrivals have just begun, but data on initial weeks shows that prices have dropped after higher arrivals within no time. Now, the threat of heavy rainfall-led crop damage lingers

The kharif cropping season has ended, and farm produce will soon start entering agricultural markets, including the state government-regulated Agriculture Produce Marketing Committee (APMC) mandis.

Initial data on four major kharif crops shows that their wholesale prices in major producer states have already fallen to the level of the Minimum Support Price, within the first few weeks of crop arrival. The MSP is intended to act as a floor for open market prices.

Take soybean, for instance. The price of the most popular oilseed cultivated in India has fallen to the MSP (Rs 3,950), after trending close to Rs 10,000 in major mandis in Madhya Pradesh in the initial weeks of September. The price was high when fresh harvest was not entering the markets. Now that the arrivals have begun, it has fallen back to the MSP level.

"Yesterday, farmers in Harda district of Madhya Pradesh, which is one of the main soybean growing districts and the home town of the state's agiculture minister, farmers staged a chakka jam in protest against the sudden and sharp crash in soybean prices. If that was not enough, the unprecedented late showers in September has damaged large tracts of short-duration varieties of urad and moong," Bhagwan Meena, General Secretary of Kisan Swaraj Sangathan, a prominent farmer group active in the state told Business Standard.

For rice, Meena said that the production situation looks unstable at the moment in MP as the prolonged dry spell in August, followed by heavy rains in September, could impact yields. MP has sown 1.12 million hectares more under paddy in the current kharif season.

Data showed that pulses, on the other hand, have been selling sold near MSP in mandis in MP and Maharashtra for the whole month, and are falling below MSP as arrivals rise. Groundnut was fetching higher than MSP in initial weeks, but Gujarat mandi prices have fallen in the last week of September, even before major arrivals kick in.

An important thing to be noted is that the glut of supply has not happened yet. Arrivals will peak somewhere in the October-December period.

Oilseeds and pulses saw a drop in sowing acreage this summer farming season in India. Coarse cereals and cotton have also seen a drop due to bouts of scanty rainfall in agrarian districts. So, the markets were factoring in some fall in production and arrivals this marketing season.

But the recent bouts of heavy rainfall, particularly in Maharashtra, have raised further concerns on crop production. Market observers believe that pulses production will fall further from expected.

Business Standard looked at four crops—soyabean, tur, urad, and groundnut—and tracked their wholesale prices in three mandis each, in the states of Madhya Pradesh, Maharashtra, and Gujarat, to ascertain the levels of wholesale prices farmers are fetching by selling them in September.

Oilseeds-Soybean & Groundnut

With gradually rising arrivals, soyabean prices have fallen at Indore APMC in Madhya Pradesh, from the range of Rs 8,000-Rs 9,000 per quintal in the second week of September, to between Rs 4,000 and Rs 5,000 towards the month end.

The Indore APMC usually has one of the highest soyabean arrivals in the state, and this was true for September 2021 as well. Nearly 1,000 tonnes of soyabean arrived in the mandi in September, with the daily quantum crossing 100 tonnes on September 24 and 25.

In the Manasa APMC in Neemuch district, one of the top agrarian districts in MP, arrivals were high in the first week of September, and have fallen thereafter. Here, soyabean is still fetching farmers Rs 6,000- Rs 7,000 as September nears its end.

Mhow, third in terms of total arrivals in September, is showing trends similar to Indore. Wholesale soyabean prices there have fallen below Rs 5,000 per quintal, inching close to the MSP of Rs 3,950.

Groundnut is seeing a similar drop-to-MSP in Rajkot in Gujarat, where the arrivals have been the highest in the state.

But in Halvad and Mahuva (Station Road) mandis, prices have fallen below MSP in the last week of September.

Pulses-Tur & Urad

Wholesale prices of tur or arhar had been trending at MSP in Maharashtra’s Karanja mandi in Washim district. But as arrivals rose, they have fallen marginally below the support price. The story is not so different in other major mandis in Maharashtra.

Tur prices have gone below the Rs 6,000 mark in Hinganghat and Khamgaon mandis much before the arrival glut has begun.

Pradeep Ghorpade, chief executive officer at the Indian Pulses and Grains Association, said that the erratic high rainfall has skewed the math on production, arrivals and projected prices.

“There is some crop loss expected in urad and moong production. How much—that is difficult to ascertain yet. Arrivals in the coming two weeks and damage estimation till then will provide us a clearer picture by mid-October,” he told Business Standard.

Mandis are those agricultural markets where the price discovery of farm produce for its organised sale happens. But as we enter October, and as fresh harvest leaves the farm gate and approaches the mandis, the supply-demand dynamics have already begun working inside the market.

Table: Area and production of mainn crops in the Kharif season*

Crop/Year

Area

% Chng

Production

 

 

% Chng 2020-21 2021-22 . 2020-21 2021-22 .

Soybean 

12.19 12.81 5.09 12.89 12.72 -1.32 Tur 4.85 4.8 -1.03 4.28 4.43 3.50 Urad 3.61 3.26 -9.70 1.60 2.05 28.13 Groundnut 4.8 5.23 8.96 8.55 8.25 -3.51

* As per first advanced estimnate and last Kharif sowing report 

Note: Area in million hectares, production in million tonnes