Chana prices up 40% in 4 months on lower crop

Demand pickup in spot market supports the upswing

Following a shortage of chana (chickpea), the market price of the crop has increased 40 per cent in the past four months and it is trading at Rs 48 a kg now. Prices gained on account of low output following unseasonal rainfall and a sharp drop in the area under cultivation in key growing belts.

Demand pick-up in the spot market, too, supported the upswing in the commodity’s prices.

"We have seen a sharp rally in chana prices from Rs 2,600 to Rs 4,800 per quintal in the span of 7-8 months. This can attract the farmers again to sow pulses as cultivation cost will be lower than the market prices. We can see at least 20 per cent gain in sowing, which would come to 10.30 million hectares and regain the lost acreage for this year," said Ajay Kedia of Kedia Commodity from Mumbai.

Poor returns from chana crop as the prices traded below the Minimum Support Price (MSP) of 2013-14 had dissuaded farmers from sowing the crop last year. The Centre's Cabinet Committee on Economic Affairs (CCEA) raised the MSP of chana by Rs 75 per quintal to Rs 3,175 per quintal for Rabi crops of 2014-15 season.

But lower price realisation last year and a marginal increase in MSP forced farmers to ignore the crop. Chana output was estimated lower at 8.28 million tonnes from 9.30 million tonnes in the second advance estimates released in February 2015 by the Centre's Department of Agriculture & Cooperation (DAC).

However, trade body Indian Pulses and Grains Association (IPGA) pulses survey has estimated about 5.56 million tonnes production of chana in India for 2014-15, less by about 15 per cent from previous year's 6.51 million tonnes.

Gaurav Bagdai of Shyam Canvassing from Rajkot said, "Production of chana is less than 4.5 million tonnes as estimated in March as unseasonal rainfall has damaged the crop and reduced yield. Low production supports upward movement of price and it may go up to Rs 5,500-5,600 per quintal in the coming three to four months."

He was part of IPGA pulses crop survey that were announced in March this year.

Bagdai said, "Price factor definitely changes farmers' mind and it may result in increased sowing next season. But, we have to wait for progress of monsoon as it depends on rain."

As per department of commerce data, from April 2014 to February 2015, 389,990 tonnes of chana was imported into the country while according to market sources, from February till now, over 100,000 tonnes of chana has been imported into the country. Total import of chana in 2013-14 stood at 276,130 tonnes.

Traders expect 400,000 tonnes more import by the end of December.

India imports chana from Australia, Russia, Iran, Argentina, Burma, Tanzania, and Ethiopia. Peak time for import is between July and October.

The current season price of chana (chickpea) may play a crucial role in helping farmers form a decision whether to sow the crop or not in the next sowing period, which will commence after five months.

According to experts, low production has resulted in chana price being traded upwards constantly since January.

"Reasons for good price of chana are low sowing, poor quality because of unfavourable weather and strong demand from mills and stockists," said Jagdeep Grewal of Mumbai-based Kunvarji Commodities.