Hike in pulses MSPs will ensure better output

Analysts see a rise in production, but also warn of a price rally.

The government’s decision to raise the minimum support price (MSP) of pulses in 2008-09 will result in better production, say experts. According to them, the step will ensure availability of the commodity in the domestic market.

The Cabinet has decided to raise the MSP of various kharif crops such as maize, jowar, bajra, and some pulses. However, there has been no official announcement to this effect yet.

Even as pulses associations have appreciated the government measure, commodity analysts have cautioned that it may lead to a rise in the prices of pulses, which are already ruling firm.

The country’s annual requirement of pulses is 18 million tonnes, whereas the domestic production has never crossed 14 million tonnes. To cover the remaining requirement, the country imports from countries such as Myanmar, Tanzania, Australia, Canada and Ukraine. The government has decided to raise the MSP of arhar, moong and urad among pulses, by as much as Rs 800 a quintal.
 

SOME RELIEF Revised MSPs of kharif pulses
Commodity	Rs/quintal		Per cent change
	2007-08	2008-09
Arhar	1,700	2,000	17.65
Moong	1,700	2,520	48.24
Urad	1,700	2,520	48.24
Source : PTI

K C Bhartiya, president of the Pulses Import Association, said, “It was a necessary move, as globally, the prices were ruling firm. We have been asking for an MSP hike for a long time. With this, farmers will go for more production on the assurance of better prices. This, in turn, will assure availability of pulses in the domestic market.”

Pulses have been less remunerative for farmers compared to other crops in the past few seasons. Consequently, they had started diverting to crops such as soybean and cotton, causing a stagnation in pulses production. Over the last two years, the prices of pulses have touched historical highs. Holding the futures trade responsible for the menace, the government banned forward trading in some pulses.

Suresh Agarwal, chairman of Madhya Pradesh Dal Udyog Mahasangh, said, “Hike in the MSP is too late. However, now that the government has taken note of it, I believe farmers will be encouraged to grow more pulses and the diversion to soybean and cotton will be checked, at least to some extent.”

Though commodity analysts admit that the MSP hike will have a positive impact on the production side, they expressed apprehension that the prices may see a rally as market rates will be higher than the support prices.

Tanmay Kumar, senior research analyst at Agriwatch Commodities, said, “For this season, acreage under pulses has seen a decline. With the price hike, we cannot rule out a rally in the pulses market.” Steps taken for controlling inflation may go haywire, he added.

The latest statistics suggest that acreage under pulses have reduced by over 17 per cent as August 22 compared with the same period last year.

Urad is the worst hit in terms of acreage for the current kharif season. The crop did not get adequate rains in May (the sowing period). As on August 20, urad has seen a dip of 22.62 per cent in its acreage compared to last year. Moong and Tur have seen a decline of 22.07 per cent and 13.63 per cent.