To stop price slump, Andhra seeks Centre's approval to buy turmeric

The Andhra Pradesh government has sought central approval for procurement of 25,000 tonnes of turmeric under the market intervention scheme, to stop the fall in prices of the spice.

Turmeric is not covered under the Minimum Support Price mechanism. The state government (60 per cent of the country’s output comes from Andhra) has suggested procurement at Rs 4,500 a quintal (Rs 45 a kg), according to officials. Last year, farmers got Rs 120 a kg; today’s price at Nizamabad in Andhra is Rs 47 a kg. Last month, many farmers kept away from market yard auctions to protest against the low price and push for procurement by state agencies. The cost of production is around Rs 40 a kg.

The central government has to approve the quantity proposed and also the procurement price. Its approval would mean it shares 25 per cent of the loss, if any, that the procuring agency makes when it resells the produce in the market at a later date, according to officials.

“We will open purchase centres at major turmeric markets like Nizamabad once we receive orders from the state government,” D Vimalakar Rao, government consultant at AP Markfed, told Business Standard. The idea is that AP Markfed and the Centre’s Nafed would each procure half the 25,000 tonnes.

This year’s production is estimated at nine million bags (a bag is 75 kg), a record, compared to 6.5 million bags last year. The carryover stock at end-January was 1.5 million bags, taking the current available stock to 10.5 million bags.

Including export demand, consumption is expected to be close to 5.5 million bags, leaving a big carryover stock. All this has depressed prices and with the new crop already coming in, traders and analysts say the price can fall further.

“The government should provide farmers with well-equipped cold storage facilities to store their produce,” traders in Mumbai said. If nothing is done, the price will fall further and farmers next year will not sow enough, said Manubhai Shah, a Mumbai-based trader.

Exports from April to November were 58,000 tonnes, compared to 35,000 tonnes last year, according to the Spices Board of India.