Why delay in announcing Rabi MSP sends the wrong signals

The government needs to loosen the purse-strings to boost domestic production of pulses

Minimum support prices (MSP) for winter-sown crop in 2014 were announced on 29 October, in 2013 it was published 17 October.  In 2012, Rabi MSP was approved on 2 November and 25 October in 2011.
 
Given the low levels of water in dams across the country, excess cereals stock, and sky rocketing prices of gram and lentil, it was expected that government would announce a pulse friendly MSP before the start of rabi sowing. By the end of last month, the sowing had covered 5.84 million hectares, over 9 percent of the total rabi acreage of 62.4 million hectares. As sowing moves into top gear by this week, there is no official announcement on this season’s support price and procurement plans.
 
The crux of India’s pulse crunch is that farmers are unwilling to grow them on irrigated land. To entice them to switch, there needs to be a strong commitment from the government that crop will be bought at a remunerative price. The nitrogen boost for the soil and reduction of urea subsidy are added bonuses.
 
An estimated 11.5 million hectares of land is left fallow after harvesting summer-sown rice. Black gram, mungbean, lentils and even oilseeds can be grown in these uncultivated lands with adequate guidance and lucrative support prices. Farmers have so far stayed away from taking risks on these fallows, as there are labour, disease, weather and marketing risks. Unlike rice, maize or wheat, hybridization and mechanization in pulse farming is underdeveloped. Available implements are a crude modifications on designs built to support other crop operations. Non-availability of short duration high-yielding seed varieties is yet another challenge. An ecosystem mirroring major cereal crops cannot be built overnight but attractive support prices will certainly kick start the process. It might be already late this year.
 
Every season missed will only strengthen the farmers in other countries to improve their competitiveness and reinforce the idea that we will be forever import dependent on our protein needs. According to news reports, traders have already contracted to import 2.5 million tonnes of pulses this year. The shipment is scheduled to arrive in the next three months.  An early signal of intent to boost domestic production would have sent the message to the trading community to look inward than outward.
 
The government’s focus has tilted more towards easing of supply chain rather than boosting the supply. Tightening of stock limits, raids on warehouses, threat of criminal charges, retail supply through government agencies are all a sign of treating symptoms rather than the disease. To complicate the matter further, government has now planned to stock up 30,000 tonnes of tur dal and 10,000 tonnes of black gram from this month. Ideally, buffer stock schemes should be kick started in a surplus year when prices are low. This will ensure that there will be incentives to keep the supply stable the following year. However, the move to create buffer stock this year will only stress the supply further. The government should loosen its purse-strings and encourage domestic production.

Aruna Urs farms in his village in Mysuru, Karnataka. He was co-founder and CEO of a database management company in Mysuru. Prior to that, he worked as an adviser to the government of Timor-Leste (East Timor).

Aruna blogs about farming, rural & agri economy on his blog, Rural Dispatch, a part of Business Standard's platform, Punditry.

He tweets as @arunaurs