Farmers irked as prices of pulses fall below MSP ahead of rabi harvesting

Dabba trading, smuggling of peas contribute to price fall ahead of rabi harvesting

With rabi harvesting a few weeks away, prices of pulses in select mandis have slipped to trade below their minimum support price (MSP) — the threshold at which the government procures the kitchen staple.
 
While chana (Bengal gram) in Gadag (Karnataka) is selling at Rs 4,122 a quintal — 11 per cent below its MSP of Rs 4,620 a quintal — prices of moong (green gram) in Nasrullaganj (Madhya Pradesh) slipped to Rs 5,201 a quintal — a staggering 26 per cent below its MSP of Rs 7,050 a quintal. 
 
Similarly, tur (red gram), masur (lentil), and black gram (urad bean) are also selling at substantially subpar MSPs.
 
The fall in prices of pulses ahead of the rabi harvesting season could prove to be a major blow to farmers anticipating better realisations on lower acreage this year. Experts, however, have divergent views on the price collapse.
 
“A huge quantity of peas is being smuggled into India by road from Nepal, Bangladesh, and Myanmar. None of these countries cultivates peas. These are imported from Canada and other countries. Since the smuggled quantity evades a massive tax of 50 per cent, importers have room to sell their goods dirt cheap. This is pulling down the prices of pulses in India,” said Bimal Kothari, managing director, Pancham International.
 
The National Collateral Management Services forecast India’s rabi pulses output to decline by 2.1 per cent to 14.48 million tonnes (mt) this year, compared to 14.8 mt reported in the same season the previous year. Rabi season contributes nearly 60 per cent to India’s pulses output, kharif season contributes the rest.
 
In its latest report, chana output is forecast to decline by 5.4 per cent to 9.58 mt during the ensuing rabi harvesting season, compared to 10.13 mt of output reported in the previous year.

 
To discourage the import of peas and making India self-reliant in pulses production, the government has levied 50 per cent import duty on peas, in addition to fixing Rs 200 a kilogram (kg) as the minimum import price. Thus, the landed cost of peas — either from Canada, Russia or Ukraine — works out to Rs 325 a kg. With some profit for traders factored in, the ideal retail price should be at a minimum of Rs 350-375 a kg.
 
“Chana is a substitute for peas and hence, traders are working to increase its supply from overseas through the illegal route. Such illegal trade needs to be curbed straight away,” said Kothari.
 
Meanwhile, Babulal Goyal, president of Rajasthan Dal Mill Association, has a different explanation for the diminishing prices.
 
“Dabba traders (who take prevailing prices on commodity exchanges as a reference point to quote for bilateral deals) are purposefully quoting chana prices lower to build their stock during the current harvesting season and make profits in futures when its price moves up. Normally, a lean season or farm month price quotes are higher than near month in the harvesting season. So, dabba traders need to be curbed,” said Goyal.
 
According Goyal, the government needs to intervene and procure the entire quantity of pulses available for trade, especially when their prices decline below the earmarked MSP.
 
“The government had procured around 2 mt of pulses last year at the MSP for selling in the lean season. But, selling is done when the prices have fallen below the MSP, thereby triggering huge losses for the government,” said Goyal.
 
Pulses price fall during the harvesting season is set to lower farm income, encourage farmers to sell in distress and compound their debt levels, said Goyal.