The new kharif pricing policy announced by the government on Wednesday has done well to offer an increase of Rs 250-275 a quintal in the minimum support price (MSP) for pulses even while keeping the increase in the MSP for paddy at a modest Rs 50 a quintal. The objective, obviously, is to give farmers incentives to grow more pulses, whose shortage has pushed up their prices by 60 to 70 per cent over the past one year, rather than rice, which at present faces no supply constraints. In the past, the government's pricing policies have tended to encourage the output of cereals like rice and wheat over that of pulses and oilseed. As a result, while the production of staple cereals has steadily risen, that of pulses and oilseed has tended to more or less stagnate, necessitating huge imports to meet fast-growing domestic demand.
The major issue, at present, is the prices and availability of pulses - which are defying the overall moderating trend in food inflation. According to the government's latest wholesale price inflation data, the prices of pulses have surged by 23 per cent in May, up from 15.4 per cent in April, even as the price rise in most other farm commodities has remained within single-digit levels. Some of the most-consumed pulses like pigeon pea (tur or arhar) and green gram (moong) are currently selling at over Rs 100 a kg, pushing these key sources of protein out of easy reach. Sourcing substantial stocks of pulses from abroad at short notice may be difficult due to limited supplies and high prices even in the global market. Moreover, anticipation of higher Indian import demand, in the wake of damage to local pulse crops due to unseasonal rains in March and fears of an El Niño-driven poor monsoon, has already caused a 30 to 40 per cent spurt in global prices. Further price spikes cannot be ruled out as the new crops in the major exporting countries are due only from August onwards. There is also a danger that big orders from India may prevent international prices from sliding perceptibly even after the arrival of the fresh harvests.
One of the prime reasons for the failure of the country's pulses production to keep pace with the rise in demand is the lack of adequate returns to producers. Though the government routinely announces MSPs for all major pulses, these are of little value to the growers in the absence of adequate arrangements for procurement at the recommended prices. Distress sales of pulses immediately after the harvest at prices lower than the MSP are quite common. Even the latest move to raise the MSPs of pulses by a hefty margin and offering a bonus on top may fall flat, unless firm arrangements can be put in place to ensure that the farmers actually get these prices. Those agencies like National Agricultural Cooperative Marketing Federation of India (Nafed) that are usually asked to lend price support to pulses do not have the necessary infrastructure for this purpose. Unless this issue is sorted out, the new farm pricing policy's basic purpose of shifting some area from paddy to pulses may not be fully achieved.