It Is Growers’ Turn to Complain as Prices in India Dip Below Support Levels

By G. Chandrashekhar

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It Is Growers’ Turn to Complain as Prices in India Dip Below Support Levels

India is facing another kind of ‘dal shock’ and this time pulse growers are at the receiving end. Until about four months ago, consumer interest was compromised due to skyrocketing open market prices which in turn triggered precipitate government action against the pulse trade. Traders are still recovering from the aftereffects and have turned wary of penal action.

Be that as it may, pulse growers responded admirably to escalating market prices of 2015-16, planted record acreage in the just concluded kharif season (autumn harvest) and harvested a record crop of 8.7 million tons, some 60 percent more than El Nino affected crop of 5.5 million tons this time last year.

Tur/arhar (pigeon pea), urad (black matpe) and moong (green gram) are the major pulse crops of the kharif season. In order to encourage higher production, the government announced a sharp hike in the minimum support price (MSP) pegging it above Indian Rupees 5,000 per 100 kilogram trading lot ($ 720 a ton).

Additionally, the government announced creation of two million ton buffer stock of pulses (50 percent from domestic crops and the rest through imports) in 2016-17. Four parastatal agencies have been assigned the responsibility of procuring from domestic sources. But prices of kharif pulses, especially tur/arhar, are trading below the assured MSP. The designated agencies have made limited progress so far in their purchase. It is estimated that they have procured about 150,000 tons from domestic crop and hold import contracts for 400,000 tons. Pulse growers are complaining against low prices, below the assured MSP. This can potentially impact planting in 2017 kharif season, it is feared.

Meanwhile, imports are continuing. It is estimated that from April to November 2016, India imported approximately 3.2 million tons of various pulses. A significant part of the import commitment was made several months ago when prices were ruling high. Now, with abundant supplies and sharp price correction, the domestic market is in some kind of disparity. A slight delay in new crop shipments from Canada and Australia has actually arrested a steeper price fall in the domestic market.

Now a looming threat to imports beyond March 2017 has appeared in the form of Indian government’s move to withdraw all exemptions on methyl bromide treatment. Many countries have banned use of the fumigant and will be unable to meet India’s plant quarantine rules that mandate treatment with methyl bromide at the time of shipment or selectively on arrival at the Indian shores. How things will pan out in the coming months remains to be seen.

Planting for the next crop (Rabi season to be harvested by early-March) is nearing completion and acreages are once again record high. As of end-December, 14.8 million hectares have been planted to various pulses, far higher than 13.1 million hectares this time last year. On current reckoning, crop prospects appear to be bright, although weather risks cannot be wished away.

Chana or desi chickpea is the dominant pulse crop of the season. Given extreme tightness in availability chana prices were at record levels ($ 1300 a ton) until a month ago, and now a clear correction of about 15 percent has come about. As we move into the new season and as arrival of imported cargo gathers pace, chana prices may come under additional pressure.

The first quarter of 2017 will be crucial with the market’s eye on crop prospects, prices, weather and not the least, government action in the matter of fumigation rules.

(G. Chandrashekhar, Editor of The Pulse Pod, is a global agribusiness and commodities specialist. Views are personal. He can be reached on +919821147594 and gchandrashekhar@gmail. com)

It Is Growers’ Turn to Complain as Prices in India Dip Below Support Levels
It Is Growers’ Turn to Complain as Prices in India Dip Below Support Levels
It Is Growers’ Turn to Complain as Prices in India Dip Below Support Levels


Disclaimer: The opinions or views expressed in this publication are those of the authors or quoted persons. They do not purport to reflect the opinions or views of the Global Pulse Confederation or its members.