1. Deal with dal: How processors jack-up prices during lean seasons

Deal with dal: How processors jack-up prices during lean seasons

Arrivals of tur or pigeon pea at the Gulbarga (aka Kalaburagi) mandi in North Karnataka speak of a harvest blessed by favourable weather and low incidence of pest and disease attacks unlike a year ago.

By: | New Delhi | Published: January 30, 2017 6:16 AM
Chandrakanth Biradar Bannur, also of the same taluk has about 40 quintals to offer. He finds rates at the mandi unattractive. (Reuters) Chandrakanth Biradar Bannur, also of the same taluk has about 40 quintals to offer. He finds rates at the mandi unattractive. (Reuters)

Arrivals of tur or pigeon pea at the Gulbarga (aka Kalaburagi) mandi in North Karnataka speak of a harvest blessed by favourable weather and low incidence of pest and disease attacks unlike a year ago. On January 12, when this correspondent visited the wholesale market-yard, 5,035 quintals arrived versus 3,405 quintals the same day the previous year.

Expanded supply has dampened prices. The weighted average rate in the Gulbarga yard on January 12 was R4,326 a quintal against R9,536 a year ago. At the Yadgir market, about a 100 km away, the price of red tur that day was R4,526 a quintal—a drop of more than 50% from a year ago. Trading at both the markets is electronic, but traders at the Gulbarga market have resisted reforms and moved court. They are not on the state’s unified trading platform unlike Yadgir, where traders from across the state and beyond can bid.

Because of the fall in prices, the action has shifted outside the Gulbarga mandi, where there is brisk procurement by Nafed, a central government agency. The Centre has offered to buy pigeonpea at R5,050 a quintal. The state government has thrown in a bonus of R450.

Shivananda Choragati of Gulbarga taluk’s Bhimally village arrived at the procurement centre at 10 pm the previous night to be an early bird. He cultivates on an equal profit-sharing basis with the land owner. He has 48 quintals to sell.

Chandrakanth Biradar Bannur, also of the same taluk has about 40 quintals to offer. He finds rates at the mandi unattractive.

The procurement starts at 6 in the morning and goes on till 8 at night, an official says. The exercise began on December 15. The bonus was announced around Christmas. But even those who sold before will get it, he assures the throng.

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A panel set up in the wake of shooting dal prices last year and headed by chief economic adviser Arvind Subramanian had recommended direct procurement from farmers with a committee of officials ensuring this actually happens. It also advised an MSP of R6,000 per quintal for pigeonpea. The first part of the advice seems to have been heeded, but the procurement price falls short of recommendation. The CEA’s panel has pointed to the “social impact” of pulses, that is, their enrichment of soil with atmospheric nitrogen, and low demand on scarce water, for incentivising cultivation.

The increase in production will not compensate for the fall in prices, says D M Mannur, an agricultural scientist and project sirector at Raichur University’s local agricultural research station. The average cost of cultivation is R4,800 a quintal, according to his calculation, excluding imputed value of family labour and farm rent. A farmer can make a profit of Rs 600 a quintal with a yield of five quintals an acre, he says.

Arvind Govindrao Ghantoji, says labour costs are eating into profits. He is a lawyer by training, has a household appliances shop in Gulbarga’s “supermarket” area, and grows pigeonpea on the side. Workers have to be ferried to farms and dropped off, so an eight-hour day gets reduced to six hours of work, for which R300 each has to be paid.

Inclement weather had crimped output last year, but higher prices had more than compensated. Pigeonpea prices had ranged between R15,700 and R4,600 a quintal in 2015-16 in the Gulbarga mandi, the weighted average price being R9,617. A little over 8 lakh quintals had arrived that year. Arrivals the previous year were nearly 20 lakh quintals forcing the weighted average price to fall to R4,900.

This correspondent had visited the district during July 2015 for a television series on “smart agriculture.” Sharad Tenglikar, a farmer and professor of community medicine, had blamed the grip of commission agents and traders and cartelisation among dal processors for farmers losing out in good times and in bad. The agents force farmers to sell to them soon after harvest and repay loans. That is when prices rule low. Dal processors corner stocks, he said, and jack prices up during the lean season.

But Yograj, a partner in Sri Ayyanar Dhall Mills, challenges the narrative. The mill has been operating since 1951. It is the oldest in the area, claims Yograj, whose ancestors migrated from Madurai in Tamil Nadu. Yograj says processing takes eight days during which millers are exposed to price risk. The quality of produce supplied has deteriorated over time because farmers do not care about soil health. Since there is little standardisation, experience matters in procurement. Yograj says his mill buys whole dal with an eye on producing at least 68% first-grade split dal, which fetches a premium in the state’s Dakshina

Kannada district, where there is a ready market for his “peacock” brand. Customer loyalty helps in tiding over difficult times.

Since pulses are susceptible to infestation by bruchids, Mannur suggest that they be stored in metal alloy silos and not traditional cement concrete ones. Manoj Rajan, Karnataka’s additional secretary for market reforms, and managing director of a company which provides backend support to the state’s electronic commodity markets, plans to set up a network of warehouses closer to farmers than the mandis. Standardised produce will be stored scientifically there, and farmers will be able to use the warehouse receipts to obtain loans from banks. Control over produce should allow farmers to postpone sales and obtain better prices.

The author is editor of www.smartindianagricuture.in, a website devoted to promoting modern practices in agriculture, including use of genetically-engineered seeds.

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