The aggregate production shortage of pulses, year on year, is just 0.1 million tonne (mt): in 2007-09, India produced 14.76 mt, which has slipped to 14.66 mt this year. But that small fluctuation is enough to send retail prices of pulses soaring by at least 18% for chana in just three months. The price of arhar, the favourite legume of urban and rural India, is up by a whopping 53% in the same period in Delhi markets.
The problem is simply because India consumes every gram of the lentil produced each year and there is just no scope to build a buffer for a year when production dips, even marginally. Farmers cannot even leverage the price rise as futures trading in pulses is disallowed in India.
An Assocham report says the availability of pulses has risen at a compounded annual growth rate of 1.4% over the last two decades, while the population has increased by 1.8%. This means over the past 20 years, the per capita availability of pulses has declined from 16 kg a year to just 12.7 kg.
Meanwhile, per capita income has risen by a CAGR of 6% in the last ten years alone, according to the Central Statistical Organisation. So, the food habits of Indians have migrated from a dependence on rice and wheat to a more balanced diet that includes mostly pulses. The current price rise could therefore jeopardise that balance.
?Definitely, there is a problem,? admitted agriculture minister Sharad Pawar on Tuesday. But he said the shortage was compounded by lower production. ?This year also, the areas where we generally get pulses have had less rain. These are essentially rain-fed areas,? he added.
The bleak possibility of any immediate recovery because of the delayed arrival of the southwest monsoon?kharif pulses acreage is down by 3-lakh hectare as of July 17?has further compounded the problem. This, as well as the remote chance of supplies improving for at least the next three months (when the crucial festival season starts) is creating the current price asymmetry. Traders in the informal market in states like Gujarat and Madhya Pradesh are quoting Rs 150 a kg for arhar for delivery in the next three months.
The government?s efforts to augment supplies has not yielded spectacular results because there is an overall global shortage of pulses in the key producing countries of Myanmar, Canada and Australia, as farmers–tracking international prices–have shifted to corn and oilseeds.
This is where India?s ostrich-like policy to commodity trading has created problems. Farmers globally have no means to track pulses prices and are therefore less inclined to grow it. Moreover, even though India is the largest producer and consumer of pulses, there is no means to balance the shortage or create a price signal for farmers to react.
?There is very little chance of any significant drop in pulses prices at least for the next three to four months because the import cost is much more than domestic prices, while local supplies are almost nil,? said Pulses Importers? Association president KC Bhartiya.
Traders said the current landed cost of tur (arhar) is around Rs 6,200 a quintal, which when freight and processing charges are added exceeds the prevailing market rate. Ditto for urad, whose landed cost in Mumbai is around Rs 4,100 a quintal.
In Mumbai, tur has soared by Rs 21 to around Rs 75 a kg since the middle of April. Prices in Kolkata for tur, according to consumer affairs ministry data, have soared by Rs 30 in three months. Prices of other pulses varieties are also soaring. Gram in Delhi has jumped by Rs 6 in three months, while in Shimla it has become costlier by Rs 7 to around Rs 38 a kg since the middle of April.