With the mandi prices of chana (gram) hovering around 35% above the minimum support price (MSP) due to a drop in output, the government may impose a stock holding limit on the pulses variety, which accounts for 50% of the country’s pulses production.

Sources told FE mandi prices have witnessed a sharp spike in the past month following reports of a drop in output this year and robust demand, and did not rule out the possibility of imposing a stock holding limit on it.

Prices of chana are currently ruling around Rs 7,200- Rs 7,300 per quintal in the key producing states of Rajasthan and Madhya Pradesh against the MSP of Rs 5,440/quintal for the current season. Traders say its prices have crossed Rs 7,000 per quintal for the first time in recent years.

On Monday, chana spot prices were Rs 7,201/quintal at Bikaner, Rajasthan, on commodity burse NCDEX.

According to the agriculture ministry estimate, the production of gram in the 2023-24 crop year (July-June) is estimated at 12.16 MT, marginally lower than previous year. However, trade sources pegged the output of the key pulses variety much below the official estimates.

“Chana prices have surged 13% during the current month in various mandis due to supply demand imbalance caused by decreased output,” Harsha Rai , head, Mayur Global Corporation, leading pulses trading firm, said. Rai said the demand for chana has been strong, while the arrivals have been steadily decreasing.

Meanwhile, the government has asked agencies — farmers cooperative Nafed and National Cooperative Consumers’ Federation of India (NCCF) — to purchase chana from farmers in Madhya Pradesh, Rajasthan and Maharashtra at predetermined market-driven prices.

Trade sources said only around 40,000 tonne of chana has been purchased by Nafed in the current marketing season (April-June) against the target of one million tonne (MT) under the price support scheme (PSS).

Nafed had purchased 2.3 MT and 2.6 MT of chana under PSS in the 2023-24 and 2022-23 seasons, respectively which had given a boost to the buffer.

Sources said the buffer of chana has currently dipped significantly against a norm of one MT.

The government last week removed import duty on desi chana while extending import duty exemption on yellow peas till October, which is aimed to curb the spike in chana prices. The price rise in chana has been in the double digit since October 2023.