The government also chose not to restrict the duty-free imports of lentils and about 6 million tonne were imported in 2016-17, which created a glut in the market.
Market data provide little evidence that mandi prices of crops skyrocket once the harvesting season ends, disproving the notion that traders tend to artificially jack up prices once the arrivals recede. Even in case of crops like pulses and oilseeds where government intervention, through minimum support prices, is not very effective, prices barely show wild fluctuations during and after the harvesting period. General economic conditions and global commodity prices (especially in the case of oilseeds, where imports cater to bulk of domestic consumption) impact mandi prices, much more than traders’ cartels. An FE analysis of the price behaviour of six major kharif crops over the seven months to May 2018 shows that prices of pulses such as tur, moong and urad have remained stable even after their market arrivals dipped. But the domestic prices of soyabean, groundnut and maize have moved up, in tandem with the international prices that have firmed up (see graph).
For instance, mandi prices of tur ruled between Rs 3,400-4,150/quintal at the start of market arrivals in mid-October in the country’s top-producing centres like Narsinghpur in Madhya Pradesh, Latur in Maharashtra and Gulbarga in Karnataka, according to Agmarknet. Agmarknet is the government portal which shows arrival and prices of agricultural commodities in mandis across India. On May 4, more than seven months after the start of the harvesting season, tur prices were still between Rs 3,370 and 3,920 a quintal in these three states, which together account for more than half of tur output. Of course, the mandi prices of tur were much lower than the MSP of Rs 5,450/quintal, but that was because the MSP operations were not effective.
On the other hand, mandi prices of soyabean started climbing up from November last year, because imported soyabean oils got costlier. The domestic refineries also increased the buying prices of kharif oilseeds such as soyabean. In Indore, the country’s main trading hub of soyabean, prices have moved from a level of Rs 2,700/quintal in November to Rs 3,500/quintal in April-end. Similarly, the groundnut prices, which were prevailing at about Rs 3,500/quintal during January-April, have increased to Rs 3,750/quintal this month in Gujarat’s Rajkot, agmarknet data showed, again reflecting the link with the global markets. Most of the kharif crops start arriving in market from October and the arrival in mandis start declining from Januray onwards as maximum farmers sell these in first three months.
While pulses prices appear to be low now in most markets because the MSPs were set at very high levels, market watchers say. The government also chose not to restrict the duty-free imports of lentils and about 6 million tonne were imported in 2016-17, which created a glut in the market. The government has estimated pulses production at about 24 million tonne for 2017-18 crop year (July-June). According to Vijay Sardana, noted food policy expert, the prevailing depressed sentiments in the farm commodities market could also be attributed to liquidity issues as traders have shifted from cash economy to a formal one after demonetisation and implementation of goods and services tax (GST). This apart, traders have also stopped holding stocks fearing government action, he added.
Amit Sachdeva, India representative of US Grains Council, said Indian maize prices on the futures and spot markets are now moving up due to strong domestic demand and bright export prospects.
By: Prabhudatta Mishra