Crop insurance, irrigation key to raising pulse output
That pulses inflation was racing at 42% in October is no surprise given that India has had three consecutive monsoon shocks – near-droughts in 2014 and 2015 and unseasonal rain in March 2015 that affected the rabi crop. What comes as a surprise is what Crisil has pointed out in a recent research note on pulses, that India seems to witness a spike in pulses inflation every three years – this year has been the worst, but that’s because the weather has been exceptionally adverse. Just four states – Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh – account for 70% of India’s pulses output. And, with the exception of Rajasthan, the other three have seen acute rainfall shortages in four of the last 8 years – Madhya Pradesh, which accounts for over a fourth of pulses production, had a 18% shortfall in rain in 2008, 30% in 2009, a 6% surplus rain in 2012, a 20% shortfall in 2014 and 12% in 2015. Add to this the fact that just 16% of the acreage under pulses is irrigated – it is under 9% in Maharashtra which accounts for 16% of the output – and it is clear why the crop is so volatile and prices spike as often as they do. Indeed, with no Food Corporation of India (FCI) ready to buy pulses output as it does wheat and rice, farmers have virtually no income security at all – which is why the area under pulses has stagnated and not much has been done to improve productivity either.
Given that demand for pulses is going to rise each year as people demand more protein once incomes rise, it is obvious such price shocks will get worse unless serious action is taken – the Indian Institute of Pulses Research estimates production will have to rise 2.2% each year till 2050 as compared to the 0.9% achieved annually over the past decade. Higher support prices is an easy way out but since FCI hardly buys pulses, it is of no help. The only lasting solution lies in dramatically increasing irrigation facilities and moving from a subsidy based on crops – wheat and rice, primarily – to one which is given to farmers per acre of land, irrespective of the crop they grow. Combine this with a well-designed crop insurance which will insulate farmers from weather – or other disasters and farmers will react to price signals – so, as demand for pulses rise, so will production. Failure to do all three will condemn us to Crisil’s 3-year cycle and, if weather patterns aggravate due to global warming, the cycles could shorten.