Why the MSP hikes may not make much of a difference for the moong market

New Delhi | Published: August 23, 2018 1:52:40 AM

The MSP hikes may not make much of a difference for the moong market, even though acreage may increase

moong dal, pulsesAs farmers are set to receive better prices for moong in comparison to other pulses, any major decline in area under moong is unlikely. (IE)

Moong is an essential food for every section of the society, being a rich source of protein, carbohydrate, energy and other nutrients. It would seem like that the increase in MSP for kharif pulses would definitely encourage growth in net sown area for moong. It is not too wild to expect moong acreage to break records this season, against such a backdrop. But the key question is: what does this mean for the moong market? This year, the government has also tightened the import norms for moong, via a revised notification from the Directorate General of Foreign Trade.
As per the Commission for Agricultural Costs and Prices (CACP), the estimated production cost for kharif moong is Rs 4,650 per qtl. For ensuring around or more than 55% over this price for farmers, the government has prioritising policies that could help prices realised by farmers reach Rs 5,500-7,000 per quintal.

This kharif season, the net sown area in India for moong is lagging behind by 1.46%, or 2.02 lakh ha (July 22, 2018), as per the Directorate of Economics and Statistics. In Karnataka, the moong growers are doing good and are ahead of the previous year estimates by 8.86%, at 1.72 lakh ha (net sown area under moong in Karnataka as on date). Andhra Pradesh has not been able match estimates, and the net sown area is only 0.03 lakh ha, against normal estimates of 0.25 lakh ha. In Maharashtra, too, moong growers are not doing well, and are running behind by 66.66%, with acreage under the crop being 0.02 lakh ha as against last year’s 0.06 lakh ha. Recent heavy showers are likely to boost the sowing process in North India as well as the western states in next few weeks.

This kharif season, states in central and northern India received a gift of good rainfall, which has encouraged farmers for sowing pulses, specifically moong, in the pulses-growing regions. Urad kharif area in India is lagging 29.1%, at 0.47 lakh ha against 0.67 lakh ha last year. Normal kharif urad area in India is 26.99 lakh ha. Farmers’ preliminary sowing intention shows that some urad area might have been re-purposed for other lucrative crops like soybean, groundnut and chili.

As farmers are set to receive better prices for moong in comparison to other pulses, any major decline in area under moong is unlikely. Production volumes, though, will depend on rains in the moong-growing regions.
In the cash market for farmers (mandis), moong is traded at a steady range of Rs 4,800-5,400 per quintal. Millers in the states are buying only a limited quantity as it seems there is plenty of stock in the mandis, apart from the fact that a bumper arrival of kharif moong is expected and selling from the central stock continues. It is difficult to increase the net sown area under kharif moong but the hiked MSPs for kharif crops may increase production area in coming few weeks, and the possibility of increased returns from bumper kharif crops may be drive moong production up in states like Rajasthan, MP, and Maharashtra.

Though, the arrivals from this summer crop in states, i.e., Rajasthan, MP, Maharashtra and Karnataka could have a limited impact in their respective local markets. A high pressure on market supply is likely to continue till end-September. The major moong producing states, i.e., MP, Maharashtra, Telangana, etc, have planned to purchase kharif moong at its new MSP of Rs 5,575 plus Rs 800-1,200 per quintal incentives. There’s a need to observe closely the kharif crops from MP, Maharashtra, Telangana, Karnataka, etc, that have fixed MSP for moong at `6,975. Therefore, any big change in moong market is not expected yet.

By Vishal Dagar, PhD scholar and research fellow, Agricultural Economics Research Centre, Delhi School of Economics.

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