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  1. Will increased acreage curb pulse inflation?

Will increased acreage curb pulse inflation?

The sky-rocketing prices of pulses have been a serious worry for the government since accessibility and affordability of pulses, a major source of protein for the Indian masses, has become a tough challenge in a country with a billion-plus population.

By: | Published: August 29, 2016 6:17 AM
It is all due to mismatch in demand and supply for almost 30 years. Even regular import of 3-6 million tonnes could not provide relief in pulses inflation. (Reuters) It is all due to mismatch in demand and supply for almost 30 years. Even regular import of 3-6 million tonnes could not provide relief in pulses inflation. (Reuters)

The sky-rocketing prices of pulses have been a serious worry for the government since accessibility and affordability of pulses, a major source of protein for the Indian masses, has become a tough challenge in a country with a billion-plus population.

It is all due to mismatch in demand and supply for almost 30 years. Even regular import of 3-6 million tonnes could not provide relief in pulses inflation.

At present, prices of pulses are exceptionally high in the retail markets across the country. The price of each variety—including the cheapest one, chana dal—has touched R120 per kg. Kharif pulses—arhar, moong and urad—crossed R150 per kg.

The reasons for this include fall in domestic production in the last two years due to deficient rainfall, higher international prices and hoarding by traders to jack up profitability.

Domestic production of pulses in the country declined to 16.47 million tonnes (mt) and 17.15 mt, respectively, in 2015-16 and 2014-15. After adding imports of 4.58 mt and 5.79 mt, the pulse availability in the market was 21.73 mt and 22.26 mt, respectively. This is far lower than our demand of more than 25 mt.

The data on prices of pulses show a significant margin at every stage of the supply-chain, from farm-gate prices to consumer prices in retail. Growers get 40-50% of the consumer’s rupee due to inefficiency in the supply-chain. It is true that milling of pulses results in reduction of volume. This explains a part of mark-up in retail.

In fact, difference between retail and wholesale prices should not be more than 10-20% after accounting for logistics, but the gap is often more than 25%. The gap between wholesale and retail prices has increased over the years and this is one of the reasons why huge imports could not help in arresting prices.

Therefore, retailers are also responsible for a spike in pulses prices in addition to fall in supply.

The government used a slew of measures such as import of pulses, raising their support price by around 8% and creation of a buffer stock of 2mt to arrest prices but inflation has remained stubborn.

The latest data on planting of kharif pulses show that all varieties (arhar, moong and urad) have been sown in an area of around 12 million hectares, significantly higher than the 8.97 million hectares sown in FY16.

Normally, kharif pulses are sown in 11 million hectares. These data further show that farmers across the major pulses-producing states, i.e., Madhya Pradesh, Maharashtra, Rajasthan, Andhra Pradesh and Karnataka allocated higher acreage to pulses in response to higher prices, leading to increased profitability and income.

The acreage under arhar, the main kharif legume has increased by 50% this year in comparison to last year. The planting of other important kharif pulses, i.e., moong and urad is also higher by at least 20 %.

This could be possible due to buoyant rainfall in rain-fed areas across the country. This is contrary to the general belief that pulses producers do not respond to price signals. Enhanced acreage under pulses has demonstrated that positive price signals and sufficient rainfall are key determinants of acreage decisions of the farmers.

It is expected that higher acreage under kharif pulses would tame their inflation. It would provide respite to the common man who consumes some or other variety of legumes in his daily diet. Particularly, the masses with lower purchasing power may benefit by raising the intake of pulses to maintain nutritional security.

If this trend of rising pulses prices is not arrested, it may further result in declining nutritional security of the vulnerable sections of the population.

The government expects a production of around 20 mt in FY17, around 2% higher than the domestic production of around 17 mt in FY16.

Will India be able to tackle pulses inflation with its demand level above 25 mt? To some extent, yes; but not if production and marketing constraints are not removed by the government.

Undoubtedly, imports are imperative at this stage to bridge the demand and supply gap. It is however, urgent to focus on increasing domestic production for attaining self-sufficiency without losing time.

The efforts of the government through implementation of the National Food Security Mission covering pulses yielded some results. However, additional efforts are needed to improve productivity.

Currently, the level of productivity of each variety is much below the potential yield that can be attained by adopting the full package of available technology. We reap merely 577 kg/hectare from cultivating kharif pulses. The situation is equally discouraging for all— arhar, urad and moong.

The present yield levels can be easily raised to 15 quintal/hectare a without much effort. It is possible via support services and inputs, particularly improved seeds of area-specific varieties, fertilisers and, above all, efficient extension services to guide farmers on full adoption of available technology.
The acreage under pulses is good news for India though the road ahead for attaining self-sufficiency is pretty long. So far, the country has not achieved any breakthrough in the yield of pulses despite being the largest producer, importer and consumer of this protein-rich food.

pretty long. So far, the country has not achieved any breakthrough in the yield of pulses despite being the largest producer, importer and consumer of this protein-rich food.

The scientists have a major role in the country achieving this goal, through research in technology that can bring about higher productivity of pulses. The acreage under pulses can be increased by popularising cultivation of short-duration varieties in rice fallows and in the period between harvest and the sowing of both kharif and rabi crops.

In the end, a multi-pronged strategy, that combines price policy, easy availability of technology support and further R&D in area-specific varieties for reducing yield-risk may lead to success in attaining the desired level of pulses production that will, in turn, arrest price rise.

 

Written by: Usha Tuteja & Vishal Dagar

Tuteja is former director and Dagar, research fellow, Agricultural Economics Research Centre, University of Delhi

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