ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Unending Woes of Pulse Farmers

Sustainable policies are needed to protect farmers and consumers against output and price fluctuations of pulses.

The current crash in pulse prices is on account of excess supply in the pulses market. This is the second year in a row that pulse prices have fallen and have not been remunerative for farmers. The situation in 2014–15, however, was very different. A scarcity in production had caused a spike in prices then, thereby adversely affecting affordability and the average intake of pulses. There have been increases in acreage since that have led to excess supply and drastic price reductions in 2018. The government has failed to frame a policy that addresses the fluctuations in pulse output and prices adequately.

In 2014–15, pulses output fell by 9.7% over the previous year. The shortages were caused by successive droughts as well as hoarding by traders. The risk of drought was high since an estimated 88% of the area under production was rain-fed. In 2015–16, the domestic production of pulses was 16.35 million tonnes (mt), while imports amounted to 5.79 mt. Only 21.89 tonnes were available for domestic consumption. During this period, the government intervened with a lag to stabilise the prices by deciding to increase procurement, allowing free imports (for tur, moong and urad dal), imposing export restrictions, and enforcing stockholding limits under the Essential Commodities Act. The government also set a procurement target of 20 lakh tonnes as buffer stocks to stabilise market prices. To provide incentives to farmers producing pulses, it hiked the minimum support price (MSP) for pulses in successive years.

The market situation has changed since then. A good monsoon and higher MSP offered by the government led to an ­increase in acreage and output of pulses. In 2016–17, the domestic production grew substantially to 22.95 mt and the imports amounted to 6.61 mt, making 29.42 mt available for domestic consumption. This was much higher than in previous years.

The third advanced estimates for 2017–18 show that pulses production was at a record high of 24.51 mt, higher than the previous year by 1.37 mt, and 5.66 mt higher than the average output in the last five years. Imports were another 5.1 mt during April–December 2017. Consequently, supply exceeded demand. Prices began reducing. The average monthly Wholesale Price Index (WPI) deflation for the pulses component during 2017–18 was -26.7%. The mandi prices of most pulses were about 30% lower than the previous year’s levels. Although the nominal MSP had been hiked, the prices received by farmers were below the prevailing MSP in mandis across states, which ideally should have acted as a floor. The costs of cultivation (C2, as measured by the Commission for Agricultural Costs and Prices or CACP) were also on the rise, with costs going up to 3.7% in 2016–17 from 2.8% in 2015–16. This means that the nominal income of the farmer has come down per unit of pulse output produced. Also, this situation has been exacerbated by the lack of an active procurement policy. Thus, the MSP have failed to provide farmers an assured price or market.

These shortages as well as surpluses in pulse markets, and the rise and fall in prices reveal that pulses are prone to seasonal price cycles. The current crisis, however, demands a different approach than was deployed during times of scarcity. Ways to absorb excess supply must be found. A response to the glut in the pulse market requires that farmers are not made worse off relative to the consumer, and the gains made by the traders are not at the cost of farmers and consumers.

What are the interventions required in a situation where ­India is the largest producer and consumer of pulses in the world? Without large-scale demand for pulses outside India, the solutions for price stability can be ensured through domestic policy. In the event of bumper crop, in order to pre-empt a price fall, the government should guarantee farmers the procurement of a definite quantity of produce at an appropriate price. It should also impose quantitative restrictions on imports and regulate exports.

While these are immediate measures, more proactive policies and institutions that lead to better price realisation for farmers are necessary, especially for crops that are prone to seasonal price fluctuations, be it a shortage or excess supply. These should also include measures to improve market access for farmers through the formation of producer companies or cooperatives to strengthen the bargaining power of the farmer and to do away with middlemen who tacitly collude to manipulate prices. Access to and availability of better seeds, irrigation, and storage facilities, such as warehouses and cold storages, are also necessary. Long-term purchase agreements with agro-companies may also protect the farmer to a certain extent from gluts in the market.

The need of the hour is not only an expanded and active procurement policy by the states, but also an effective mechanism to distribute larger quantities of pulses through the state public distribution systems so that more is made available to the poor for consumption, especially in states where populations are ­nutrient deficient.

Updated On : 26th Jun, 2018

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