Speculators would continue to over-exploit India’s under-supplied pulse market, the way they did it recently, unless dealt deftly by the government. What would further facilitate such speculation is the farmers’ unwillingness to grow more pulses for want of remunerative minimum support price (MSP). However, the policy decision to create a buffer stock for pulses this year is expected to bring stability to the pulse prices that went up to over Rs 200 per kg for some popular varieties. Experts believe that the recent speculative spurt seen in the prices was triggered by domestic rather than their global counterparts. Indian pulses market is said to be too small to interest global giants like Cargill or Glencore. “I claim that besides domestic traders based in Indore, Ahmedabad and Old Delhi, the domestic corporates like Tata, ITC and Adani (present in agri-business) are primarily responsible for taking the pulse prices to un-imaginable heights,” says Basavaraj Ingin, convener, National Pulses Commodity Council with the Consortium of Indian Farmers Associations.
The domestic market for pulses is becoming less lucrative for farmers with a huge difference between the farm gate and the market price. This difference is often cornered by the middleman. India consumes about 22 million tonnes of pulses annually. To incentivise farmers to grow more pulses, the MSP for pulses was introduced about a decade ago. And the MSP has indeed helped the pulses production to grow to about 19 million tonnes in FY14 but the modest increase in MSP for pulses in last two year has made the current MSP quite unattractive for farmers. “In fact, the MSP set for pulses is up to 30% less than it’s ever increasing cost of cultivation,” says Ingin, a reason farmers are shifting towards growing other commercial crops. For the same reason, the total area under pulse cultivation has also gone down by 20% on an all India basis. Ingin adds that the MSP only exists on paper. The government neither procures pulses nor has any regulatory mechanism in place to ensure that private traders buy at MSP. After being popularly perceived as being little lax on hoarders, the government has taken a bold step to create a buffer stock of one lakh tonne of pulses in the country. Such direct intervention by the government in the open market is expected to bring some respite for the pulse farmers but its sincere implementation remains the key. Besides this pro-activeness, “the government needs to step-up efforts to innovate higher yield and pest resistant variety of pulses to increase its productivity,” says Sunil Sinha, principal economist, India Ratings & Research.