MSP: A finger on the pulse

Only if procurement is assured will farmers switch from cereals to pulses

The Centre recently announced minimum support prices (MSP) for kharif crops. Tur, urad and moong saw an increase in MSP in the range of ₹375 to ₹425 per quintal, an increase of about 8-9 per cent over the previous year. While the intention is to make farmers shift from paddy or wheat to pulses, with no set procurement system, it is doubtful whether farmers will do so.

The Commission for Agriculture Costs & Prices (CACP) arrives at the MSP after taking into consideration the cost of production, the inter-crop price parity and market trends.

The MSP for pulses has only risen in recent times. For instance, the MSP on urad has increased from ₹1,700/quintal in 2007-08 to ₹4,625/quintal in 2014-15 and ₹5,000/quintal for 2016-17. In moong, the MSP has risen from ₹1,700/quintal in 2007-08 to ₹5,225/quintal now.

It is hence evident that it is not the absence of remunerative prices but of effective procurement at that price that dissuades farmers from growing pulse crops. In 2013, market prices of chana ruled at about ₹2,600-2,700/quintal while the MSP stood at ₹3,000-3,100/quintal. But there was no procurement at all by government agencies and farmers were at a loss.

In 2014, as per a CACP report, farmers in Gujarat sold groundnuts at least 10 per cent lower than the MSP which, to some extent, explains the unwillingness on the part of farmers to diversify to pulses.

Pulse is the cheapest source of protein. If measures are not taken to improve output, there could be serious fallouts.

A study by the National Council of Applied Economic Research shows that pulse production in the country has increased by less than 1 per cent in the last 40 years with the per capita availability declining sharply. In recent years, though, it has shot up, thanks largely to the higher imports.

Pulses production has been stagnating at about 17-18 million tonnes a year since 2010-11.

Soaring inflation

With deficit supply, prices of pulses including tur and urad have skyrocketed in the last two years. While the overall consumer inflation is at a modest 5 per cent (April), the inflation in pulses is at 34 per cent. Madan Sabnavis, Chief economist, CARE, says, “Around 25-30 per cent of our pulses requirement is being imported. When there is a shortfall, imports are even higher which stokes inflation. It is not like rice or wheat where I have buffers to dip into…”. In 2014-15, India imported about 4.58 million tonnes of pulses, up from 3.53 million tonnes in the previous year. In 2015-16 till January, about 5.13 million tonnes of pulses was imported.

Farmers prefer cash crops such as cotton, sugarcane or maize as risks are lower and price volatility is less. In paddy and wheat, as the Food Corporation of India (FCI) procures in large quantities, there is some surety.

But in dals or oil seeds, there is no such comfort. Procurement in kharif oil seeds last season was just about 3.2 per cent of production.

Devinder Sharma, a food and agricultural policy analyst from Kisan Ekta, a confederation of farmer associations, says “The biggest problem farmers face is volatility of markets. Unless the government assures that they will procure 100 per cent of what is produced, farmers may not be willing to switch over to pulses because their income is not assured…tomorrow if there is a glut like what we saw in onion, they will be at a loss.”

He adds that today, of the 23 crops where MSP is announced, procurement is happening only in wheat and paddy. Balbir Singh Rajewal, President, Bhartiya Kisan Union, Punjab, airs similar views.

“The market rate for sooraj mukhi (sun flower) is ₹2,900-3,100/quintal but the announced MSP is ₹3,000/quintal. But what’s the use? There is no procurement at all by the State. In Punjab, we farmers prefer to grow wheat or paddy because there is 100 per cent procurement by the State and we need not fear market prices. If the government wants farmers to switch to dals or oilseeds, they have to assure full procurement.”

NAFED, which is entrusted with the responsibility of procuring pulses and oil seeds, has not met its targets in the past. Only if the Centre moves to restructure NAFED or lets FCI do some procurement in these crops as it does in paddy or wheat will the situation change, say experts.

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