India's pulse problem: Why the illness needs a cure beyond price support

Raising the minimum support price for pulses is hardly a solution to a growing problem. Earlier this week, the Cabinet raised the MSP of tur (also called arhar) by Rs 425 a quintal, which also included a bonus of Rs 200. MSP of moong and urad was increased by Rs 375 a quintal each.

After the increase, the MSP of tur will be Rs 5,050 a quintal, while that of moong and urad will be Rs 5,225 and Rs 5,000 a quintal, respectively. The hike for pulses is bigger than for some other commodities like paddy and the government thinks this alone will encourage more cultivation of pulses as farmers get incentivised. The only trouble is, if it procures less than a percent of pulses being produced, how can the government think an increased MSP will make any difference to pulses’ production or prices to end consumer?

 Indias pulse problem: Why the illness needs a cure beyond price support

One, despite the latest hike in MSP, there is a wide gap in what the farmers make by selling pulses in the open market and through the government procurement. As per data provided by the Agriculture Ministry in Lok Sabha last month, there was an over 40 percent gap between wholesale prices and MSP of tur daal at February 2016 prices. In this scenario, a mere single digit increase in MSP would make little difference to farmers’ lives.

Two, our obsession with wheat and rice is killing the pulses story. These two commodities are widely procured by the government which means farmers across UP, Punjab and Haryana are assured of their marketability and therefore depend largely on these two crops. Pulses production is of course not prioritised. Instead of an endless cycle of wheat and rice cultivation, farmers should be encouraged to do crop rotation – pulses also bring benefits to soil besides helping the alarming depletion of the water table in these states.

Three, we are hugely dependent on imports for meeting our demand of pulses. Remember, India is the largest producer, consumer and importers of pulses in the world. About a third of the demand for pulses was met through imports last fiscal. India produced 17.5 million tonnes and imported another 5.2 million tonnes. And for the second year in a row (2014-15 and 2015-16), India suffered a two million tonne decline in pulses output.

Four, the government needs to take more steps to curb hoarding of this scarce commodity, which is the easiest source of vegetarian protein to large swathes of Indians, specially the poor.

And five, the MSP announcement has simply come too late in the day. It should have come at least a month earlier for farmers to plan their cropping. The dissemination of such MSP change announcements is also slow, it robs the farmers of crucial time needed to plan their crops. Niti Ayog member Ramesh Chand has already been vocal about the need to find a multi pronged solution to the pulses problem and why raising MSP alone is no solution. According to an agency report in the Financial Express, Chand said, “There should not be blind faith on MSP. Already market rates are 50 percent higher than MSP, so any increase will not have much impact. Farmers will grow pulses taking market prices into account.”

Chand said that the per capita consumption of pulses has declined due to non-availability while consumption of cereals has not increased despite sufficient stock. The per capita pulses consumption has come down to 38 grams from 60 gram 15 years back. “If we have to restore to 60 grams, we need to increase production from the current 17-18 million tonnes to over 40 million tonnes.” Pulses output is estimated to be 17.33 million tonnes this year, marginally higher than the previous years production of 17.15 million tonnes, but much below the record 19.25 million tonnes achieved in 2013-14 crop year.

Agri business and commodities expert G Chandrashekhar said it was difficult to fathom the government’s reluctance to start procurement of pulses. He dismissed the government’s version about having begun procurement, saying what this means is the government is just filling up a buffer stock, not really starting procurement similar to wheat and rice.

“The procurement from the government should be around 10 percent of the total domestic production of pulses for farmers to feel incentivised,” he said. This means annual procurement of anywhere between 1.7-1.8 million tones.

The Shanta Kumar Committee Report on the subject had focused on why the government needs to revisit its MSP policy. It had said MSP is announced for 23 commodities but effectively price support operates primarily in wheat and rice and that too in selected states. This creates highly skewed incentive structures in favour of wheat and rice. The government then agreed to procurement of pulses and oilseeds through FCI.

According to a reply Consumer, Food and Public Distribution minister Ram Vilas Paswan gave in Lok Sabha during the budget session, the government felt this step would not put any additional burden on food subsidy and FCI will create a separate fund for this procurement with the assistance of Department of Agriculture & Cooperation.

Paswan said till now, a total of 50,424.07 million tonnes of tur and urad from Kharif Marketing Season (KMS) 2015-16 and 11,754.06 million tones of chana and masur from Rabi Marketing Season (RMS) 2016-17 have already been procured. In addition, imports have been contracted for about 13,500 million tonnes of tur and 12,500 million tonnes of urad respectively.

The Indian Pulses and Grains Association welcomed the latest hike in MSP while noting that cultivation and procurement of pulses, especially tur daal, has seen a dramatic decline over the last few months. It said that to encourage production of pulses, the government needs to build a favourable environment for the entire value chain of pulse cultivation, production and consumption.

Vice-Chairman Bimal Kothari said, “While the announcement of an increase in MSP is one of the steps, it is also important that the government ensures consistent and strict implementation of the incentive across the country.” He emphasised that this increased MSP incentive be extended all-year round, saying there should be direct procurement by the government and pulses should be introduced into the PDS distribution stream.

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Updated Date: Jun 03, 2016 14:48:44 IST