Pulses are dearer- Shortfall in pulse production has spurred inflation

Source: The post is based on the article “Pulses are dearer- Shortfall in pulse production has spurred inflation. Government must ease restrictions, allow imports” published in “The Indian express” on 9th September 2023.

Syllabus: GS3- Agriculture- Transport and marketing of agricultural produce and issues and related constraints.

News: Due to lower monsoon rainfall, there’s less planting of pulses like arhar, urad, and moong. This has caused their prices to rise above the official minimum rates. Global pulse prices are also high. The government needs to use its stored pulses wisely and consider changing import rules to help with the shortage.

What are the reasons for the price rise in pulses?

Domestic Reasons for Pulse Price Rise:

Reduced Planting: Farmers sowed 8.6% less area under pulses such as arhar, urad, and moong compared to last year, a decline of over 1.1 million hectares.

Price Increases: In two months, arhar prices increased from Rs 10,000 to Rs 12,500 per quintal. Moong prices went up from Rs 6,500 to Rs 9,000, and chana prices rose from Rs 4,600-4,700 to Rs 6,100-6,200.

Exceeding MSP:  Current market prices for pulses like arhar, moong, and chana are well above their official Minimum Support Prices.

Global Reasons for Pulse Price Rise:

Reduced International Harvests:

Canada and Australia’s pulse harvests are projected at 1.3-1.4 mt each, down from 1.7-1.8 mt the previous year.

El Niño is affecting Myanmar, a key urad supplier to India.

International Price Hikes: Masoor’s landed price increased from $650-680 to $780-790 per tonne.

Export Limitations:  Mozambique set a floor price of $850-900 per tonne for arhar exports.

What can the government do?

Utilize Stored Pulses: The government has chana stocks which can be released into the market. They were holding around 3.8 million tonnes of chana as of June 30.

Restrict Bidders: Consider limiting bidders to actual users or dal millers during allocations. This ensures that the right stakeholders get access to the pulses.

Revisit Import Restrictions: The current rule, not allowing stocks to be held beyond 30 days from customs clearance, discourages imports. This needs revision as larger imports are crucial now.

Facilitate Bigger Shipments: Presently, imports are in 25-tonne containers, but bigger 30,000-60,000 tonne vessels would be more efficient.

Revise Pea Import Duties: The government should reconsider the 50% duty and the minimum price of Rs 200/kg on yellow/white peas, making them more affordable for import.