India, despite being the largest producer of pulses, faces a persistent shortfall in the production of tur dal, necessitating significant imports to meet the demand-supply gap. This shortfall is exacerbated by issues such as hoarding by traders and alleged cartelisation in the importation of tur dal, both of which contribute to price increases in the market.
India imports most of its tur dal, also called arhar, from two African nations, Mozambique and Malawi, and Myanmar, and is the third largest importer of tur dal in the world, only behind the United States and Canada.
What has happened?
Over the past month, the average market price of tur dal has risen by Rs 10 per kilogram, reaching Rs 149 per kilogram. The prices of tur are being bolstered by several factors, including the constrained availability of domestic stocks, delays in the sowing of the kharif crop, and a sluggish pace of imports.
Tur dal in India is boiling at record-high prices and to prevent hoarding and elicit its continuous release, the Central government on September 25 significantly reduced the stock limit for tur, and also urad dal, held by wholesalers and large retail chains from 200 tonnes to 50 tonnes. The maximum quantity of dal that retailers are allowed to stock remains at five tonnes.
The slashed stock limit is the lowest in recent years and is now applicable until December 31.
What has the government done so far?
The Department of Consumer Affairs is actively keeping a close watch on the stock levels of tur dal. This monitoring is conducted through the stock disclosure portal, and regular reviews are held with state governments on a weekly basis.
In June this year, Rohit Kumar Singh, the secretary of the Consumer Affairs Ministry, had said that India will import 12 lakh tonnes of tur dal in the current fiscal, up by 35 per cent from the last year, to boost domestic availability and contain price rise.
The Indian High Commission in Mozambique issued a statement in August to inform all tur dal exporters in that country that they can now export this commodity to India under the ‘free category.’ This implied that there are no restrictions on the quantity they can export, and no import duty will be levied on these exports until March 31, 2024.
India had previously entered into an MoU with Mozambique, allowing for the import of 200,000 tonnes of tur annually. Furthermore, the central government has already eliminated the import duty and the requirement for a certificate of origin for tur imports from Mozambique.
In March, the government established a committee to oversee the inventory of tur dal held by importers, mills, stockists, and traders, aiming to curb hoarding and speculative practices. Rohit Kumar Singh, the Secretary, instructed retailers not to maintain unreasonably high-profit margins on pulses, particularly tur dal. He encouraged them to adjust their retail margins in a manner that prevents disturbances in the composition of the pulses consumption basket for households due to price increases.
India is projected to import around one million tonnes of tur dal in the marketing year 2023-24 in order to fulfil the domestic demand. This decision stems from the anticipation of a drop in domestic production due to the impact of wilt disease. Rohit Kumar Singh had made this announcement back in January as a measure to address potential shortages and rising prices in the tur dal market.
India’s tur dal problem
India’s trouble with tur dal lies in low domestic production, leading to the country’s heavy reliance on African countries. Maharashtra, Karnataka and Uttar Pradesh are top three producers of tur dal in India, and all three states are bearing the brunt of the erratic monsoon this year.
As per the third advance estimate released by the government, the tur production in India for the year 2022-23 amounted to approximately 3.4 million metric tons (MMTs), 19 per cent lower as compared to the previous year’s production of 4.2 MMTs.
Although, it is slightly better than 2019 when the production was as low as 3.3 MMTs but the trend in Indian tur crop production has been on a downward trajectory since 2018.
The pulse cultivation area for the current kharif season also witnessed a dip this year standing at 122.57 lakh hectares as of September 22 as compared to 128.49 lakh hectares recorded during the same period last year, according to data from the agriculture ministry.
Tur is one of the pulses that often experiences heavy price fluctuations, and these fluctuations can have a ripple effect on the prices of other pulses as well. Since pulses are a crucial component of the Indian diet, any significant price increase in tur dal can lead to broader implications for overall food affordability and inflation in India.
This article has been republished from The Economic Times