Mandi prices of pulses rule below MSP on sluggish demand
By Sandip Das
Despite the government’s intervention in the market through the price support scheme, mandi prices for most pulse varieties are currently ruling below the benchmark minimum support price (MSP), mainly due to robust harvest and adequate buffer stocks, trade sources said.
The market prices of pulse varieties – tur, chana, urad, masur and moong – are currently ruling 4% to 14% below the MSP.
The mandi price of chana (gram), which accounts for about 50% of pulse production, is currently ruling around Rs 5200/quintal against the MSP of Rs 5875/quintal for the season. Tur prices are ruling around 6% below the benchmark price. Masur and urad prices are currently around Rs 6200/quintal and Rs 7500/quintal, 11% and 4% below the MSP respectively.
Harvest Surplus
“Some pulses are currently trading below MSP due to peak arrivals and slower demand. While MSP remains a key benchmark, mandi prices reflect quality and real time buying,” Harsha Rai, head, Mayur Global Corporation, a leading pulses trading firm, told FE. Rai noted that the softness in prices appears cyclical and should ease as arrivals taper.
Traders said demand for pulses is sluggish during the summer months, and future price movement would depend on the monsoon’s performance, which would impact the kharif pulse output.
Strategic Buffer Management
Against the target buffer of 2.8 million tonnes (MT) of pulses aimed at managing price volatility and ensuring supplies, government agencies – the farmers’ cooperative Nafed and NCCF – currently hold 2.69 MT of pulses, including gram (1.1 MT), tur (0.75 MT), masur (0.36 MT), moong (0.4 MT) and urad (33,402 tonnes). These buffers are built through procurement under the price support scheme and imports.
To offload surplus stock in the buffer, the centre last month had urged states to source varieties of pulses – tur, chana, masur and moong – from it instead of buying them in the open market, for their welfare schemes.
In a communication to states, the department of Consumer Affairs stated, “sourcing pulses from the central buffer obviates the need for a cumbersome tendering process for procurement under various welfare schemes.”
These strategic pulse reserves are used as an instrument of the market intervention program to curb any potential rise in prices. These stocks are offloaded through open market sale and supplies to states for the welfare schemes such as PM-Poshan, Integrated Child Development Services (ICDS), public distribution system (PDS) etc.
The centre provides free grain – 5 KG each of rice and wheat monthly – to over 800 million beneficiaries under the Pradhan Mantri Garib Kalyan Anna Yojana or free ration scheme. Several states including Tamil Nadu, Andhra Pradesh, Chhattisgarh, Gujarat and Kerala provide items such as pulses and edible oil at subsidised rates to supplement it. Often states use tendering to procure these commodities from the private entities.
This article has been republished from The Financial Express.