Pulses shortage: Set up procurement mechanism

Around July last year, soon after celebrating a year in office, the Narendra Modi government woke up to the steady rise in the prices of pulses. The first year in office was marked with low inflation levels – thanks to the decline in global crude and commodity prices and sluggish domestic demand. But July of 2015 brought with it the rude shock of a steady increase in prices of pulses. As the festive season of September-October approached, arhar or toor was retailing at Rs 200 per kg, forcing the government into action.

The first response was to ramp up imports by tapping the usual sources – Canada, Malawi and Myanmar. But global crop failure and non-availability in international markets kept the prices high. This year too, pulses continue to cost dear to the common man who spends about 5% of his food expenditure on his key source of protein in the diet. And, the government has come up with the expected response – increase imports and build up buffer stocks to enable market intervention to cool down prices.

A look at the data put out by the government clearly states that India has been dependent on imports to fill in the gap between demand and supply of pulses. The increase in rural wages in the latter part of the past decade had led to a steady increase in demand for pulses. In 2007-08, the demand for pulses was 16.77 million tonnes, while domestic production was 14.76 mt. Over the years, the domestic production stagnated at around 18 mt and the demand this year has been pegged at 24 mt.

A study by Assocham in November last year has pegged pulses imports at 10.1 mt for 2015-16 raising questions whether India would need to depend on buying from global markets perpetually to meet its domestic needs of the protein source. The Indian Institute of Pulses Research has forecast a demand of 39 mt of pulses by 2050.

According to a Crisil study, this would require production of pulses to grow at an annual rate of 2.2%, compared with the 0.9% growth witnessed in the last decade.

The need of the hour is to dramatically increase domestic production to meet the growing demands for pulses. It needs a mix of policy and technological interventions to bridge the demand-supply gap. The Economic Survey 2015-16 had pointed out that most of the land dedicated to growing pulses in each state was unirrigated – thus leaving the output at the mercy of the rain god. It had made a strong pitch for increasing production of pulses on irrigated land to meet the high and growing demand.

The recent spike in prices of pulses has sent the government scurrying to Africa and Myanmar once again – this time round exploring the possibility of contract farming in foreign nations to meet the domestic demands. Law and order issues in some African nations and high transportation costs have been cited as key hurdles
 in previous attempts to explore land leasing options.

The earlier attempts were made by the private sector and now India is holding government-to-government talks to explore avenues to ensure stability in supply of pulses. Top Central officials visited Mozambique and Myanmar last fortnight and are expected to present their reports to the government. This comes even as the government is pushing farmers to grow more pulses. But what ails the pulses sector? And why has India been unable to keep pace with the growing demand.

The Green Revolution began in India in the early 1960s and within a decade the food grain production was on a steady increase. In 1970-71, total food grain production was 108.43 mt of which rice and wheat amounted to 42.22 mt and 23.83 mt, respectively. Production of pulses was 11.82 mt. By 2006-07, the total food grain production had doubled to 217.28 mt. While rice production zoomed to 93.35 mt and wheat to 75.81 mt, the growth is pulses amounted to 14.20 mt.

Low yield
In the absence of technological breakthrough, farmers were saddled with low yield seed varieties that help them produce about 700 kg of pulses per hectare, against the global average of 800 kg per hectare. Some states do much better than the all-India average, but even the key pulse producing state of Madhya Pradesh has yields (938 kg/ha) barely three-fifths that of China’s (1550 kg/ha). This also makes a case for examining the viability of genetically modified variety to increase yields.

Pulses are also high risk-prone crops as most of the production takes place in rainfed areas. Only 16% of pulses coverage is through irrigation thus exposing the farm output to monsoon shocks. Moreover, 70% pulses production comes from four states – Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh. Barring Rajasthan, the rest three states have received deficient monsoon for the past four years thus affecting the production of pulses.

In June, the Centre increased sharply the minimum support price (MSP) for pulses. But farmers were not enthused by the increase as wholesale prices are almost double the MSP.

There are also demands for increasing the MSP to the level of the rates at which government imports pulses. They also recall the glut in chickpea production three years back when prices had fallen below the MSP. The government had failed to intervene and procure at the support price.

But the biggest intervention from the government could be in the form of setting up a procurement mechanism to buy pulses from farmers at it does in case of wheat and paddy. The government procures between 30 and 40% of wheat and paddy produced in the country. But in the case of pulses, procurement is almost negligible.

The Shanta Kumar Committee on Restructuring Food Corporation of India had suggested better price support operations for pulses to encourage farmers to take up cultivation on a large scale. The government needs to act on this.