The price of tur surged by a staggering seven per cent during the past two days, due to estimates of lower supply following the government's decision to levy import duty on the commodity.
Polled data compiled by the National Commodity & Derivatives Exchange (NCDEX) showed desi variety of tur at Rs 4,700 a quintal in the benchmark Akola wholesale mandi on Wednesday, up by Rs 300 from Monday. Tur prices have been trading lower than the minimum support price (MSP) of Rs 5,050 a quintal (including Rs 425 as bonus) over the past few weeks.
While the government's foodgrain procurement agency, the Food Corporation of India (FCI), has procured tur from farmers for the first time this year, its price continued to disappoint farmers because of lower realisation. Since tur dal prices were hovering between Rs 120-140 a kg, farmers brought in additional area last kharif season which brightened prospects of higher output this year. Tur price jumped, albeit marginally, in other spot markets across the country.
"But, tur dal price fell to Rs 6,000-6,500 a quintal resulting in whole unprocessed tur quoting at Rs 4,400-4,500 a quintal. This price is unremunerative and will prompt farmers to switch to other crops next season. Since, the average per capita consumption of pulses stands at less than 10 kg a year, consumers would not mind paying little higher for the sake of farmers. Tur (whole unprocessed) price below Rs 60-65 a kg is not profitable for famers. Thus, both tur and tur dal prices should rise by at least 25-30 per cent from the current level to encourage farmers to continue with its farming next season," said Himat Chandra, Partner, Trimurthi International, a wholesaler in Vashi mandi.
The Ministry of Agriculture in its second advanced estimated forecast India's tur production at 4.23 million tonnes, which is the highest ever and almost twice last year's level of 2.56 million tonnes.
Meanwhile, worried over farmers' sub-MSP realisation, the government levied 10 per cent import duty on tur import effective immediately. India imports around 500,000 tonnes of tur every year. But, the import is likely to remain lower this year due to abundance of domestic production.
"India is the only country consuming tur. Hence, even with the import duty, overseas producers would sell their tur output to Indian buyers only. At the most they would reduce their price quote by 5 per cent to absorb the import duty levy. Indian buyers would have to absorb the remaining 5 per cent," said Bimal Kothari, Vice Chairman, Indian Pulses and Grains Association (IPGA).
Meanwhile, traders believe that the government has taken a tactical decision with import levy as the duty is unlikely to change anything on the ground.
India imports tur primarily from least developed countries that get preferential treatment. Under this treatment, no import duty is levied. Hence, despite duty levy, tur import would continue to come into India duty-free, said traders.
Trades believe that the government wants tur price to trade above MSP to realise farmers adequately. Hence, the import duty levy is just to raise price in domestic markets, they added.