A combination of large production, decent level of stocks with public agencies and weak demand growth has kept the domestic pulses market under leash over the last two years. Inventory pressure — from record imports three years ago as also court-order-enabled import last year — has substantially reduced.
However, even as the market was readying to find a sense of balance between supply and demand, Covid-19 pandemic struck. There is palpable loss of demand, especially in the HoReCa (hotels, restaurants and catering) segment.
It may take several months for out-of-home food consumption to pick up momentum as consumers are likely to be overly cautious about eating out.
During the festival months of August, September and October, usually food demand (cereals, pulses, sugar, cooking oil) expands manifold. But this year even festival season consumption is likely to be subdued.
The relief programmes of the government to provide free ration of pulses to vulnerable families are lending some support to consumption. About 17 crore vulnerable families are entitled to receive one kilogram of pulses per month for three months till June. About 5 lakh tonnes of pulses will be distributed under the relief programme.
Prices of major pulses are still ruling well below the minimum support price (MSP) despite procurement and price support measures by State agencies such as Nafed. Chana is ruling at about ₹4,000 per quintal (100 kilograms), far lower than the MSP of ₹4,875. Similarly, tur/arhar at ₹5,300 is well below its MSP of ₹5,800 for 2019-20.
We now need to look ahead to the kharif season planting. The India Meteorological Department’s (IMD) forecast of normal South-West monsoon and timely onset over Kerala is a good augury, and initial reports of sowing are quite encouraging.
The major pulses grown during kharif season are tur/arhar (pigeon pea), urad (black matpe) and moong (green gram), and total planted acreage during the season averages 120 lakh hectares.
In the past two years, actual production has fallen well short of the target. From a record of 93 lakh tonnes in 2017-18, kharif pulses output declined to 81 lakh tonnes the following year and to 80 lakh tonnes in 2019-20, a fifth below the target of 101 lakh tonnes. On current reckoning, it would be a surprise if kharif harvest breaks above 80 lakh tonnes.
The government has not fixed any specific target for various kharif crops this year, except that cereals covering rice, pulses and coarse cereals will be 150 million tonnes. It would be reasonable to surmise that pulses production target may be 110 lakh tonnes.
Import quotas for pulses (urad, tur/arhar, moong and peas), aggregating 11 lakh tonnes, have been announced, but permits are yet to be issued in some cases.
Meanwhile, the government earlier this month reduced customs duty on imported lentils (masur) from 30 per cent to 10 per cent for no ostensible reason.
There was an unjustified call by the RBI to review pulses import duty based on spike in retail prices of pulses during April, little realising that the spike was because of lockdown-driven supply chain disruption and panic-buying by retail consumers.
The duty reduction has created discontent among growers as 14.4 lakh tonnes of masur were harvested recently in March/April and prices have been barely above the MSP.
Given that the pulses market has been languishing for a long time, the hike in MSP for the 2020-21 kharif season for various pulses is seen as a routine exercise devoid of rationale, and will serve little purpose.
Both tur/arhar and urad will have higher an MSP of ₹6,000 a quintal, an increase of ₹200 and ₹300, respectively.
In sum, subject to normal temporal and spatial distribution of rainfall, pulses harvest in the upcoming season is likely to stay at around 80 lakh tonnes, and prices will continue to be under pressure and rule below MSP, necessitating price-support operations.
It is, therefore, critical that pulses continue to be distributed through welfare programmes such as PDS and NFSA at highly subsidised prices even after June. As the most economical source of vegetable protein, pulses consumption will help advance the country’s nutrition security.
The writer is a policy commentator and an agri-business specialist