Pulses: Now is The Time for Government To Act, Before It’s Too Late

MUMBAI (Commoditiescontrol) - Government has been heavily involved in the pulses trade in last couple of years. As a result the smooth trade has been disrupted. First all the prices made new all time high despite heavy government watch and now the prices are collapsing unprecedentedly, even as the government watches. When the prices were rising the government intervened by taking measures like imposition of stock limits, raids on big players, suspension of future contracts of Chana, direct import of pulses from overseas and increasing the minimum support prices for the new crop pulses. In response to record prices farmers all over the country have responded by sharp increasing the acreage under various pulses. Now there is a sheer panic in the market. And it is reflected in the prices.

Kharif Sowing Progress: Tur | Urad | Moong

Rates In Rs/100Kg


Due to the sudden collapse in prices the trade has come to a standstill. There are report of large defaults, sellers’ panic and buyers staying away from the market despite the start of peak consumption period and festivals. Anyone and everyone in the pipeline with stocks are stuck. There are farmers, small traders, wholesalers and retailers of processed pulses left with burdensome inventories and no buyer. Surprisingly this strange situation exists even as the market pipelines are empty amidst peak demand.

From being optimist, the trade is now shrouded with extreme pessimist due to huge production prospects not only in India but also around the world. The Peas and Lentil production is going to be record in Canada, Chana acreage is record in Australia and may end up with one more year of record production. While accurate data is not available of African nations, but the imports are expected to pick up from suppliers in these countries from Mid-September. And there is little doubt that the production in this continent will be nothing short of a record, in response to record demand and prices in India. Forward shipment rates are already indicating a collapse in prices. All the countries in the world are producing record in response to Indian situation, as India is the biggest buyer of pulses in the world. As a result they will not have the choice but to dump all the produce in India, even if at lower rates. On the other hand sudden collapse in prices is bound to result in huge defaults as the buyers try to move out of the deal done at much higher prices.

Much Including The Nation’s Reputation Is At Stake
Now is the time for the government to intervene before it is too late. It is the festive season and demand is at its peak. Stockiest, traders, farmers, small and big players and the government all need to offload their inventories while buyers are cautious due to loss of confidence in the market after recent sharp fall. Moong prices have already dipped way below the Minimum Support Price. Government’s entry to support the prices at this juncture will go a long way. First it will provide immediate support to the collapsing prices. Improvement in prices will allow all those stuck in the trade move out of it. Failure to do so will continue to see prices collapse. As Indian farmers prepare for the harvest of new cop the prices would have collapsed deeper with no buyer around, including the government! Trade by then would be deep into red and could result in large defaults of importers. Already the big buyers are out of the market due to government restrictions, which could have absorbed some of the financial shock, and this could see smaller players and farmers being badly hurt.

Government need to do all that it did while the prices were touching record, like give assurance to the farmers, show it in action by buying as promised and clam the nerves of the trade. A smoother transition from a sharp deficit to sharp oversupply will only assure a more long term sustainable response to the Pulses Crisis In India.

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(By Commoditiescontrol Bureau; +91-22-40015533)