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Wednesday, October 21, 2015

the spiralling prices of Pulses ~ market intervention by Government

In Economics, it is simply the ‘demand and supply’ that determine the price of any commodity ~ as you try to understand the market dynamics there would be more for sure including elasticity and more jargons.

Pulses are a great tasting addition to any diet. They are rich in fibre and protein, and have high levels of minerals. In addition to their nutritional profile they are linked to improved health too.  A pulse (from Latin: puls] sometimes called a "grain legume", is an annual leguminous crop yielding from one to twelve seeds of variable size, shape, and colour within a pod.  Like many leguminous crops, pulses play a key role in crop rotation due to their ability to fix nitrogen. To support the awareness on this matter, the United Nations declared 2016 the UN International Year of Pulses. The words "bean", "lentil", and "pulse" may refer to just the seed or to the entire plant.  Pulses are consumed as Dal, which is a cheap source of plant protein.
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India is the biggest producer, consumer and importer of pulses in the world. Pulses are the major source of vegetarian protein diet for vegetarian Indians, and protein content in most of the pulses is more than one-fifth by their weight. Channa (chickpea), Tur (arhar/ pigeon pea), masur (lentil), and matar (pea) are major pulses produced in the country, whereas urad (black gram/ matpe), moong (green gram), moth (moth bean), khesari (grass pea), kulthi (horse gram), chowli (cowpea/lobhia), and vaal (lablab bean) are the minor pulses grown in India.  Pulses are grown both in kharif (1/3) and rabi (2/3) seasons.

India imports pulses from many countries -  India’s imports from USA had slowed down in recent years due to high transit time, and shifted to nearby countries like Myanmar, China, Nepal, and across the nations in Western and South Africa for their proximity. The delivery time required by far off countries like Canada and Australia is one month and 25 days respectively, which carries considerable price risk during transportation time, while that of Myanmar is around 15 days, or even less, reducing thereby the price risk involved during the transit time.

The skyrocketing prices of pulses have hit headlines ~ and has become popular butt of jokes too !

When was the last time you stood in the queue and bought something in a Ration shop ? – remember that this was routine in our younger days, a couple of decades ago !!..  Public distribution system (PDS) is an Indian food security system. Established by the Government of India under Ministry of Consumer Affairs, Food, and Public Distribution and managed jointly with state governments in India, it distributes subsidized food and non-food items to India's poor. Major commodities distributed include staple food grains, such as wheat, rice, sugar, and kerosene, through a network of public distribution shops.  In coverage and public expenditure, it is considered to be the most important food security network. However, the food grains supplied by the ration shops are not enough to meet the consumption needs of the poor or are considered to be of inferior quality.

Newspaper reports state that to  discourage hoarding of pulses for speculation, the government on Tuesday intensified its drive against excess stockholding with official agencies seizing over 5,800 tonnes of illegally stored pulses in surprise raids. Union Cabinet secretary P.K. Sinha took another meeting of top officials of departments concerned for the second consecutive day to review the situation.

Officially, the average price of tur stood at about Rs. 156 a kilogram, while urad remained at Rs. 138 a kg. Government outlets like the Kendriya Bhandar and Safal have started selling imported dal at Rs. 120 a kg, government sources said. The meeting discussed the action taken by State governments against hoarding under the Essential Commodities Act and reviewed the availability of pulses sold through official outlets to check the high prices of tur and urad.

According to the Consumer Affairs Ministry, over 5,800 tonnes of pulses stored in excess of stock limits were seized in five States. Around 2,546 tonnes were seized in Telangana, 2,295 tonnes in Madhya Pradesh, 600 tonnes in Andhra Pradesh, 360 tonnes in Karnataka and one tonne in Maharashtra. “Raids are being carried out in Mysuru and Kalaburagi in Karnataka as also in Tamil Nadu,’’ official sources said. The Rajasthan government has also intensified enforcement of stock limits on pulses. Besides taking measures to de-hoard illegally stored pulses, State governments have begun to withdraw exemption on stock holding limits given earlier to pulse importers, exporters, licensed food processors and large departmental retailers, in line with the Centre’s orders. Maharashtra, Karnataka, Rajasthan and Tamil Nadu have already issued orders to this effect, the sources said.

The government is able to make the market intervention through the Price Stabilisation Fund created in 2012. The government will sell toor dhal at about half the market price through its 91 cooperative stores from November 1. It is stated that a consignment of 500 tonnes imported by the Centre and allotted as the State share has reached the Chennai port, the Civil Supplies Corporation will process the dhal and distribute it through the TUCS and Amudham stores in Chennai, Coimbatore, Madurai and Tiruchi. While the price of the toor dhal is priced at Rs. 220 per kg in the retail market, the government will be selling it at Rs. 110. Even half kg packets priced at Rs. 55 each will be available.

 “It is a market intervention. Once the demand is controlled, the price is likely to fall as the festive season approaches,” says a senior official of the department. It is something that affects the common man ~ and in this context – why should such commodities be sold Online and more importantly who benefits from ‘ futures trading’ on such commodities… await experts’ opinion on this. 

With regards – S. Sampathkumar
21st Oct 2015.

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