Mumbai, May 13 (Commodities Control): In response to dwindling warehouse stocks of Chana (chickpeas) and a scarcity of Matar - an alternative for Chana - in international markets, the Indian government is shifting its focus inwards to mitigate rising prices and prepare for the upcoming festive season demand.
The current scenario of less availability locally and internationally, we have experienced a surge in Chana prices, reaching between Rs 5,800 to Rs 6,000 per quintal, significantly above the minimum support price (MSP) of Rs 5,440. With expectations already reflecting in price fluctuations, the government is considering procurement from farmers in Madhya Pradesh, Rajasthan, and Maharashtra under the Minimum Assured Procurement Price (MAPP) mechanism or dynamic buffer procurement price, derived based on average prices of the last three days.
During the marketing year 2023-24 (April-March), domestic Chana production was estimated at 12.16 million tons, slightly lower than the previous year. On the other hand, trade estimates pegged total domestic Chana output at 8 MT. With an estimated carry-over stock of 1.5 MT, the total availability was pegged at 13.6 MT (trade estimate 9.5 MT), against an annual consumption of nearly 11-12 MT, leaving a carry-over stock of just 2-3 MT. This year's production is anticipated to drop amid weather uncertainties, necessitating the government to build stockpiles.
Although, Chana intake remains restricted due to hot weather conditions, but its demand is set to pick up with on-set of monsoon and ensuing festival season. There's enough crop in the country, but it seems the farmers are withholding their produce, which is roughly around 7 MT, in anticipation of price rise. The government beginning to source Chana to replenish buffer stock offers a good opportunity for farmers to seel their produce at higher prices. The government couldn't announce procurement earlier due to the general election.
Now, the government has issued directives for local sourcing, especially with international sources drying up fast. The government has instructed various sourcing agencies such as NAFED and the National Cooperative Consumers’ Federation of India (NCCF) to initiate procurement at market-driven prices or under the MAPP mechanism. The government procurement would boost prices, but the upside would be capped by adequate supplies with the farmers. The estimated 7 MT Chana held by farmers would hit the markets, which will help keep prices under check. Also, the imports of yellow peas at lower price would come in handy.
It may be remembered that despite previous efforts, NAFED procured only around 40,000 tonnes of Chana in the current marketing year, far below the target of one million tonnes, resulting in a buffer stock of approximately 0.6 million tonnes, well below the norm of one million tonnes. However, this dynamic serves farmers well, as they can demand higher prices for their produce.
The government may ramp up procurement process, similar to previous seasons, where NAFED bolstered the buffer stock significantly. While the removal of import duty on desi Chana and the extension of import duty exemption on yellow peas until October aim to curb price spikes, challenges remain due to slowed output and reluctance among producers to sell at current rates.
Experts suggested a potential shift in demand from Chana to yellow peas, caused by adequate availability of the peas internationally. Record harvests in countries like Canada and Russia are expected to stabilize prices, offering relief to consumers. However, the harvest in these countries will be over by August or September. India's harvest of desi Chana would start by March 2025, that's almost 9-10 month away from now. Hence, one can expect lot of price volatility.
As the government deliberates on procurement measures, stakeholders remain vigilant of market dynamics, seeking to strike a balance between food security and managing price volatility in the pulses sector. While Chana prices may witness a surge in the immediate term, government interventions are expected to rein in any unrealistic price gains.
(By Commoditiescontrol Bureau; +91-9820130172)
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