Lower Tur Price Disappoint Farmers As More Correction Likely Ahead

MUMBAI (Commoditiescontrol) - Tur (Pigeon Pea) continued to trade bearish in the domestic markets amid higher production estimate for tur in the country with slow domestic demand followed by new crop supply from Burma.

The benchmark Burma lemon tur in Mumbai dropped sharply by 41.46 percent in 2016, whereas edged lower by 7.36 percent so far during current year. In 2016 tur fell mainly due to strict government measures in October 2015 after prices surged to record level of 15,000 level on October 15, 2015. Indian consumer’s food plate become costlier as tur is widely used as rich source of protein for vegetarian population.

India government slapped stock limit on pulses, asked agencies to increase imports, conducted raids on hoarders, increased minimum support price of kharif pulses significantly to encourage farmers to increase acreage under tur, urad, moong. Government succeeded in their attempt to bring prices against in comfortable zone.

Record Production On Card
Tur sowing in the country usually starts with arrival of monsoon i.e. from June to November-December. Early sowing starts mainly in Karnataka, Telangana and Andhra Pradesh, which later in July extended to Maharashtra, Madhya Pradesh, Uttar Pradesh and other states.

Tur average monthly price during May-June was at 8,734/100kg, whereas India government on June 1 announced to raise tur minimum support price (MSP) for kharif 2016-17 by 9 percent at Rs 5,050/100kg (including Rs 425 bonus) against Rs 4,625 in 2015-16.

Higher spot price and encouragement by government in form of sharp increase in MSP prompted farmers to allot more area for tur, which has resulted in record tur sowing this season. Tur sowing in the country during kharif 2016 jumped at 52.79 lakh hectares versus 37.65 lakh hectares a year ago. India government in first advance estimate projected tur 2016-17 crop at 42.9 lakh tonnes, which is more than sufficient to cater demand.

According to balance sheet drawn by commoditiescontrol tur availability during 2017 will be at 41 lakh tonnes, whereas domestic consumption likely at 35 lakh tonnes leaving 6 lakh tonnes as ending stocks at the end of the season December 2017.

Price Crashes In 2016; What About 2017?
Tur price in 2016 corrected 41.46 percent and more than 7 percent in 2017 so far due to expectation of record crop. Tur is likely to remain in bearish mode this year as well. A majority of fall in tur was witnessed mainly after demonetisation i.e. from November, 2016. The government announced to scrap Rs 500 and Rs 1000 note on November 8.

Liquidity crunch has slowed consumption of tur dal (processed tur). Demand from traders, millers and stockists has dropped significantly since they don't have sufficient cash to purchase the commodity, whereas sellers mainly prefers to sell their produce in cash rather than online or cheque payments. Further consumption of tur has dropped due to ample availability of vegetable at the cheaper rates leading to subdued demand for tur dal.

Tur crop in Burma is better this year and likely to start to hit Indian ports by January-end, which is also likely to exert pressure on domestic tur prices.

Government Must Intervene To Protect Farmers Interest
Tur price in most of the domestic markets across the country has dropped below minimum support price leaving disappointing farmers as they are not have sown the crop that they will at least get MSP rate of Rs 5,050/100kg for their produce, but since government agencies procurement is very slow they are forced to sell their produce at the much lower than MSP rate.

Government should ask the agencies to start procurement process extensively to support farmers as new crop supply is yet to pick up momentum from major producing centers like Maharashtra, Gujarat, Madhya Pradesh and Uttar Pradesh. The farmers have allotted more acreage to increase tur production to cater domestic demand with trust that government will provide them a good rate for their produce. Relaxation on stock limit is another option so that traders, stockists, millers, wholesalers and retailers can buy tur in large quantity.

In case government failed to provide attractive rates to farmers then they may opt to reduce tur acreage next season, which may again increase country's dependency on imports to fulfill demand.

Government can also allow surplus production of tur dal for exports to support price or even put restriction on imports by raising import duty, which at present attracts zero percent. Export of pulses was initially prohibited for a period of six months in 2006 which was extended from time-to-time.

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