MUMBAI (Commoditiescontrol) - Tur farmers are a text book example of how farmers are the worst sufferers as a result of the well intentioned but ill timed government policies.
Due to draughts in 2014-15 and 2015-16 domestic production of all pulses dwindled sharply. The two consecutive drought years in India and ferocious appetite for pulses of this vegetarian nation caused shortage in global markets, resulting in all time high prices of all pulses in India. Tur prices in Maharashtra touched the high of around 125-100 per quintal for two seasons in a row! These prices were enough to attract the acreage in the country. But government went in overdrive and offered sharply higher Minimum Support Price for all pulses. Tur support price was declared as 4425/100kg + 200 Bonus in 2015-16 and Rs 4625 + 425 Bonus in 2016-17. Acreage in response touched the record of 52.8 lakh hectares up from 37.7 lakh hectares in previous season against normal area of 40 lakh hectare estimated by the Ministry of Agriculture.
Tur sowing usually starts from June-July. The average price in June 2016 was Rs 8773/100kg; in July it was Rs 8555. Tur is harvested in the month of January and the prevailing prices back then were Rs 5000 per quintal, already below the declared MSP. The prices have fallen incessantly since then to below 4000 per quintal currently. Government ended up procuring more than 11 lakh tons of Tur at MSP and yet the prices have not stopped falling, prices are at the seasonal low. Government after extending the MSP based procurement twice has now stopped the procurement since 22nd April. This in turn is expected to increase the panic in the market and the prices could go down further.
One thing that could have supported the prices from going down further would have been the stockiest buying. But that has not emerged because of the stock limit imposed by the government. It is once again the bad timing of the policy. The stock limit that was imposed in a period when prices were record high has remained despite the fact that area sown under Tur production in the country rose to record level and even the weather was conducive. A very simple logic would have said that the crop would be record this season and at 42.3 lakh tons (second advance estimates of Ag Ministry) the 2016-17 Tur crop is indeed an all time high crop. The prices have fallen to the levels last seen in June 2014 and the stock limit has stayed in many states.
Government is now holding 26% of the record production. It is expected that the government will offload the stocks during the festive season. This will continue to see the prices remain under selling pressure. And this in turn will turn the farmers away from Tur in the next sowing season that will begin in Jun-Jul.
Stockiest play an important role in Tur market, for that matter in any agri commodity market. This is because the agri commodity supplies materialize in the two months of harvest and the consumption is throughout the year. Consumption varies according to the seasons, peaking in festive months and slacking in mango season. It is the stockiest who end up carrying the commodities for these balance 10 months and thus providing liquidity to the market in rest of the year.
Hence it is imperative that the government removes the stock limit from the pulses at the earliest. Allow traders to stock at lower prices and provide a market driven bottom to the prices. The chances of this having an impact other than providing bottom is limited as the government is the largest stockiest currently and the risk of liquidation will remain for the rest of the season and even next.
(By Commoditiescontrol Bureau; +91-22-40015533)
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