K R Sudhaman
Onion and pulses prices soar periodically in India and that
too ahead of elections bringing tears to common man and deny much needed
protein for growth to the poor. This happens despite the fact that the
production has increased substantially in the country. Onion production has
doubled in the last 7-8 years to 190 lakh tonnes. The pulses production might
not grown that rapidly but India
is the largest production of pulses at 19.5 million tonnes. The country is also
the largest importer of pulses at 3.5 million tonnes.
In onion the wastage is around 30-40 lakh tonnes every year. The
shortfall during years of crop failure or destruction of standing onion crops
due to floods or unseasonal rails is usually not more than 10 lakh tonnes. When
this shortfall is not bridged prices skyrocket and political parties take
advantage of it. Sometimes shortfall is engineered to manipulate prices. If
only the country manages save just 25-30 per cent of the wastage through better
cold storage facility, the supply can be regulated preventing any spurt in
prices. Unfortunately this does not happen in the country as it prevents
traders and political bosses to reap benefit from price manipulations.
In the case of pulses the problem is more complex. India is the
only country which consumes huge quantity of pulses as it is perhaps the major
source of cheap protein, particularly for vegetarians. Here the problem is
there is no incentive for farmers to increase production of pulses unlike in
rice and wheat where minimum support prices is increased substantially
disproportionate to the increase in input costs. This disincentivise farmers
from producing pulses as there is also no proper procurement policy for pulses
like in the case of food grains, where the country has stocks, which is three
times more the buffer required to meet any contingency at around 60 million
tonnes. One of the reasons the BJP lost the recent Bihar
assembly elections because of the soaring prices of pulses, which touched Rs
200 a kilo. Rightly government has thought of creating a buffer now for pulses.
The agriculture ministry has now decided to create a buffer of 50,000 tonnes of
pulses using the market stablisation fund. The new pulses crops start coming
into the market from January and government would start creation through
imported pulses from that month. Initially it will import 10,000 tonnes. This
makes sense as when India
imports huge quantity during shortage global prices of pulses soar as it
happened recently. The prices of imported pulses, which was around $700 per tonne
in August rose to $1900 a tonne in October when India imported huge quantity to
meet the shortfall to stablise prices. Another problem with pulses not many
countries produce pulses apart from India. It is produced only in Myanmar and certain varieties like chik-pea in Australia and Canada. So imported pulses is not
available all that easily.
As a permanent solution India needed to encourage Indian
farmers to produce more pulses on a mission mode shifting some of the surplus
rice and wheat production to pulse through incentives like higher MSP and so
on. Also private Indian businessmen could buy huge quantity of land in Africa,
particularly East Africa which is conducive
for growing pulses. The quantity produced produced there could brought to India to create
much needed buffer bringing about price stability. President Pranab Mukherjee,
gave some incentives for increasing pulses production in Eastern
India when he was Finance Minister. That did help in marginally
increasing pulses production in subsequent years but unfortunately that
programme has appraently not been sustained and expanded. There is also scope
for increasing yield of pulses in the country as it is usually grown only in
arid region. If it is grown irrigated area, the yield automatically increases,
but farmers prefers to grow rice and wheat as it ensure assured and
remunerative prices. Government should therefore come out with some incentives
to farmers to shift to pulses cultivation in some of their irrigated land in
the country.
Rating agency
Crisil has said in a recent report that there is a clear pattern of a spike in
pulses inflation every third year, though this year the peak is higher than the
last two peaks, with wholesale price index (WPI)-based inflation already
crossing 34 per cent average so far.
It said this
year’s spike can be explained by supply side shocks, mainly from deficient
monsoon and higher global prices, while various other factors – such as drought
and delayed rains, high growth, shift toward protein consumption and demand
pushed up by higher rural wages due to NREGA – can explain the previous spikes.
Though
pulses is grown in all seasons, rabi and kharif. Its shorter variety is grown
during the intermediate season, thereby there is a three crop every year. But
in India it is mostly a rabi
crop and four states, Madhya Pradesh, Maharashtra,
Rajasthan and Uttar Pradesh account for 70 per cent of the production. But
pulses is grown in most parts of the country in smaller quantity.
Crisil
report noted that while food prices were the biggest contributor to the decline
in the consumer price inflation (CPI), pulses inflation had seen the sharpest
spike in a decade. The CPI and WPI inflation for pulses was 42.2 per cent and
53 per cent, respectively, in October.
This statistics
reveals more than what they hide. It is certainly a wake up call for the
government to act to deal with this problem, which is not insurmountable. But
the question is will the government have the political will as price
manipulations benefits traders and political parties to the deteriment of
common man. Anyway Narentdra Modi government has made a beginning by deciding
to create a buffer of pulses and one only hope it is carried forward to bring
about price stability. It would augur well for common man, if onion is tackled
on a permanent basis to provide relief to common man.
(K. R Sudhaman, who has 40 years of experience
in journalism in currently Editor, SMEpost.com and has been Editor in Press
Trust of India, TickerNews and Financial Chronicle)
