Dal prices have been on fire and bureaucrats and poli-ticians have been caught napping once again. Recently tur dal prices crossed Rs 200 per kg. The prices of other major pulses have also crossed Rs 100 per kg. The governments have gone on overdrive to blame hoarders for the price rise, as they have often done since the 1960s. A statement released by the ministry of consumer affairs, food and public distribution late last week pointed out that 74,846.359 million tonnes of pulses have been seized from hoarders after 6,077 raids. It is not surprising that the Centre wants to beat down the price of pulses in general and tur dal in particular, given the Assembly elections in Bihar. Media reports suggest that high prices of dal have become an election issue in Bihar, with leaders of both the NDA and the Nitish Kumar-Lalu Prasad Yadav-Congress combine accusing each other of not doing enough to control dal prices.
But is hoarding the only reason for high prices? The ministry of agriculture publishes a document titled Commodity Profile for Pulses. This document, dated March 2015, had clearly pointed out that the total production of various kinds of dal would fall by 6.8 per cent to 18.43 million tonnes in 2014-2015. The production had stood at 19.78 million tonnes in 2013-2014. The production of tur dal was expected to be at 2.75 million tonnes, a fall of 13.2 per cent. The production for 2013-2014 had stood at 3.17 million tonnes. The Commodity Profile for Pulses dated September 2015 revised these numbers. The total production of dal was revised to 17.2 million tonnes, a fall of 13 per cent from 2013-2014. The production of tur dal was revised to 2.78 million tonnes, a fall of 12.3 per cent from 2013-2014.
The point is that the government knew that the production of tur dal in particular and total dal production had fallen in 2014-2015. It was but logical that hoarders would get into the fray. This possibility should have been tackled by them. By the time the government woke up to act, it was too late. Further, imports have been bandied around as a solution to the escalating prices. In an October 19, 2015, press release the ministry of consumer affairs, food and public distribution stated that the “government would import 2,000 tonnes of tur dal and 1,000 tonnes of urad dal. Tur is mainly grown during kharif and a very small portion of the total area under production has irrigation.
The monsoon this year was at 86 per cent and may have had an impact on tur production. As mentioned earlier, the production of tur dal has fallen from 3.17 million tonnes in 2013-2014 to 2.78 million tonnes in 2014-2015, a drop of around 0.4 million tonnes. Professor Ashok Gulati of Indian Council for Research on International Economic Relations estimates that the yearly consumption of tur dal in India is in the region of 3.3 to 4 million tonnes. Trying to plug this huge gap by importing tur dal is not going to help much. In fact, the global market for pulses is not very big. In 2014-2015, India imported 4.6 million tonnes of dal, of which 0.58 million tonnes was tur dal. A little over half of India’s tur dal imports came from Myanmar and the remaining from Africa. Also, it is worth mentioning here that India is the biggest producer of tur dal in the world. Pulses are an important source of protein for vegetarians.
A paper titled Taming Food Inflation in India released by the Commission for Agricultural Costs and Prices (CACP) in April 2013 refers to the same reason. As it points out: “(The) study finds that the pressure on prices is more on protein foods than on cereals and edible oils. This happens with rising incomes.” What this clearly tells us is that the government failed to see this crisis coming, even though data suggested it very clearly. The Centre procures wheat and rice through FCI. The CACP points out that “procurement gives an incentive for farmers to produce cereals instead of diversifying.”
Incentives encourage farmers to produce more rice and wheat and not other crops. This must be set right. The good news is that the area on which pulses have been sown this kharif has gone up to 11.6 million hectares. As far as tur dal is concerned, the area has gone up by 4 per cent to 3.74 million hectares. With an increase in area, prices are likely to fall in the days to come. Nevertheless, if dal prices in general, and tur dal prices in particular, need to come down dramatically in the years to come then the yield as well as area under cultivation need to go up. And this is easier said than done.
The writer is the author of the Easy Money trilogy. He can be reached at vivek.kaul@gmail.com
