Five Reasons the Humble Dal Has Become Too Hot to Handle

Shortage of production has led prices of pulses to skyrocket and no relief is expected any time soon.

If it was the price of onions at Rs 50 per kg that was keeping the government bleary-eyed till a month ago, now it’s the turn of pulses. Prices have skyrocketed over the past 12 months. Tur dal is trading in the wholesale market at Rs 190 per kg currently against Rs 90 in October 2014; retail prices are another Rs 20-30 higher. Arhar and urad at Rs 150 and above have become an issue in the ongoing Bihar Assembly elections.

The reasons for the surge are not too difficult to work out.

1. The Rain Gods Have Not Been Benevolent

The monsoons have failed Indian farmers for the second straight year. Since less than one-tenth of the area under pulses have irrigation cover, the crop is entirely dependent on monsoons.

2. And So, Production Fell Across India

The output of pulses declined from 19.25 million tonnes (mt) in 2013-14 to 17.20 mt in 2014-15. On an average, India consumes around 23 mt of pulses per year but production has stagnated at around 18-19 mt for several years now. The shortfall between production and consumption is made up by imports, mainly from Canada, Myanmar and some African countries.

3. Plans To Import Didn’t Work Out Too Well

There isn’t much production of pulses outside of India. For example, the total global output of pulses was about 70 mt in 2014-15, of which India accounted for more than 25 per cent. So when there is a crop failure in India, there is not much scope to import vast quantities to make up for the domestic shortfall. Even so, our imports peaked last year at 4.6 mt.

4. Hoarders Worsened the Situation

Long-time traders and market experts allege that domestic hoarders seem to be the key players responsible for the rising prices, besides new market entrants like MNCs and large firms that are into trading. But the government, to be fair, has cracked down on hoarders and black-marketers through an imposition of stockholding limits. Over the weekend these limits were extended to even stocks sourced from imports or held by licensed food processors and large departmental retailers.

5. Farmers Just Never Had Enough Incentive to Grow Pulses

Since the 1970s, policy makers in India have been obsessed with encouraging the production of basic food grains like rice and wheat. Successive governments raised the minimum support price (MSP) for wheat and rice, virtually giving a guarantee to the farmer that their output of wheat and rice would be purchased by the state at the MSP. So India has a “buffer stock” of wheat and rice in excess of 60 mt. But no such incentives have been provided for pulses.

The consistent signal to farmers has been to focus on wheat and rice and neglect pulses. Even the cursory data is mind boggling. The total pulses’ output in 1970-71 in India was 11.8 mt. After two decades of the Green Revolution, the output had gone up to 14.3 mt. And that’s not all. The total output in 2000-01 was below the output achieved 30 years ago at 11 mt. During the same period, the wheat output had gone up five times and that of potato by about 10 times.