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Farmers feel the chill as prices of commodities fall

Farmers feel the chill as prices of commodities fall

Fri Jan 12 2018


Rural India is facing stress as prices of key agricultural commodities such as pulses have fallen sharply because of fresh supplies from farms and the government's robust measures to build stocks and control food inflation.


Most farmers are facing losses in the rabi, or winter-sown, crop, which has started arriving in mandis. The worst hit are those who planted pulses as prices have plunged 20% below the support price in the case of tur dal. The price of many spices has fallen, while the usually pricey pomegranate is selling at the lowest level in a decade.


Onions are doing relatively better but farmers have planted so much of the crop that prices are likely to tumble in April, traders said. Jeera, coriander and oilseeds such as mustard are also expected to come under pressure, they said.


Farmers have faced a rough time in recent years: The summers own kharif crop was hit by two failed monsoons along with erratic rainfall in the last season. In this period, the winter-sown crop also suffered damage due to hailstorms and unseasonal rain after failed monsoon, magnifying farmer discontent.


Farmers and traders said the only way out was to heavily step up government procurement of grains and allow export of onions to support prices.


Agriculture minister Radha Mohan Singh agreed.


Last Season's Heavy Stocks to Blame for Situation

"Minimum support prices are increasing but now a serious issue is to ensure and focus on buying produce from farmers at MSP rate," agriculture minister Radha Mohan Singh told ET. He said the food ministry was working closely with states to ensure higher procurement.


Analysts blamed heavy stocks from the last season for the situation. "It's a seasonal thing that correction will happen ahead of the harvest season. However, due to a huge carryover stock with both traders and government, prices of wheat, mustard, pulses are already trading very low," said Prerana Desai, vice-president at Edelweiss Agri Research.


Desai said existing stocks and the arrival of the new crop had hit prices. "Chana and masoor harvest has started. There have been substantial imports and lack of export opportunity, resulting in the price fall. While masoor prices remain very close to a multi-year low, chana prices have now fallen to April 2015 levels," she said.


At the Indore mandi, new chana crop reaching the market is being quoted at 12% lower than the MSP of Rs 4,400 a quintal while masoor was 15% less than the MSP of Rs 4,250 a quintal, said traders. At the Latur APMC (Agricultural Produce Market Committee) in Maharashtra, tur prices are ruling lower than the MSP of Rs 5,450 a quintal by about 20%. With arrivals of chana to pick up, prices are expected to slide further.


"Only a big procurement operation by the government to the tune of 1-1.5 million tonnes can give support to prices of tur and chana," said Bimal Kothari, vice-president, Indian Pulses and Grains Association (IPGA).


Similarly, wheat prices in Kota were 7-10% lower than the MSP at Rs 1,650 a quintal. "Opening stock of wheat in March will be all-time high in free market to over 3 million tonnes compared with five-year average of 1 million tonnes. Food Corporation of India will have 14 million tonnes in March. Wheat USDA (United States Department of Agriculture) global stock is at a 10-year high, so wheat prices will remain subdued," said Desai.



For the mustard crop, there is a substantial stock with the trade but this has already been priced in by the market. The new crop is relatively small, limiting the downside, traders said. In the Alwar market, the price was 1% less than the MSP of Rs 4,000 a quintal. "Immediately, we don't see a fall in prices, but in the next 20 days, mustard prices will correct. In wholesale, mustard oil prices will see Rs 4-5 a litre correction as the new crop gets harvested," said Sanjeev Giri, business head of edible oil at Mother Dairy.


With harvests of coriander and turmeric progressing in Gujarat and Telangana, prices are falling and expected to decline further. Jeera and turmeric have dropped 6% in the past week while coriander has fallen 10% in two weeks, said Anuj Gupta of Angel Commodities. Traders are seeking the relaxation of export norms on onions. As prices have been ruling high at about Rs 30 a kg for the past two months, farmers have increased planting.


"The restriction of minimum export price (MEP) on onion will have to be removed from April as production of the rabi crop is expected to be higher by about 15-20%," said CB Holkar, ex-director, National Agricultural and Co-operative Marketing Federation (Nafed). "Prices may fall so much that farmers will not be able to recover even 50% of the cost of production."


Further, prices of millets like jowar and bajra, grown in marginal lands mostly by small farmers, are also ruling lower than MSP in majority of the markets in Karnataka, Maharashtra and Andhra Pradesh, according to Agmarknet data. Prices of kharif maize, which is currently coming to markets, is lower than the MSP by 15-20%, while the prices of rabi maize, which will be harvested after two months, is also likely to remain subdued due to huge carryforward stocks and estimate of bumper production in kharif and rabi season, said Agmarknet.


Vegetable prices are at rock bottom, as is the case every winter season.



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