Farmers left in lurch as FCI suspends pulses procurement

The Food Corporation of India (FCI) has suspended the purchase of pulses from farmers under the minimum support price (MSP) operations for the current season after “surpassing” the procurement target set by the ministry of consumer affairs. The government-owned food grains procurement agency says it is now looking at mechanisms to dispose of its stock.

The decision, however, is likely to hit a large number of farmers as pulses prices continue to slump, falling over 25 per cent below the MSP in the open market. As against the MSP of ~5,050 a quintal, tur is selling at ~4,000-4,200 a quintal in the open market. The suspension of tur purchase under the MSP operations could force farmers to go for distress sale of the pulses. Many farmers held their inventory after harvesting for the current season amid expectations of a recovery in prices following supply deficiency.

As India meets around 23 per cent of its annual pulses demand through imports, farmers’ strategy to hold stocks for better realisation makes sense. “Effective April 22, we have stopped the purchase of pulses for the current season after surpassing the government’s target. Now, we are looking to slow our pulses procurement in the forthcoming rabi season,” said a senior FCI official.

The ministry of consumer affairs had set a procurement target of two million tonnes (mt) of pulses — 1.55 mt for kharif and 0.45 mt for the rabi season. But the FCI surpassed the target for the kharif season, procuring over 1.1 mt of tur alone and 0.45 mt of other varieties.

The FCI has now started auctioning the pulses. The agency, the official said, would give priority to the ministry of defence and other defence departments to dispose of the procured pulses, mainly tur. It has also initiated dialogues with state governments to clear the stocks. Its last priority will be market intervention i.e. selling in the open market, which often takes place when price firms up suddenly.

Markets, however, are abuzz with allegations that some traders are buying pulses from the open market at a cheaper rate and selling it to government agencies like National Agriculture Cooperative Marketing Federation of India (Nafed) at the MSP. V R Patel, chairman of Nafed, has denied such allegations.

After tur dal surpassed ~200 a kg in retail markets last year, many state governments had encouraged farmers to bring in additional area under pulses to fetch extra incomes. Tur dal is today selling at ~6065 a kg.