To clear stocks, Centre gives big pulse discounts to states
Agriculture minister Radha Mohan Singh has written letters to all chief ministers, offering them centrally stocked pulses at a heavy discount of Rs15 a Kg to prevailing wholesale prices (which are anyway low) in their respective states.
In a one-off move, the Centre is offering states nearly 3.4 million tonnes of pulses at a deep discount to pare its own ballooning reserves, following record procurement during 2017-18, to calm farmers riled by low prices. Given fixed storage space, the government needs to clear stocks to make way for fresh summer harvests that are being procured by its agencies.
Agriculture minister Radha Mohan Singh has written letters to all chief ministers, offering them centrally stocked pulses at a heavy discount of ₹15 a Kg to prevailing wholesale prices (which are anyway low) in their respective states. These could then be distributed in nutrition-based welfare programmes such as school meals, he wrote.
This discount will also enable states to provide consumer packs of pulses at a rate that is likely to be 50% lower than retail rates, the minister said.
Procurement refers to the government’s buying and stocking of farm produce at federally fixed minimum support prices (MSPs) to soak up surpluses and help raise market prices for farmers. For pulses and oilseeds, procurement is done under the price support scheme.
Prices of pulses in 2017-18 plunged following record production of 24.5 million tonnes. “I am glad to inform you that this is an attractive scheme to provide pulses to the targeted beneficiaries of the welfare schemes at a very low and affordable price by government,” Singh stated in a letter dated October 26, a copy of which was seen by HT. The current offer proposes to clear stocks worth ~5,237 crore, according to a Cabinet note related to the sale scheme.
“Further, this would help in vacation of warehouses of the states, where procurement may be required since kharif pulses are ruling below the MSP,” the letter said. The Centre bought a record ~29,070 crore worth of 6.34 million tonnes of summer pulses and oilseeds from farmers in the 2017-18 crop season (until June 30). Overall, between 2014 and August 2018, or the present government’s tenure so far, the total procurement was 7.5 million tonnes, compared to 0.84 million tonnes between 2010-11 and 2013-14 under the previous government. This spike suggests the government’s intervention increased due to farm distress. To free up storage and reserves, 3.4 million tonnes of five varieties of pulses (known as tur, moong, urad, chana and masoor) are “available for utilization by states” on a first-come-first-serve basis, according to guidelines of the offer.
The discounted sale is way below what it cost the Centre to buy the stock in the first place. “This is the other dimension of MSP operations. The Centre has to eventually incur losses to dispose of stocks,” said Sachin Kaul of Comtrade, a commodities trading platform.