Why Tur dal prices are shooting up ?

The central government has imposed stock limits on tur and urad till October 31 due to a spurt in prices of these pulses. Apart from production shortage, hoarding and alleged cartelisation in imports also contribute to price rise.


Business 09-06-2023  Economic Times
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Tur dal, also called Arhar, is one of the pulses that frequently sees price jumps which ultimately impact other pulses too. Though India is the biggest grower of pulses, it still falls short of tur dal which it has to import in large quantities to fill the demand-supply gap. Hoarding by traders and alleged cartelisation in imports also contribute to price rise.

Unprocessed whole tur beans are processed at the dal mills to produce split tur or tur dal. Ex-mill tur dal prices have increased by about 30% since January. Last week, prices of unprocessed whole tur crossed Rs 100/kg.

Will stock limits check the price?

On June 2, the Central government decided to impose stock limits on tur and urad till October 31 due to a spurt in prices of these pulses. Stock limits on pulses are applicable to wholesalers, retailers, big chain retailers, millers and importers, and are aimed at preventing hoarding and unscrupulous speculation.

Prices of tur dal have decreased slightly after the stock limits were imposed on traders and processors. However, the dal processing industry expects tur prices to remain firm over the next three-four months due to supply shortage.

"The stock limit may not lead to much decline in tur prices as there is a shortage," Suresh Agarwal, president, All India Dal Millers' Association. “When the production is less, nothing can help much to alleviate the prices.” Trade sources revealed that at the current levels, many stockists have started booking profits in tur dal, which has improved the arrivals in the markets. Yet, whole tur prices are expected to remain above Rs 100/kg as there is a shortage and imports won't be enough.

In April, the government had found that while the number of registration and stock disclosure on the consumer affairs ministry's e-portal was increasing, a substantial number of market players either did not register or failed to update their stock positions on a regular basis. It was also observed that stocks under transaction like farmers' stocks lying in mandi for auction and stocks awaiting customs clearance at ports, etc. escaped the then monitoring mechanism. The Central government had directed state governments to take strict action against traders, millers, importers and stockists, who have not provided full disclosure about their tur dal stocks.

The government had also constituted a committee in March to monitor the stock of tur dal held by importers, mills, stockists and traders in order to check hoarding and speculation. Consumer Affairs Secretary Rohit Kumar Singh had directed retailers to not keep their profit margin on pulses, especially tur dal, at "unreasonable level". He told them to calibrate the retail margins in such a way that the composition of pulses consumption basket of households is not disturbed by price rise.

Import cartels :

In 2016, when the tur dal price had shot up, there were claims that the scarcity was man-made. It was alleged that organised cartels of hoarders and importers ran across India with tentacles spreading from Myanmar to the African continent and their modus operandi was to take delivery of pulses stocks and hoard it at foreign ports. Ships from Myanmar carrying tonnes of pulses were rerouted to Singapore while ships from the African continent were made to slow down for days together. The aim was to create artificial scarcity of tur dal in India.

Production problems :

Tur dal production is expected to be lower in the current crop year (July-June) due to unseasonal October rains in Maharashtra and Karnataka. This has pushed up the price of the commodity. Last fiscal, India had imported 850,000 tonnes of tur to meet domestic demand. The Centre has also extended the import of tur and urad pulses under the ‘free category’ till March 31, 2024.

As per the second advance estimate for food grain production for the 2022-23 crop year, tur production was estimated at 3.66 million tonnes (MT), a decline of 13% from 4.22 MT estimated in the 2021-22 crop year. India imports tur pulses from Myanmar and east African nations like Tanzania, Mozambique and Sudan.

India is likely to import a million tonnes of tur dal in the marketing year 2023-24 to meet the domestic demand as production in the country is expected to drop due to wilt disease, Consumer Affairs Secretary Rohit Kumar Singh had stated in January.

Traders and millers of pulses have requested the government to increase the minimum support price (MSP) of tur dal to encourage the farmers to grow more tur. Tur takes longer time in the field compared to moong and other pulses, which makes it the least preferred legume for farmers. The MSP of tur, after the latest hike yesterday of Rs 400, is at Rs 7,000/quintal but far lower than that of moong at Rs 8,558.

Pulses

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