As news emerges that the Union government is poised to release 40,000 tonnes of tur dal from its buffer stock into the retail market in small lots. This move is designed to tackle the recent surge in pulse prices.
Understanding the Hike in Prices
Major consumer areas for urad and tur dal have experienced a 20% increase in prices within a two-week timeframe. These locations, which include Andhra Pradesh, Kerala, Maharashtra, Bihar, and Tamil Nadu, have revealed an interest in purchasing one lakh tonnes of pulses from the Central buffer stock. They aim to procure these pulses at Minimum Support Price (MSP) rates and distribute them at subsidized prices. Comparatively, the average retail price of urad at the national level has spiked by almost 40% since 2019, with the average retail prices of tur dal witnessing an approximate 24% increase.
The Role of Retail Intervention
The Department of Consumer Affairs (DoCA) has instigated a retail intervention using the buffer stock of the National Agricultural Cooperative Marketing Federation of India (NAFED). NAFED obtains pulses from farmers at MSP rates, which allows it to stabilize retail prices by supplying pulses to the States and Union Territories. Pulses are provided to states either in large quantities or retail packs, distributed through public distribution system (PDS) ration shops, or via government and cooperative-run milk and vegetable outlets. For such retail intervention, offer prices are established based on MSP itself.
The Impact of Using Open Market Sale
DoCA has also opted to utilize the Open Market Sale (OMS) Scheme, releasing 40,000 metric tonnes of tur from the buffer stock. This decision should ensure releases reach the retail market more rapidly, subsequently helping to reduce rising prices.
The Importance of Earlier Measures & Future Steps
In previous efforts to address this issue, the Centre extended the procurement window for its Price Support Scheme (PSS) up to 90 days from the scheme’s commencement. The PSS is activated when prices fall below the MSP.
The Centre has also committed to providing one kg of pulses per month to all families owning ration cards for three months as part of a Covid-19 relief package.
About the National Agricultural Cooperative Marketing Federation of India
Established in 1958, NAFED was created with the goal of promoting cooperative agricultural produce marketing to benefit farmers. Agricultural farmers form the General Body members of NAFED and contribute to decision-making processes.
Understanding Minimum Support Price
MSP is the rate at which the government procures grains from farmers. This system aims to counter price instability of agricultural commodities due to irregular supply, lack of market integration, and information asymmetry.
The Open Market Sale Scheme
Food Corporation of India (FCI) sells surplus stocks of wheat and rice at predetermined prices through e-auction in the open market. This typically happens during lean seasons to moderate open market prices in deficit regions.
A Focus on Food & Nutrition Security
Food and nutrition security is guaranteed when all citizens have access to adequate nutritious food. This principle is embedded in international human rights law and includes state obligations to respect, protect, and fulfill their citizens’ right to food and nutrition security.