Economy News

Govt to purchase chana at market rate from farmers for buffer

The government last week removed import duty on desi chana while extending import duty exemption on yellow peas till October, which is aimed to curb spike in chana prices.

With prices ruling above minimum support price (MSP), the government has asked agencies — farmers cooperative Nafed and National Cooperative Consumers’ Federation of India (NCCF) — to purchase chana (gram) from farmers in Madhya Pradesh, Rajasthan and Maharashtra at predetermined market driven prices.

Sources told FE that two agencies will produce chana, which has 50% share in country’s pulses output, from the farmers under the mechanism such as minimum assured procurement price (MAPP) or dynamic buffer procurement price derived on the basis of average prices of previous three days across all the three key producing states.

Sources said that procurement operations under the price stabilisation fund (PSF) are expected to start next week and MAPP is fixed across three states in the range of Rs 5,900/quintal to Rs 6,035/quintal against the MSP of Rs 5,440/quintal for the current season.

These prices would be revised based on the market prices for boosting procurement by agencies.

Last month, FE reported about the government’s move to buy the pulses variety at the market price. Under PSF, the government undertakes market intervention initiatives to check the volatility in the prices of agri-horticultural commodities to protect farmers as well as consumers. The government will soon commence procurement of 0.5 million tonne (MT) of onion for buffer under PSF.

At present, farmer’s cooperative Nafed and state level agencies are unable to carry out MSP procurement operations under price support scheme (PSS) because of higher prevailing prices of pulses variety.

Mandi prices of chana are currently ruling around `5,800/quintal to `6,000/quintal. Trade sources said only around 40,000 tonne of chana has been purchased by Nafed in the current marketing season (April-June) against the target of one million tonne (MT).

Nafed had purchased 2.3 MT and 2.6 MT of chana under PSS in the 2023-24 and 2022-23 seasons, respectively which had given a boost to the buffer.

Sources said robust procurement in last two marketing seasons, which boosted buffer stock to 3 MT last year, had allowed the government to sell chana in the open market to bulk buyers and sell chana dal at `60/kg through retails outlets through Bharat dal initiatie. Sources said that the buffer of chana has currently dipped to around 0.6 MT against a norm of one MT.
On Friday, the chana spot prices was `6,388/quintal at Bikaner, Rajasthan on commodity burse NCDEX.

“Chana prices have surged significantly in various mandis due to supply demand imbalance caused by decreased output,” Harsha Rai , head, Mayur Global Corporation, leading pulses trading firm, said.

According to the agriculture ministry estimate, chana production in the 2023-24 crop year (July-June) is estimated at 12.16 MT, marginally lower than previous year. However trade sources estimated the output of key pulses variety much below the official estimates.

The government last week removed import duty on desi chana while extending import duty exemption on yellow peas till October, which is aimed to curb spike in chana prices.

Given the gap between demand and supply, retail pulses inflation has been elevated for the last several months and was reported at 17.71% in March, 2024 while chana variety of pulses reported a price rise of 14.31%.
The price rise in chana has been in the double digit since October, 2023

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