Prices of pulses decline on stock limits; edible oil still rising

Industry players and experts say there has been a vast difference in the way the prices of the two commodities have been controlled

During the past few months, two agriculture commodities that have been in focus are edible oil and pulses.

The sharp increase in their prices has not only rattled policy makers, but has also put household budgets under stress. This could not have come at a worst time just when the second Covid wave was peaking.

The prices of both edible oils and pulses, though off their peaks, are expected to remain elevated for the next few months partly due to global factors and an erratic monsoon which has pulled down kharif acreage of both crops.

However, when it comes to controlling prices, industry players and experts said that there has been a vast difference between the two.

Though a series of steps have been announced to check prices in both crops, when it comes to sledgehammer-type measures such as imposing stock limits, pulses have borne the brunt while edible oils have remained largely unscathed.

This could be due to the nature of stock holding in both commodities and the manner in which they are traded, along with the government's own perception of the reasons behind the surge in prices. But if it was purely on grounds of price rise, then edible oils and pulses should have got equal treatment.

For example, data sourced from department of consumer affairs shows that between March 1 and July 2 (the date on which the Centre first imposed stock limit on pulses), the price of gram dal went up by Rs 4 per kg in Delhi retail markets and that of masoor dal was up by Rs 9 per kg.

The price of Groundnut oil during the same period, in the same Delhi markets, was up by Rs 14 per kg, while sunflower oil was up by Rs 34 a kg and soy oil was costlier by Rs 24. (see chart)

Though the Centre has lowered the import duty on edible oils and lifted all restrictions on import of refined oils to check prices, it seems the international markets upped their prices in a manner that nullified the impact of duty cut.

But the same cannot be said about pulses and data shows that after the stock limits were imposed, there has been a slowdown in prices in the retail markets. Between July 3 and August 3, arhar dal prices have come down by Rs 1 per kg in Delhi, while moong dal rates have softened by Rs 2 per kg and masoor dal has become cheaper by Re 1 per kg.

Stock limit on pulses

On July 2, barely days after the Centre had lowered the import duty on edible oils, it imposed stock holding on all pulses, except moong held by wholesalers, retailers, importers and millers till October.

“There was a sustained increase in the price of pulses in March-April. The need for an urgent policy decision was felt to send the right signal to the market,” the ministry had said in a statement.

As per the order that came into immediate effect, a stock limit of 200 tonnes has been imposed on wholesalers provided they do not hold more than 200 tonnes of one variety of pulses.

On retailers, the stock limit will be 5 tonnes.

In the case of millers, the stock limit will be the last three months of production, or 25 per cent of annual installed capacity, whichever is higher.

Lastly, for importers, the stock limit was the same as that of wholesalers for stocks held/imported prior to May 15, 2021.

And for pulses imported after May 15, the stock limit applicable on wholesalers will apply after 45 days from date of customs clearance, the order said.

Later, under pressure from various sections of traders and importers, the Centre relaxed the stock limits after 16 days of imposing them.

Edible oils

Before edible oils, the Centre had reduced basic customs duty on crude palm oil to 10 per cent with a hope to bring down edible oil prices in the retail market.

As a result, the effective customs duty on crude palm oil was reduced from 35.75 per cent to 30.25 per cent, while that on RBD palmolein was lowered from 49.50 per cent to 41.25 per cent and that on RBD palm oil was brought down to 41.25 per cent from 50.40 per cent.

In addition, the Centre had removed all restrictions and limts on import of refined edible oils in India.

But, none of the measures have resulted in a big drop in retail prices as shown in the charts. 

Table: Retail prices of  key commodities in Delhi markets (Rs/kg)

Commodity	2-Jul-21	3-Aug-21	% Change	Change from Mar 1 to July 02 (Rs/kg)
Gram dal	73	75	2.74	4
Arhar dal	110	109	-0.91	2
Urad dal	114	120	5.26	-4
Moong dal	100	98	-2.00	-8
Masoor dal	87	88	1.15	9
Groundnut Oil	188	187	-0.53	14
Mustard Oil	165	179	8.48	18
Vanaspati	137	142	3.65	14
Soyoil	157	160	1.91	24
Sunflower Oil	193	189	-2.07	34
Palm Oil	123	132	7.32	7

Source: Department of Consumer Affairs