Chana (bengal gram) April futures on the National Commodity and Derivatives Exchange Ltd (NCDEX) rose by almost four per cent on Monday to close at Rs 3,727 per quintal over talk that Centre might further expand the seven per cent export incentive announced last month while there could be further revision in Minimum Support Price (MSP) in the coming months.
Madhya Pradesh’s decision to exclude chana and masur, two major lentils grown in the state from the much-talked about Bhawantar Bhugtan Yojana (BBY) also lead to the price increase, but it wasn’t big enough to warrant the rise.
“The market seems to have been enthused by Centre’s decision to extend an export support scheme to chana. The inclusion of chana in BBY was also seen as a positive, but not big factor as market had already factored in the decision,” Anuj Gupta, deputy vice-president of Angel Commodities told Business Standard.
He said that there was also some talk in the market that Centre’s new MSP calculation mechanism could have positive impact on chana prices.
Last week, Centre extended support to ‘bengal gram’ (chana) through the Merchandise Export from India Scheme (MEIS). The export support at the rate of seven per cent has been extended for a limited period of three months.
Under MEIS, exporters get access to a scrip which they can invoke as and when they imports a similar quantity.
But, despite the incentive, chana prices continued to rule below the Centre mandated MSP for 2018-19 season fixed at Rs 4,400 per quintal.
“Futures prices would continue to remain under pressure due to heavy arrivals which are expected to peak in the coming weeks and any upside beyond Rs 4,000 per quintal shouldn’t be expected,” Gupta said.
This would mean in the coming weeks as well, chana prices could trade around 10 per cent below the Centre mandated MSP.
Production of chana in 2018-19 is projected to be around 18.3 per cent more at 11.10 million tonnes. A bulk of this is projected to come from Madhya Pradesh where large tracts of land around the Malwa-Nimar belt has shifted to chana from wheat this year due to good prices.
Meanwhile, in a related development, the Madhya Pradesh government has decided to exclude chana and masur back into the much-talked about Price Deficit Financing Scheme (Bhawaantar Bhugtan Yojana).
This comes barely weeks after the state government expanded the scheme to include onion and garlic into the programme in which farmers are directly compensated for the drop in value below the MSP but up to a certain limit.
There is no physical procurement of the commodity. However, experts and market watchers said that traders along with gullible farmers milked the scheme for their own benefit and artificially pulled down prices.
The state government though sources said that decided to discontinue a portion of the scheme and come back to physical procurement in case of chana and masur as the total cost of price deficit financing escalated while there wasn’t any matching help from the Central government. Madhya Pradesh Chief Minister Shivraj Singh Chouhan was in Delhi last week to discuss host of issues related to the state’s agriculture sector.
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