As the turmeric prices falling neat to cost of production, farmers are likely to get support from government procurement. Turmeric is not covered under minimum support price mechanism and hence state agencies procure this saffron from south on commercial basis only.
Last year turmeric farmers realized Rs 120 per kg which is today quoted at Rs 47 for Nizamabad turmeric. Last month many farmers kept away from market yard auctions to protest against low price and push forward demand for procurement by state agencies to support the prices. Turmeric cost of production is around Rs 40 and they will find it difficult to sale at those levels.
In this context, Andhra Pradesh government has sought Government of India's approval for procurement of 25,000 tonnes of turmeric from open market under the market intervention scheme in a bid to stabilise the prices of the spice.
The state government has suggested the procurement of turmeric, which has no support price mechanism, at Rs 4,500 per quintal, according to government officials. Government of India has to approve the quantity proposed and also the procurement price.
"We will open purchase centers at major turmeric markets like Nizamabad once we receive the orders from the state government," D Vimalakar Rao, government consultant at AP Markfed told Business Standard.
Of this 25,000 tonnes, AP Markfed and Nafed will procure 12,500 quintals each, Government of India's approval would mean it will share 25 per cent of the loss, if any, the procuring agency makes when it resells the produce in the market at a later date, according to officials.
Farmers who cultivated turmeric in Andhra Pradesh and Tamil Nadu have asked the central government to buy their stocks as the price of the spice has fallen significantly as this year's production is at an all time high.
This year the total production is estimated to be around 9 million bags (1 bag = 75 kgs) compared to 6.5 million bags last year.
Carry over stock as on 31 January was 1.5 million bags taking the current available stock to 10.5 million bags. This year, along with exports the total consumption of turmeric is expected to be close to 55 lakh bags, thus the next years carry over stock to be higher.
Fresh crop arrival has already hit the market and traders and analysts say that the price of the commodity can fall further as arrivals will increase.
“The government to provide farmers with well equipped cold storages facilities so that the farmers can store their produce and their crop will also not get affected,” turmeric traders in Mumbai said.
If nothing is done, then price of the commodity will fall further due to which farmers next year will not sow the commodity causing acreage to fall by 40%, said Manubhai Shah, a Mumbai based turmeric trader.
In the financial year turmeric exports from April to November has been 58,000 tonne compared to 35,000 tonne last year, according to Spices Board of India.
