FCI reaches only 40% of rabi target

Late entry and farmers' preference for cash reasons for tardy progress; procurement may carry this over to kharif crop

In its first attempt to procure pulses from mandis (wholesale markets), government-owned Food Corporation of India (FCI) was 60 per cent short of its target for this season.

Faced with a sudden spike in prices early this year, the government had in March allowed FCI to commence procurement of pulses. The target fixed for chana dal (chickpea) was 40,000 tonnes and masoor (split red lentil) at 10,000 tonnes. It could buy 15,200 tonnes of chana and 4,335 tonnes of masoor.

This was the first time FCI entered into pulses procurement at the market-driven price. Normally, it conducts MSP (minimum support price) operations, buying grain at the minimum assured price set by the government.

To intervene in case of sharp spike in prices, the government decided in November 2015 to build a buffer stock of 350,000 tonnes of pulses, comprising 150,000 tonnes of tur (split red gram) and urad (split black gram) and 200,000 tonnes of chana dal and masoor. FCI closed procurement last Friday for the rabi harvesting season.

An FCI official cited three basic problems in the target. The government allowed FCI to start procurement only in March, when half the rabi harvesting season was over. Farmers with early harvests had already offloaded into the mandis and traders built their inventory by the time FCI began. “We started procurement two months late,” said the official.

Second, farmers preferred to receive cash, which only traders and arhatiyas (authorised middlemen) can offer. FCI offers cheques, which many farmers did not like. So, they sold pulses to traders even at a one to two per cent discount to the market price offered by FCI. Many had also already taken money from the arhatiyas or traders, with their output as collateral; they had to sell to only the latter.

  Third, a large quantity of pulses in the mandis was not polished cleanly; the quality did not match the FCI specification. In contrast, arhatiyas bought pulses of any quality.

According to official sources, the government is considering extending the pulses procurement to the kharif harvesting season. Urad harvesting starts in September. “For this, however, the government should allow us to start procurement in advance,” said the official.

Apart from FCI, the government has also asked two of its other agencies, Nafed and the Small Farmers Agribusiness Consortium, to procure pulses in major producing states.

While prices of tur and urad have stabilised at around Rs 120 a kg in the benchmark Delhi market, moong softened by 15 per cent since February to trade currently at Rs 71 a kg. Chana dal’s price has doubled in the past six months, to trade at Rs 102 a kg in the wholesale market. Masoor jumped by a third, to trade at Rs 75 a kg in the Delhi mandi.