Just like in wheat, the government is likely to keep the Minimum Support Price (MSP) of barley unchanged in the 2012-2013 crop marketing season because of supplies exceeding the demand.
At present the MSP of barley is Rs 980 per quintal, the Commission for Agriculture Costs and Prices (CACP) in its latest report on price policy for rabi crops of 2012-2013 has advised freezing the MSP of barley at Rs 980 per quintal.
If the union cabinet accepts the recommendations, then like in wheat, this would be the first time in almost 10 years that MSP of barley will be unchanged. Market players, however, said that this won’t have an impact on prices, as the retail price of barley is much more than the MSP.
Barley which is largely used in the malt industry and as a poultry feed has seen an almost 30 per cent jump in prices this year because of strong local and exports demand. It is harvested during the rabi crop season, just like wheat. “The CACP however said that if the government bans export of barley, then MSP should be immediately raised by 10 per cent,” a senior government official said.
India annually produces around 1.3-1.6 million tonne of barley, however this year, production is expected to rise to around 2.0 million tonne. Despite strong demand from India’s growing malt-based beer industry, barley production has remained stagnant because of lower yields and returns.
On an average, the country consumes around 1.5 million tonne, and thus, has a very little share in global trade, with exports ranging around 25,000-40,000 tonne over the past two-three years. According to USDA data, India had exported highest 340,000 tonne in 2007-08 due to a drop in output in Ukraine and Russia in the 2007-08 season.
“Since, July there has been some softening of barley prices, but I believe that it will again start rising in the next 15-20 days as export demand is re-emerging, while local production might not be as good as 2011-2012,” said Badruddin, assistant vice president, Indiabulls Commodities Ltd.
He said prices rose because of poor rains during the first part of 2012 southwest monsoon season. In NCDEX October Barley futures rose to a contract high of Rs 1,589 per quintal in July, before falling to Rs 1,148 per quintal in October.
“There is possibility that it will touch the level of Rs 1,300 per quintal in the next 15-20 days,” Badruddin said. Among other recommendations, the CACP has said that MSP should be raised by Rs 200 per quintal to Rs 3,000 per quintal, while that of lentil should be increased by Rs 100 per quintal to Rs 2,900 per quintal.
