India is likely to sell about 1 million tonnes of pulses domestically to avoid its stockpiles rotting in warehouses.
The government is attempting to sell the reserves in the open market and to some states and organisations such as railways and defence forces, according to two people familiar with the matter who didn’t want to be identified, citing rules. That would account for about half of the total inventories held by the world’s largest consumer, they said.
The states are seeking to buy the grain at a subsidised rate so they can distribute it to the poor under their social welfare programs, one of the two people said, adding that the federal government may spend about 6 billion rupees ($92 million) to subsidise the states, including Karnataka, Gujarat and Tamil Nadu.
The spokesman for the food ministry didn’t immediately respond to an email seeking comment on whether the government was planning to sell pulses to prevent its reserves from rotting.
India may sell 700,000 tonnes of pulses, food minister Ram Vilas Paswan told reporters in New Delhi last week. He did not comment on the quality of the grains.
Such a move just before the winter crop season may depress local prices and cut imports from countries like Australia, Canada and Russia. Pulses imports climbed 14% to 6.6 million tonnes in 2016-17 from a year earlier, accounting for about 30% of India’s total annual consumption, food ministry data shows.
Lentils, chickpeas, black grams and pigeon peas are a staple for most of India’s 1.3 billion people and demand has been growing. The legumes are often cooked with curry spices, sauces or butter and eaten at most meals with rice and Indian flat bread.
“Lower prices will impact winter sowing,” Pravin Dongre, chairman of the India Pulses and Grains Association, said by phone. "It’s important that the farmers get the right price signal. They have to see the crops which would go under sowing and ensure prices of those crops remain above the cost of production.”
The buffer stock of about 2 million tonnes, including around 379,000 tonnes of imported grains, was built by the government in 2016-17 so it could control any price surge by selling. Production of pulses surged 40% from a year earlier to an all-time high of 22.95 million tonnes in 2016-17 after higher state-set minimum purchase prices encouraged farmers to increase the crop area, according to the farm ministry.
The wholesale price index of pulses has fallen 34% from its November 2016 level when it climbed to the highest since the start of a new series in April 2011, according to the commerce ministry.
The government will continue to purchase pulses from the local market to support farmers and consumers, if required, one of the two people said.