NAFED sells chana below MSP to liquidate surplus stocks

A whopping 3 million tonnes (mt) of stocks procured mostly in the last two years is forcing the government to sell chana (gram) below the minimum support price (MSP) from the buffer held with the National Agricultural Cooperative Marketing Federation of India (NAFED).

NAFED has sold chana through open auction at the price ranging between Rs 4,416-Rs 4,751 per quintal in Rajasthan, Karnataka, Andhra Pradesh and Madhya Pradesh in the last few weeks to bulk buyers. The price realised through open auction by NAFED was against the MSP of Rs 5,230 per quintal and Rs 5,100 per quintal for the 2021-22 and 2022-23 seasons paid to farmers.

Currently, mandi prices of chana are ruling at Rs 4,300-Rs 4,600 per quintal and traders say that the government move to sell surplus pulses below MSP will put further pressure on chana prices. Chana price declined by 1.28% in August compared to a year ago.

To dispose of surplus stock, on August 31, the Cabinet had approved the disposal of 1.5 mt of chana from the surplus buffer stock held with NAFED, at a discount of Rs 8 per kg over the issue price, to states for supplying through various social sector schemes.

Sources said that several states such as Karnataka, Gujarat, Himachal Pradesh and Tamil Nadu have envisaged buying pulses at the discounted prices from the government stock.

The government’s expenses are expected to be around Rs 1,200 crore for implementation of this scheme. Prior to the beginning of the next chana harvest season in April 2023, officials said that the government aims to create storage facilities.

At present, against the government’s buffer stock norm of 2.3 mt, NAFED has 3.7 mt of pulses. Of this, the chana stock is close to 3 mt. A portion of the stock is close to two years old.

However, in the case of other varieties of pulses, because of lower procurement, the government’s stocks are smaller — moong (0.56 mt), urad (0.08 mt), tur (0.12 mt) and masoor (0.07 mt) — at present. Chana has a share of close to 50% in the country’s production of 27.69 mt in the 2021-22 crop year.

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