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Chana (gram or desi chickpea) prices have steadily moved down from the high of ₹9,000 a quintal seen two months ago to around ₹6,500 at present. The market at the moment is perceived to be under further pressure given that the rabi planted acreage is at a record high and material from overseas origins, especially Australia, has begun to flow in after weather-induced harvest and shipment delays of about four weeks.
The big question bothering market participants is: where is the chana market headed?
Chana planted acreage has reached a new high at 98 lakh hectares (lh) in the ongoing rabi season — 10 per cent higher than last year’s 89 lh, as per the latest estimates from Weather Watch Group.
The chana production target set by the Agriculture Ministry is 96 lakh tonnes. The crop size last year was lower at 72 lakh tonnes because of damage caused by unseasonal rains and hailstorm. Given the satisfactory weather so far and assuming normal conditions in the next two months, there is hope that the chana harvest will touch 85 lakh tonnes. In the event, harvest pressure is sure to bring prices down further.
Price pressure
Subject to normal weather and if the anticipated level of harvest is achieved, it must come as no surprise if chana prices crashed to around ₹5,000 a quintal. Imports, too, would add to supplies and exert downward price pressure.
The landed cost of Australian desi chickpea is in the region of ₹5,400-5,600 a quintal. It is estimated that around five lakh tonnes of Australian desi chickpea have been contracted for.
While this appears to a fairly realistic or plausible production and price scenario, there may be some unintended consequences. If chana prices stay above the season’s minimum support price of ₹4,000 a quintal, the designated procurement agencies may not enter the market.
Lack of procurement can potentially be discouraging to growers because they expanded the planted acreage based on unusually high prices over the last several months.
Just as tur/arhar or pigeon pea growers are feeling disheartened over the tardy pace of procurement from the kharif harvest, chana growers, too, could be disillusioned. This is best avoided because it can potentially hurt next season’s planting prospects.
The emerging situation demands deft handling. Some initiatives from the government may help. The first is to withdraw storage limits. New Delhi must ask States not to impose stock limits on chana.
The second is to open chana exports. At present only kabuli chickpea export is permitted and export volumes are about three lakh tonnes. Opening the export window for desi chickpea would help support a price collapse in the domestic market.
In any case, export volumes from India may not be significant considering the total volume of production.
Another initiative could be to consider restart of futures trading in chana. It would allow price discovery for market participants and help users manage price risks.
Back-to-back bumper harvests (kharif and upcoming rabi) would take the country’s pulse production this year to a new high of 220 lakh tonnes, as compared with 165 lakh tonnes in 2015-16.
Yet, imports during financial year 2016-17 are projected to be around 45 lakh tonnes — down from 58 lakh tonnes in the previous year.
