Mitigate policy and institutional constraints in moong (green gram) marketing
(Enlarged version of the piece published in The Tribune July 11, 2022. The link is: https://www.tribuneindia.com/news/features/help-farmers-maximise-gains-from-moong-411340)
THE Government of Punjab (GoP) is procuring summer moong (green gram) at the minimum support price (MSP) of Rs 7,275 per quintal (q) from June 1 to July 31, 2022. For achieving economies of scale, the policy instruments and procurement modalities should be carefully crafted to mitigate constraints in moong production and marketing. The approach should be guided by a critical appraisal of different options as the fiscally constrained GoP has limited elbow space on the expenditure front.
As per Department of Agriculture estimates, summer moong was planted on about 40,000 hectares (ha) in 2022. Expected production is 40,000 metric tonnes (mt). About 25 per cent will be used for domestic consumption or sold within the villages. Marketable surplus should be around 30,000 mt. (My personal view is that the actual quantity will be lower)
Procurement arrangements
Guidelines have been issued for procurement of 5,250 mt by Markfed under Price Support Scheme for NAFED through 41 Cooperative Societies. For procuring another 35, 500 mt, Rs 66.56 crores have been allocated as viability gap funding @ Rs 1875/q. Total procurement target is about 40,750 mt. The farmers have to register their moong area on e-mandikaran portal and produce documentary evidence (farad) of moong area from the Patwari.
As expected in any new initiative, some farmers faced difficulties in selling their produce. Initial wrinkles are being ironed out as procurement progresses. For long term success, the GoP should not dilute quality specifications under pressure from the vested interests. Moong procurement cannot be treated as an extension of paddy and wheat procurement by the GoP. In the absence of provision of cash credit limit by the Government of India (GoI), about Rs 260 crores will have to be arranged by the GoP from its own sources, although about Rs 200 crore will be subsequently recouped by Markfed from sale in the open market.
For expanding area under moong and other pulses on a sustainable basis, two key constraints — marketing risk and production risk — should be mitigated.
Reducing marketing risk
Below MSP harvest time price was the main deterrent in moong cultivation. Of the total area, 73 per cent is in Bathinda, Mansa, Moga, Muktsar and Ludhiana districts. The remaining area, thinly spread over several districts, will create procurement hassles. Some of the notified Cooperative Societies will receive small quantity resulting in high transaction costs.
Due to low production and fragmentation of marketing, prices in Punjab Mandis remain low despite shortage of pulses in the country. It will be prudent to issue a notification in February 2023 mapping moong area to 5–7 Mandis/Procurement Centres before sowing. South-western districts of Punjab are suitable for production of oilseeds (mustard) and pulses (moong and gram). Over the next 5–10 years, the goal should be to develop one large pulse and oilseed market at Bathinda or Mansa on the pattern of Hapur Mandi in UP. UP produces Zaid (summer) urd (black gram, mash) and its price invariably remains above the MSP at Hapur Mandi as it attracts large number of traders.
To reduce fiscal burden of expansion of moong area, the MSP intervention should be supplemented with rolling out of negotiable warehouse receipts (NWRs) and deficiency price payment system (DPPS), strengthening of marketing intelligence, and development of farmer producer organizations (FPOs). These mechanisms should be simultaneously developed over the next 2–3 years.
Negotiable warehouse receipts (NWRs): By using a NWR, instead of harvest time distress sale, the farmer can obtain a bank loan to meet his immediate needs by hypothecating his moong for which a warehouse registered with the Warehousing Development and Regulatory Authority (WDRA) has issued an electronic (e)-NWR. He can sell during the off-season when price is higher.
Punjab has only five accredited warehouses with a storage capacity of 4.4 lakh mt. These are used by traders and importers, and not by farmers. Farmers in agriculturally diversified states like MP, Rajasthan and Maharashtra can access large number of accredited warehouses. Punjab State Warehousing Corporation should get its warehouses near the Mandis identified for moong procurement accredited by the WDRA. Operationalization of NWRs in Maharashtra enhanced price realization by 8–20 per cent.
Deficiency price payment system (DPPS): Implementation of DPPS, whereby the Government pays the difference between MSP and the actual price received by the farmer, is another option. For preventing exploitation of DPPS by the traders, alternatives like e-NWRs should be operationalised simultaneously. Requirement of farad as documentary evidence safeguards against exploitation of DPPS. Unlike moong procurement notification issued by the GoP, an innovative procurement plan should be developed in 2023 to benefit from these alternatives. The GoP should be the procurer of the last resort as it is not an efficient pulse trader.
Marketing intelligence: Third mechanism is strengthening of the nascent Agriculture Marketing Innovation, Research, and Intelligence Centre of Punjab Agricultural University, for guiding farmers about crop diversification options. This centre can issue advisories about the expected price bands if total area under moong, does not exceed a threshold so that the farmers can make an informed choice before sowing time. It will also generate data for improving efficiency and reducing pain points in the long, twisted value chains of Punjab’s agricultural commodities, including moong.
Farmer producer organizations (FPOs): Fourth mechanism is development of FPOs and linking them with bulk buyers like Haldiram, Bikanerwala, Reliance, Future Group, and other organised retail. Punjab has few fully functional FPOs, unlike hundreds of such farmer collectives in other states. Vibrant FPOs have empowered farmers to lower production costs, improve product quality, and earn greater share of consumer spending by directly accessing input and output markets. The nodal agency, Punjab Agricultural Management and Extension Training Institute, Ludhiana should be strengthened to mentor FPOs and maintain its autonomy, independent of Department of Agriculture. Like Cooperative Societies, the GoI’s Price Support Scheme allows FPOs to act as procurement agencies.
Reduce production risk
Summer moong matures in 65 days and timely sowing before April 10 is necessary for high productivity. Late sown crop is damaged by early monsoons and excessive vegetative growth, often necessitating use as a green manure. Instead of thinly spreading over the entire state, moong should be promoted after potato and Raya (mustard). Currently some of the potato area is under water guzzling spring maize which should be discouraged to save precious ground water. Non-uniform ripening, apart from small grains, necessitates drying of the manually harvested crop which is damaged by early monsoon. Pest management and optimum plant population also merit attention.
Does summer moong save water?
The main benefit of summer moong is additional income of about Rs 40,000 per ha and a lower dose of urea for rice. Requiring five irrigations, it does not reduce the water footprint except where it replaces water guzzling spring maize.
While guaranteeing procurement of summer moong, the GoP should not make the mistake of offering MSP for spring maize as it will promote excessive mining of ground water by both the grain and silage-making crop. High moisture content in spring maize, enhanced by harvest-time rains, results in harmful aflatoxins. Punjab needs about 5 LMT maize for livestock feed and other use. Cheap broken rice and Bajra are preferred substitutes as the consumers can see from the whitish grey (not yellow) egg yolk. No outside buyer will come to Punjab due to high transportation costs and availability of cheap maize in Bihar. Even for the Kharif crop the present acreage should not be expanded to avoid distress sale. Maize procured by the GoP can only be sold at a heavy discount. Maize stored for a few months may become useless due to toxic aflatoxins. Fiscally stressed Punjab Government should avoid such adventure.
