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    Chana prices may fall another 10% after plunging 20% below MSP

    Synopsis

    “Chana should trade lower as arrivals gather pace. Demand is very poor,”

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    A second consecutive year of bumper production, rampant smuggling of yellow peas and ample storage with the government have combined to keep chana supply robust and prices suppressed, said traders.
    Pune: Prices of chana (gram) are likely to fall another 10 per cent as fresh harvest hits the market, according to traders, after having plunged 18-20 per cent below the minimum support price (MSP) of Rs 4,875 per quintal.

    “Chana should trade lower as arrivals gather pace. Demand is very poor,” said pulses processor Nitin Kalantry.

    The additional supply will increase challenges of the government, which is already struggling to manage overflowing granaries, as it will have to procure chana under the price support scheme.

    A second consecutive year of bumper production, rampant smuggling of yellow peas and ample storage with the government have combined to keep chana supply robust and prices suppressed, said traders.

    The wholesale price of whole chana is currently at Rs 3,900-4,000 per quintal in different states, against the minimum support price of Rs 4,875 per quintal fixed by the central government for the rabi marketing season of 2019-20.

    Chana dal or spit gram, a processed product made by removing the skin from the bean, is currently priced at Rs 48-50 per kg. Traders expect prices to fall another Rs 3-4 per kg. “Demand in physical markets is expected to rise after prices correct,” said Kalantry.

    Responding to the hike in MSP and good soil moisture levels thanks to the bountiful monsoon this year, farmers increased area under rabi pulses. The area sown under gram increased to 10.72 million hectares, up 11 per cent over the previous year’s area of 9.62 hectares.

    India has seen a near doubling of chana production in the past 13 years, driven by good prices. From 9.94 million tonnes in 2018-19, chana production is expected to increase to 11.22 million tonnes in 2019-20. The highest chana output was recorded in 2017-18, at 11.38 million tonnes, whereas it was 5.60 million tonnes in 2005-06.

    As the government is bound to procure chana at MSP due to subdued market prices, the National Agricultural Co-operative Marketing Federation (Nafed) faces a fresh challenge. It is struggling to offload the stock it has been carrying for the past two years and is currently selling chana it procured two years ago under the price support scheme, which has aggravated the depressed market sentiment.
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