Dal price rise follows 3-year spike pattern

The sharp spike in dal prices may be among the biggest worry for Indian households but a study by Crisil has shown that there is a spurt every three years, although this year's increase is the steepest in a decade Stock Market Trading Tips

So what drives up dal prices? While lower production results in supply-side constraints, higher incomes, particularly in rural areas which have resulted in higher protein consumption, has increased demand. And, add a weather shock to the arithmetic and the result in a price rise. 

"Pulses prices have spiralled in years when there have been adverse supply shocks as is the case this fiscal. Three consecutive monsoon shocks - deficient southwest monsoons in 2014 and 2015 affecting the kharif season output, and weather disturbances in March 2015 affecting rabi output -- have hurt overall pulses production. At the same time, global pulse prices are elevated and the rupee is weak, suggesting that resorting to imports could provide limited comfort to domestic price," Crisil said in a report Himanshu Tiwari Astrologer Blog

An analysis of the data since 2005 showed that there was a price shock in 2006 when high economic growth and NREGA, resulted in higher income levels and drove up demand for proteins and prices of pulses. Then, in 2010, drought affected supply, while rural wages remained high and so did dal prices. Two years later, delayed rains once again showed its impact in the dal mandis. 

"Over time, supply of pulses has failed to catch up with demand. Production remained stagnant for nearly seven years since fiscal 2004, while demand accelerated, causing per capita availability of pulses to decline and prices to spiral. Although there was some policy push to production after 2010, yields have remained low because of weather shocks, low irrigation cover and lack of access to latest production technologies. Pulses account for about 20% of area under foodgrain production, but less than 10% of foodgrain output. Also, over time, production of pulses has failed to catch up with demand. Output has grown less than 2% average in the last 20 years, while acreage has grown even lesser at 0.8%. Not surprisingly, yield rose only 0.9%," the agency said Indian stock market astrology prediction