Dal mills stare at brink despite lower prices of pulses

Poor demand, rising operational costs weigh on profitability; higher Govt stocks impact sentiment

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The prevailing bearish price trend in pulses such as tur and chana has brought no cheers to the processing units across the country. On the contrary, the low prices of the pulses coupled with drop in demand amidst rising operational costs have hurt them financially, forcing many units to either operate at a lower capacity or stop their operations, millers claimed.

Prices of pulses have been steadily coming down over the past two years as supplies have increased due to rise in domestic production and increase in imports.

Kalaburagi mills hit

“In a bearish market, millers — by the time they purchase, process and sell their produce — are forced to take losses due to a downward price trend,” said Santosh Langar, a dal miller in Kalaburagi. The rural demand has also taken a hit largely due to increase in supplies through the public distribution system, he said.

According to the Dal Mills Association in Kalaburagi, a large tur growing region in South India, about 200 of the 297 units have stopped their operations, while the remaining are operating half their capacity. Total outstanding by mills in Kalaburagi is estimated at around 600 crore. “Those who are operating are processing on a need basis and are mainly doing the job works for the government agencies,” said Langar, who has also pared his capacity by half.

The fear of intervention by the government, which is holding huge stocks of pulses, is keeping prices under pressure affecting trade sentiment. Lack of interest by stockists in a bearish market has also added to the woes of the millers apart from the impact of demonetisation and roll-out of GST.

Consumption slows down

“The demand for pulses is getting worse. This dip in demand has hurt the processing units and many of them are facing losses,” said Suresh Agarwal, President of the All India Dal Mills Association. The millers’ body has already approached the Ministry of Food Processing seeking relief. Agarwal said there are about 7,000 dal processing mills across the country and the average capacity of each of these mills is about 10 tonnes per day. In Madhya Pradesh, where there are over 750 dal mills, at least 250 have shut down. Besides, 80 per cent of the mills that used to run two shifts on a daily basis, have now cut down their capacity and are operating on a single shift, Agarwal said.

“The availability of cheaper vegetables has also affected the pulses offtake. Further, in the upcoming mango season also, we expect the demand for pulses to be muted. Consumers in Uttar Pradesh and parts of Madhya Pradesh shift to aam ras during the mango season, which affects the demand for dals,” Agarwal said.

“It is difficult to understand why the processing units are not doing well, despite lower raw material prices. Only those which are having a good control over their finances seem to be doing well,” said Basavaraj Ingin, President of Tur Growers Association in Karnataka.

Source thehindubusinessline.com
Via thehindubusinessline.com

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