Government Agencies Act to Stabilize Lentil Prices

To stabilize rising lentil prices in India, two key government agencies, NAFED and NCCF, have started releasing their stockpile of lentils. These agencies hold around 550,000 tonnes of lentils, which include stock purchased during the 2022 and 2023 Rabi marketing seasons, along with imported goods. NAFED recently began selling this stock to bring down prices and ease market pressure.

On July 22, NAFED issued tenders to sell 42,641 tonnes of lentils in Madhya Pradesh and 4,811 tonnes in Gujarat. These lentils came from local Indian farmers, and this sale aims to prevent further price hikes.

Conflicts Between Production Prediction and Actual Figures

The Union Agriculture Ministry estimates that domestic lentil production for the 2023-24 Rabi season will increase by 12.5%, reaching 1.75 million tonnes. However, some in the trade sector expect actual production to reach only 1.2 million tonnes.

With NAFED selling both homegrown and imported lentils, the extra supply should relieve pressure on domestic prices. This increase in availability will bring some much-needed relief for consumers who have faced higher costs in recent months.

Lentil Imports and New Price Support for Farmers

Between April and May 2024, India imported 113,679 tonnes of lentils. Throughout the 2023-24 financial year, lentil imports surged to a record 1.67 million tonnes. India sources most of these lentils from Canada and Australia, with additional shipments from Russia.

To further support local farmers, the government has increased the Minimum Support Price (MSP) for lentils from USD 0,72 per kg to USD 0,77 per kg. Officials expect an additional 5-7% increase for the upcoming Rabi season, aiming to reduce dependency on imports by boosting domestic production.

International Market Prices Offer Hope for Lower Costs

Currently, Canada sells red lentils at USD 0,68 per kg for the new crop and USD 0,69 per kg for the old crop, delivered to India’s Nhava Sheva port. Despite these competitive prices, buyer interest has remained low. However, with NAFED releasing its stock and imports continuing steadily, the domestic market should soon experience relief in lentil prices.

Conclusion: Lentil Prices Expected to Soften in India

As NAFED continues releasing its stockpile and imports keep flowing from major suppliers, the lentil market in India should see improved supply. This will stabilize prices and help prevent further increases, bringing much-needed balance to the market in the coming months.

Click here to reach our trading platfrom CMBroker