India Import Ban on Tanzania Pigeon Peas: When a Winner Loses All
By Zirack Andrew, National Coordinator of Tanzania, Pulses Network in Dar ES Salaam, Tanzania
“What happened is that last season is that we mobilized our farmers (to increase pigeon peas production) and India produced a lot; so that was the problem. They (Indians) convinced us (to produce pigeon peas). Now after being self-reliant, they imposed a ban on countries which had no bilateral agreement with, but (surprisingly) they did the same to Tanzania while we have a bilateral agreement which we entered into with them in 2000, and so we told them”, said Charles Mwijage, Minister for Industry, Trade and Investment while addressing the press on September 4, 2017, soon after coming back from New Delhi on Tanzania-India Joint meeting where he met his counterpart and discussed the possibility of lifting the ban.
It all began when India Ministry for Commerce produced a circular that restricted pigeon pea importation to 200,000 tons – a quantity that lasted for a measly one week before total ban was announced. This meant all those countries without bilateral agreement prior set before this occasion had to adhere to the blockade. Our neighboring countries like Malawi and Mozambique had an agreement before, so they continue enjoying preferential treatment by accessing Indian market.
An underlying reason for all the turnaround on the Indian side is the bumper harvest that her farmers had this year; so the move is intended to shield them from the world’s competition as well as giving BJP party a political mileage come next year’s elections. India is the leading country in the world in pigeon peas production. It leads the way by producing a sizeable part of world production. Much as it produces a lion’s share, it is far from being self-reliant. The 1.2 billion people in the Sub-continent consume 23 million tons of pulses per annum leaving a deficit of 6 million tons. It is because of this that Indian government has been for years yearning for external supply of the produce to stabilize the price as well as covering the deficit. It is because of this deficit that India went on to remove restrictions, as it was reported by Economic Times of India that by 2015 India exempted all pulses from import tariffs. Even Indian Prime Minister Mr. Narendra Modi’s trip to
Tanzania in July, 2016 cemented the same thing by promising to fund commercial production of peas with the same intention of closing the gap of Indian deficit. Tanzania has been a significant business partner to India for ages. According to 2015 statistics, it accounted for more than 27% of all Indian imports of pigeon peas – more than a quarter. It didn’t come by coincidence. Tanzanian famers are committed to maintaining quality of the legume, a move that turned Indian consumers new ‘addicts’ of the Tanzanian pigeon peas variety.
Now, Modi’s clarion call motivated many in the country just as it could do to Mozambique, another famed producer of the crop in Africa. The Indian PM’s assuring statement made Tanzanian ministers to start singing pulses song while always pointing to India as the place to sell the produce. In the middle of this year, when Indian High Commissioner to Tanzania made a trip to Babati (one of the leading producing areas of Pigeon peas in the country), his message was the same, in essence meaning, “Produce, we shall buy”.
Tanzania’s investment in the sub-sector is not small. With more than 112,361 hectares of cultivated land, a total cost of US$ 988,778 was used to produce the now unmarketable pigeon peas – this amount is never little to a developing country like Tanzania. As an aftermath to Indian closure, a profitability of more than US$ 28,539,694 has gone down the drain to the dismay of many players in the sector. This is not to mention of processing industries which invested millions of dollars to install and develop facilities, all eyes for their exports pointing to India. Domestic market could provide a relief to half a million farmers engaged in pigeon peas farming; but the current price which stands at TZS 300/- all the way from as top as TZS 2500/- last year is yet another disheartening reality that they have to grapple with. One farmer who appeared to be frustrated by the embarrassing price decline was seen venting out his embarrassment on social media by offering arguably a bizarre alternative. He said, “I think it’s better for me now to start collecting used plastic cans as it gives me TZS 450/- per kilo instead of pigeon peas that can hardly provide me TZS 300/-”. This tweet received many endorsements never seen on any agriculture information causing contagion to many people from all walks of life to start tweeting by cursing the saddening situation, and it is popular to date.
Another famer went even further by resolving not to harvest the peas and instead convert them into animal feed by grazing cows into the farms, “I can’t incur all these costs and sell at 300/-”, he retorted.
With a ban imposed by India, Tanzania has lost a huge amount of revenue from pulses exports, to the tune of US$ 200 million from 95% of exports annually going to India. More than 500,000 jobs of the farmers have been lost. Not to mention the multiplier effect caused on the families and dependents as well as other integrated sectors. As a matter of fact 70% of pigeon peas farmers are poised to dump the produce and move to sunflower, common beans, maize and sesame seeds whose global market is broader and more diverse than the stubborn pea. A survey made on several Tanzania exporting companies showed that 50% of workers have been retrenched since the ban was imposed; the shock to the economy can’t be direr.
Well, from the outset, India has won the league, a big win. It has protected her farmers and so my friend Kedar Sirohi (Aam Kisan Union leader who early this year led farmers’ protest against government’s reluctance to buy their low priced produce) won’t be seen rallying Madhya Pradesh farmers on the Indore road advocating for better prices anymore. Rupee will slightly appreciate against less-in-demand shilling. Foreign currency in the Reserve
Bank of India will now be relocated to importing more of crude oil from Middle East whose soaring US$ 60 has now become the highest price since 2014. No more farmers’ suicides, a handful of agricultural Non Performing Loans (NPLs), and a widening gap of balance of trade with many African countries, in favor of India.
However, despite the above mentioned gains that will be accrued over short time, it is certain that the Sub-continent will have to grapple with the glaring ramifications of their actions, some in the near future, and others in the long run.
These are some areas that India will indeed have to pay the price for:
Competition from Europe:
Over the years India has been the leading market for pulses grown in other parts of the world, by importing 25.8% annually, followed by Egypt at a distance with import of 4.2%. But this may not stay forever because there is a game changer, and the game changer is none other than awareness that is being created among many populations in the world that pulses, a disease-free food provides the same amount of protein what animal meat can, making it the best alternative for whoever wants to stay away from cancer, gout, bird flu, swine flu and cholesterol-caused diseases. And many European households are now adopting vegetarian lifestyles. According to Mintel, a research agency, 18% of all global vegan product launches were in Germany in 2016, many of which were substitute version of traditional meat dishes. Meat-substitute products such as sausages and schnitzel are now made up of plant proteins like soy. With the international pacts that provide preferential treatment for African agri-products to Europe - like ‘Everything But Arm’s (EBA) and ‘Economic Partnership Agreement’ (EPA) - plus promising European economic growth, giving them higher purchasing power, it is certain that osmosis principle is going to change Indian route to Europe.
And this won’t be the first time. It happened in the year 1254, when young Marco Polo travelled to China where he found spaghetti. In no place on earth other than China spaghetti was produced. But young Marco changed the game after coming back to Italy. He introduced the produce and many people joined the bandwagon. Now, Italy is the leading producer of pasta followed by United States, Brazil, Russia and Turkey. Complacency didn’t leave China on the safe side; today it is not even in the top five leading countries in producing the product. Can it happen to India also? Developments second an idea.
Unfriendly business image:
Among the nuggets necessary to seen in the International Trade is the adherence to Trade Pacts entered into by parties, and this is one of the things made World Trade Organization to be established. In the year 2000, the governments of India and Tanzania signed a Bilateral Agreement which gave preferential status to various agricultural products, pulses included. But the recent India stance to unilaterally block importation including from Tanzania has left everybody puzzled. Tanzanian traders’ confidence in India is now historically low because who wants to trade with unreliable partner? On October 9, 2017, Tanzania Pulses Network organized a multistakeholders meeting to decide on the way forward after the blockade. In the meeting one businessman from a big processing company told the congregants that Tanzania has to label India as an “unfaithful partner” and that a case must be lodged to the International Court of Arbitration for breach of contract. This statement couldn’t be bitter most especially to the countries whose trade exists for decades. But these statements should not be taken for granted especially when they carry with them logical and vivid experiences, reflecting loses that may take years to offset.
Reduced Indian exports to Africa
The balance of trade between African nations and India has always been negative, always in favor of India. The bilateral trade between India and Tanzania, as per 2016 statistics, stood at $4 billion. Of this, India exported products worth of $2.7 billion to Tanzania while her counterpart Tanzania pulled the string as far as $1.3 billion – a 33% share. Things are even worse for Uganda. According to 2013 Bank of Uganda Statistics, India and Uganda had bilateral trade worth of $1.247 billion. Out of this, total, India’s export to Uganda stood at $1.231 billion, while Uganda’s export was a measly $16 million – a 1.3% share. And this is a trend for almost all of the African states.
Now, when it comes to international trade practice there is this we call, retaliation – an action taken by a country in counteracting other country’s stance, especially in legal but destructive manner. It may go beyond pulses and extend to other sectors of the economy which the countries might be concerned with. For instance, India supplies a lot of pharmaceutical products to Africa. African countries might decide to use it a target in a way that once hit, it pains dearly; and this is very easy because India is not a sole producing country of pharmaceuticals. Germany, United States, Switzerland and China do. So these African countries can switch to other countries and get the same product they used to get from India at the expense of Indian economy, an action that does not augur well for the future of our centuries- long relationship.
Wherefore, much as India seems to have won the battle, a war might be a worst thing to experience.