India’s Record Production & Record Imports/
Will It Be a New Normal?

Production and imports both hitting a new high is the defining feature of the Indian pulse market performance in 2016-17. After a year of weather-affected output and tightened availability and expanded import requirement in 2015-16, the world’s largest producer, importer and consumer has set yet another record by harvesting a humungous 22.1 million tons of pulses and at the same time importing an unprecedented 6.3 million tons during 2016-17.

The production performance was aided by reasonably well distributed rainfall, enthusiasm of growers in the wake of high prices during the planting season and ravenous appetite for consumption given the price elasticity of demand for this essential food ingredient. Table: India Pulse Production and Import Trends (million tons)

It must of course be clarified that production data are on crop year basis (October/ September) while import data are on financial year basis (April to March). But it does not take away the fact that higher agricultural growth triggers higher rural incomes which in turn encourages consumption of various food products including pulses.

Experience of 2016-17 demonstrates not only the as yet unmet huge appetite for food consumption in India, but also the stark underestimation of demand by policymakers.

Where does the Indian pulse market go from here? India is at the crossroads. In some regions, pulse growers are disillusioned because despite harvesting record crops (especially tur/arhar or pigeonpea) they have not received remunerative prices that they expected.

Indeed, in States such as Maharashtra and Karnataka, principal growers of pigeon pea, the harvested produce has been selling 10-15 percent below the minimum support price (Indian Rupees 5,050 per 100 kilograms or about $ 770 a ton) assured by the government. The much touted pulse procurement program of the government has had limited impact on supporting domestic prices, especially of pigeon pea.

Similarly, in the Rabi season, seeing unprecedented prices of chana (gram or chickpea) at the time of planting, growers expanded the planted area and have harvested 9.1 million tons as per official estimate; but the market prices have halved to the current level of around Rs 5,500 per 100 kgs.

The question is whether disillusioned pulse growers will once again plant record acreage? There are risks that they may not do so. Also, the policymakers have no strategic approach to ensure that the record production of 2016-17 is sustained in the upcoming season.

Weather is sure to continue to play a critical role. While the forecast is for a normal southwest monsoon in 2017 (June to September), harvest size will depend on spatial and temporal distribution of rainfall as well as area planted. The next two months will be a period of uncertainty. Meanwhile, consumption demand for pulses will expand with the beginning of the festival season. This year Ramzan starts by the last week of May and from August to October there will be a series of festivals. During these months, consumption demand expands manifold.

The next three-four months the pulse market is likely to witness volatility, driven by onset and progress of Indian monsoon, progress of planting not only in India but in other major origins too, currency fluctuations as well as government policy.

So, the big question to which market participants seek answer to is whether India’s record production and record import is going to be a new normal or will the new found aggression fizzle out in the months ahead.

(G. Chandrashekhar, Editor, The Pulse Pod, is a global agribusiness and commodities market specialist. Views are personal. He can be reached at +919821147594 and gchandrashekhar@gmail.com)