India Update: Policy Uncertainty Grips Pulse Trade
By G. Chandrashekhar, Global Agribusiness and Commodities Market Specialist
The world pulse market stakeholders’ attention has been riveted on India last several months; and a series of policy interventions by the Indian government have generated not only a strong sense of unease, but has also created uncertainties about market conditions in the months ahead.
It started with imposition of quantitative restrictions on tur/arhar (pigeonpea), urad (black matpe) and moong (green gram) in August. Coming as suddenly as it did, the announcement sent shock waves across major suppliers such as Myanmar and several East African nations. Although Indian government had no choice but to exercise the painful option, the origins are justified in perceiving the Indian announcement as some kind of a betrayal because during 2014- 2016, India had actively encouraged growers in those countries to produce more.
After prolonged suspense, early November, yellow peas import was burdened with a 50 percent customs duty. It was done under the mistaken belief that large-scale import of low priced yellow peas depressed domestic prices. The duty was ostensibly to lift domestic prices; but it had little impact.
Chickpea and lentils (masoor) were the next target. From December 21, these two pulses attract import duty of 30 percent. Representations to exempt pre-tariff contracts from imposition of duty were of no avail.
Amid all this, the methyl bromide controversy had another round of breather. The government has extended the facility of fumigation at the Indian discharge ports for six more months till June 30, 2018.This is of course a matter of consolation amid an otherwise gloomy outlook for many supplier nations.
The QRs imposed on tur/arhar, urad and moong will end on March 31, 2018. Whether the QR is legally tenable and WTO compliant is under scrutiny. The Indian government will hopefully open up import of these pulses again from April. Whether QR will be re-imposed is a matter of conjecture at this point in time.
India imported a record 6.6 million tons during financial year 2016- 17 (April to March) valued at about $ 4 Billion. In the first six months of the current fiscal, India’s imports were an estimated 4.0 million tons. For the whole year (2017-18), I estimate that import may aggregate around 5.3 million tons, some 20 percent down from the previous year.
Meanwhile, India’s planting of the Rabi season crop (planting November/December and harvest March/April) has progressed well. Based on latest data as January 5, pulses have been planted to a record 15.5 million hectares, higher than 14.3 million hectares this time last year and higher than last five year average of 14.0 million hectares. Particularly, sown area for chickpea (chana) has seen a new high at 10.4 million hectares (last year 9.2 million hectares), followed at a distance by lentils.
Table: India Rabi pulse crop planted area (as of January 5, 2018) (million hectares)
Pulse 2017-18 2016-17
Chickpea 10.4 9.2
Lentils 1.7 1.6
Field peas 0.9 1.0
Urad 0.7 0.7
Moong 0.4 0.4
Others 1.4 1.4
Total 15.5 14.3
(Source: Ministry of Agriculture, Government of India)
Subject to normal weather, India is likely to harvest a record Rabi crop once again. The production target is 14.15 million tons, of which target for chana (chickpea) is 9.75 million tons. On current reckoning, total harvest will surely be above 13.0 million tons and chana crop no less than 9.0 million tons.
In other words, supply burden will continue to haunt growers and policymakers. An additional factor to reckon with is the inventory with the government agencies. These stocks will have to be gradually worked off – that is released in the market which in turn will augment availability and impact prices.
(G. Chandrashekhar, Editor, The Pulse Pod, is a senior journalist, policy commentator and global agribusiness and commodities market specialist. He can be reached at gchandrashekhar@gmail. com and +919821147594)