The most unexpected happened in India in 2017. After thirty long years of uninterrupted imports, pulses from overseas origins were denied free entry into the Indian market by a combination of policy interventions namely imposition of Quantitative Restrictions (covering tur/arhar (pigeon pea) and urad (black gram) moong (green gram) and customs duty on yellow pea and lentils.
The provocation for change of liberal policy stance was triggered by a massive rebound in domestic production in 2016-17 estimated at 23 million tons and an equally large harvest slated for 2017- 18. Humungous increase in domestic production augmented by unchecked imports pressured domestic prices down. Supplies were unmatched by demand growth. The policymakers were forced to intervene.
The development – especially India’s turnaround in production - has shocked the global pulses market, especially producing countries that substantially depended on the burgeoning Indian market whose ravenous appetite was incredible and lulled the exporters into a sense of complacency with hope that the Indian market would be available forever.
The unexpected turn of events has sent market participants scurrying for cover. Pulse growers – in India and abroad - have lost money, so have pulse traders following the collapse of prices. Contract defaults and renegotiations of prices have become the norm. There is a massive loss of confidence. It is going to take time for the market to find its balance again.
Self-sufficiency – a chimera: Buoyed by harvest numbers, some Indian government officials have claimed that the country has achieved self-sufficiency in pulses. They seem to have been guided by the sharp fall in domestic prices.At the moment, self-sufficiency is a chimera and farther from the truth. For India to reach self-sufficiency, its domestic harvest much reach close to 30 million tons of raw pulses.
The current harvest of 23-24 million tons would fall short of selfsufficiency level by at least 20 percent. Look at the numbers and work out the marketable surplus. Quantity retained for sowing (about 50 kilograms per hectare for 30 million hectares) and for direct consumption would be about two million tons. Milling losses are typically 15-20 percent. So, milled pulse (dal which is consumed as food) would be 17-18 million tons.
This translates to per capita availability of 13-14 kilograms, far below what nutritionists recommend. In addition, there is a skew in consumption pattern. The nutritionally challenged sections of the population deserve to eat more pulses; and they do not get to consume what the per capita availability number suggests.
Importantly, in India, pulses are the most economically-priced source of vegetable protein.
Forced by circumstances – socio-economic and political compulsions - the Indian government has resorted to negative tactics such as imposition of QRs and customs duties. These at best can be quick fixes and not lasting solutions.
On the other, New Delhi must embark on affirmative action which will include a robust procurement system to support farm-gate prices, distribution of dal (milled edible pulse) to vulnerable sections of the population through welfare programs and encouragement to domestic value addition. These initiatives will be grower-friendly and consumer-friendly.
Importantly, the government has no clue about global market conditions and much less about the emerging scenario. No wonder, policy actions are almost always reactive, rather than proactive.
On current reckoning, it is likely to take some months – perhaps until September – for the market to regain a sense of balance. The burdensome inventory in India will have to be worked off. Festival season beginning in June (Ramzaan) followed by several Hindu festivals in August, September and October will boost consumption. By then, the size of the upcoming Indian kharif crop would be clear as also the size of harvest in other major producing countries.
One year from now India will go into election mode. Control of food inflation will be the prime focus of the government.
Disclaimer: The opinions or views expressed in this publication are those of the authors or quoted persons. They do not purport to reflect the opinions or views of the Global Pulse Confederation or its members.
