Trade Talk/
Rajiv Naaram of Rathnam Brothers

To check rising prices, India recently lifted its quantitative restrictions on certain pulses through October 31, scrapping quotas announced two months earlier. The decision has had its desired effect as the prices of these pulses fell immediately.

In a Trade Talk interview with the GPC, Rajiv Naaram, a leading importer and trader of pulses in the South Indian State of Tamil Nadu, spoke of the sudden decision and its impact.

“The trade has been advocating for free imports of pulses. So, on the face of it, it is a welcomed decision. But in reality, such sudden and ad hoc decisions are not in the long-term interest of any stakeholder,” points out Rajiv. 

Rajiv, who holds an MBA from the University of Liverpool, heads Rathnam Brothers, the flagship of a group of companies engaged in the pulses business for more than 40 years. The Group is a major supplier of pulses to the State Government’s public food distribution programs.

According to Rajiv, abrupt policy decisions hurt both local and international traders who operate based on schedules and country-specific strategies. What is needed, he posits, is a long-term policy that allows for free imports with an appropriate duty structure.

Before joining the family business a decade ago, Rajiv had a two year stint at an international commodity trading firm in Singapore, his first experience in international trade.

Rajiv believes that India needs to evolve a better method for estimating crop sizes and assessing the demand-supply outlook. This could, to a great extent, help avoid the compulsion on the part of the government to make sudden policy decisions.  

Recalling his experience during the pandemic, Rajiv says. “We can’t have work–from-home in the pulses industry. During a pandemic or lockdown, we need to go out to make sure our consignments keep moving.”

“I haven’t taken a day off during the lockdown. Even during the peak of the pandemic, our employees were at work. Like others in the food industry, we too have a commitment to make sure there is no shortage of pulses.”

Pulses are a daily staple for a large part of Tamil Nadu’s people.

GPC:  On May 15, India announced the free import of tur (pigeon pea), urad (black matpe) and moong (green gram) through October 31, apparently in reaction to rising domestic prices. What are your views on the sudden change in policy and its impact?

Rajiv: The trade has been advocating for the free import of pulses. So, on the face of it, it’s a welcomed decision and it had its desired effect as prices of these pulses fell by Rs 500 to 1000 per100 kg. But in reality, such fluctuations in prices are not in the long-term interest of any stakeholder. It hurts the trade, which works based on planned strategies and schedules. So long as India is not self-sufficient in pulses, it will have to depend on imports.  Overseas suppliers operate on country-specific plans. Over a period of time, India-specific suppliers will be compelled to look for other markets or other crops, as happened in the case of Myanmar. And, when we face a shortage, we may not be able to get enough volume at reasonable rates.

GPC: It was just a few weeks ago that the DGFT announced a quota allocation for tur and moog through an algorithm-based lottery system. Do you think there is something wrong with the government’s assessment of the supply-demand situation?

Rajiv: It appears that there is a big gap between the government estimate and that of the trade and others. Some variation is understandable due to weather changes at harvest and so on, but it cannot always be the case. So ad hoc policies based on such estimates may have unexpected impacts in the marketplace.  Again, sudden decisions are taken to correct the situation, resulting in price fluctuations. The government should evolve a better method for making crop estimates. Also there should be a mechanism to assess the demand-supply situation more accurately.

GPC: Do you expect large quantities of imports to arrive and cause prices to collapse? Any guess on the likely volumes for each of the pulses?

Rajiv:  My guess is anywhere between 125,000-150,000 MT of urad and 80,000—90,000 MT of tur could come in during the stipulated timeframe. This wouldn’t cause prices to collapse as traders import only when they anticipate a shortage in the local supply. I can’t put a figure on moong as I am not importing it. 

GPC: India restricted pulse imports for the past four years, apparently to boost domestic production. Do you support this policy or are you in favor of free imports?

Rajiv: India is not self-sufficient in pulses. Pulses are grown mostly in rainfed areas. Weather changes and low soil moisture levels in pulse-growing areas is a major concern. We will have to depend on imports to meet our demand for at least the next five years. We need a long-term policy to allow free pulse imports with an appropriate duty structure. This will ensure a sufficient supply and create a win-win-situation for all –farmers, traders and the government.  And the Minimum Support Price (MSP) works as an incentive to farmers.

 GPC:  So, are you in favor of continuing MSP?

 Rajiv: Yes, MSP works as a benchmark price and also a guarantee to farmers. It is an assurance of returns for farmers to grow more. And the government agencies have been doing a good job in procurement, though they may not buy all the production. We need to boost domestic production and support our farmers.

GPC:  You have been supplying pulses to government agencies. Do you think distribution of pulses through PDS throughout the country could help increase consumption?

Rajiv: Some states like Tamil Nadu and Kerala have already started distributing pulses through the PDS. All states should distribute pulses at subsidized rates to poor people as it is the best and most affordable source of protein. This will increase the consumption of pulses and will improve the nutritional level of our population.

GPC: Can you tell us a bit about your business? What has it been like for the Rathnam Group over the past four decades?

Rajiv: Rathnam Brothers has been in the pulses business for the past 40 years. My father started the business. I took it up a decade ago. I am now focusing on imports of urad, tur, chana and green lentils. Our group company is a major supplier to the State Government for PDS and Mid-Day meal scheme for the past 25 years. Our group also has pulse processing facilities and warehouses. We have grown over the years and established a reputation as a reliable supplier of pulses.  

GPC: Which origins do you source pulses from? Are you sourcing from Myanmar and how is the situation at its ports right now?

Rajiv: We import from Myanmar, Australia, countries in East Africa, Canada and the U.S. The situation in Myanmar is still not normal. Container shortages are a major problem. There are also clearance and handling delays at the port. But the situation is improving.

GPC: What are the plans to grow the Group’s business over the next five years?

Rajiv:  There are a lot of opportunities for growth in pulses. The demand for pulses is expected to increase in the future. Following the introduction of GST, we can do business in other parts of the country from our office in Chennai.  

We want to start trading more commodities other than pulses and expand our agri-business reach. We are also looking to increase our milling and logistics capacities.

GPC: How do you manage the business amidst the rising COVID-19 cases?

Rajiv: In the pulses business, we can’t have work-from-home. During a pandemic or lockdown, we need to go out to make sure that our consignments keep moving. I haven’t taken a break during the lockdowns. My employees were at work even during the peak of COVID-19 and during the lockdowns. My office is near my home so I can walk there. My employees have to get permits to come to the office. We in the trade have ensured that there is no shortage of food items in the State. 

COVID-19 keeps reminding us not only of the value of food security but also the challenges of food procurement, processing and distribution during lockdowns. Even when you are in isolation, someone has to be available to reach you to ensure you have basic food items.