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Pulses export policy change to take time to fructify

Due to an export ban, the pulses market in India was characterised mostly by consumption catered to by a combination of production and imports

Abhishek Waghmare  |  New Delhi 

Pulses export policy change to take time to fructify

A year after Chief Economic Advisor pressed for lifting ban on of pulses, the government ended the 10-year-old ban on September 18. This comes in conjunction with the import restriction on tur (pigeon pea) to 0.2 million tonnes, and on urad (split black gram) and moong (split green gram) together to 0.3 million tonnes for 2017-18. 

have thus come a long way — from banned exports and free imports for the past 10 years to free exports limited to three dals and restricted imports with a 10 per cent tax as of today. But, prior to banned exports, India exported a variety of pulses, including urad, moong, masur (lentils), tur and chickpeas (chana). Just after the year 2016-17 that saw the highest availability of — close to 30 million tonnes (mt), including 6.6 mt of imports — India is ready to them again. Considering the consumption of in India at 22 mt, about eight mt is possibly stocked. 
 
The first few registrations totalling 200 tonnes have been received by the Agricultural and Processed Food Products Development Authority (Apeda) in the first 10 days. With renewed exports, here is an attempt to throw light on questions that need urgent attention.

Price insulation from international market 

Due to an ban, the market in India was characterised mostly by consumption catered to by a combination of production and imports. “prices in India were a product of domestic demand and supply, and were insulated from the international market,” A K Gupta, director at Apeda, told Business Standard. But still, as India is the biggest producer and consumer of in the world, international prices have always trended along with Indian prices. 

While the prices in India floated below international prices till the end of 2015, the drought impact of 2015 that severely reduced production inflated domestic prices. Since then, Indian prices have remained above the international price, data collated by the ministry show. 

competitiveness low 

In India, fluctuating tur prices followed the ‘cobweb model’. As a response to drought, reduced productivity and thus production, prices of tur doubled in 2015, which prompted farmers to sow more tur (and other pulses, too) in the next year, 2016. Sowing of tur increased 50 per cent in September 2016 over September 2015, which resulted in record production of 4.8 mt of tur In the following year, from September 2016 to September 2017, the wholesale price of tur (unprocessed unsplit beans) at Gulbarga mandi, Karnataka, dropped 33 per cent from Rs 7,000 a quintal to Rs 4,500 a quintal, while the price of ready-to-cook tur in Mumbai, one of India’s biggest consumer mandis, dropped 34 per cent from Rs 115 a kg to Rs 75 a kg.

Whereas the wholesale price of tur available on top global online marketplace alibaba.com ranges from $250-$400 a tonne, or Rs 16-26 a kg. International market agencies cite similar lower-than-Indian-prices: India Infoline data pegs moong from Tanzania at Rs 4,100 a quintal; marketonmobile pegs tur from Malawi at Rs 3,300 a quintal. 

The average price of tur imported in India — which can be taken as representative of international price — during April-June 2017 was Rs 40 a kg, half the price of Rs 82 a kg in April-June 2016. 

Lentil and peas production in Canada has improved, and record exports have been registered, according to some sources. India will not import from Myanmar this season (2017-18) since imports are capped and taxed, making Burmese available cheaper in the international market. African production has increased 10 per cent, resulting in an international supply glut.  Thus, though farmers are getting a remuneration below the minimum support price (MSP) benchmark, the Indian price (at least in the case of tur) is still less competitive for exports. But, all hope is not lost, according to representatives of the value chain. “This is a studied decision by the government which will make price discovery naturally evolved and transparent. Though immediate wonders are not expected, value chains would potentially be established in about six months, since Indian command a premium owing to their quality,” Pravin Dongre, chairman at the India and Grains Association, told Business Standard. 

Leaving other legumes behind

Exports have been opened only for three — tur dal, urad and moong — while masur and chana have not been included. “Though it (allowing export) is a good step, exports for the entire basket should have been opened up, since orders placed by international buyers, say in USA, come in baskets (sic),” said Prem Kogta, an old exporter of and chairman of Jalgaon Mill Owners Association.  A former exporter from Mumbai, Mayur Soni, drew little hope from the decision.  “At the current prices, exports are a costly business for us. from African countries and Myanmar is cheaper today, and overhead costs like transportation and port space can reduce profit margins,” he said.  Exporters also expressed concerns that any upcoming drought and subsequent low production year can result in the government again banning exports and allowing imports to ensure adequate availability. “We cannot have flip-flops in contracts. What if exports are disallowed again?” another exporter said.

 

First Published: Wed, September 27 2017. 01:11 IST
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