Inflation's pulse: Yellow peas imports to help potential chickpea shortfall

In a surprise move on December 8, the government sanctioned duty-free import of yellow peas, or peeli matar, until March 2024.

This decision, aimed at stabilising prices, underscores the government’s concern regarding the potentially suboptimal production of chickpeas (chana), trade sources said. The allowance for duty-free yellow peas import is expected to mitigate the impact of this anticipated shortfall.

Chickpeas constitute the largest portion — 44-48 per cent — of the annual pulses production of 25-27 million tonnes in India. Any dip in the crop’s yield could increase inflationary pressures, which the government can ill-afford in the upcoming election season.

“We are fully committed to keeping food inflation under check and will do whatever it takes to keep prices down,” a senior government official had told this correspondent some months ago.

“The decision to allow duty-free matar import until March 2024 is a preemptive measure in response to concerns over the forthcoming chana crop. It aims to stabilise chana prices, aligning with the government’s objective to provide affordable ‘Bharat Chana Dal’,” said Suresh Agarwal, president, All India Dal Mill Association.
 

He added that soon after the government allowed duty-free import of yellow peas, chana prices fell from around Rs 6,400 per quintal to Rs 5,800-5,900 per quintal. Similarly, processed chana dal prices have dropped from around Rs 7,175 per quintal to about Rs 6,750 per quintal. Yellow pea prices, too, have fallen, traders said.
 

Earlier, yellow peas attracted import duty of nearly 50 per cent, coupled with a minimum import price to safeguard the interests of domestic producers.
 

Unlike chickpeas, yellow peas enjoy more diverse consumption across the country — though they are considered a poor cousin of the chickpea. And like chickpeas, they are a rabi crop.

Yellow peas are cultivated between October and March, mostly in dry, arid regions like Bundelkhand, which spans Madhya Pradesh and Uttar Pradesh. “Regions like Sagar, Balaghat, Seoni, Gwalior, Lalitpur (UP), and others in Bundelkhand are the primary cultivation areas for yellow peas,” Agarwal said.
 

Before import restrictions were imposed to stimulate domestic production, India typically yielded only 200,000-250,000 tonnes of yellow peas annually. However, in the past five to six years, production has surged to 1.0-1.2 million tonnes, according to traders.

Despite this increase, the government has decided to allow free import of yellow peas since chickpea crop acreage in major growing states has reduced. Recent data from the Department of Agriculture revealed sluggish gram sowing in states like Maharashtra, Rajasthan and Karnataka, though the area under production has increased in Madhya Pradesh over last year.

So far, around 9.7 million hectares have been sown with gram, marking an 8.32 per cent decrease compared to the same period last year. While hope remains that gram sowing will pick up, the scarcity of soil moisture due to a weak monsoon and insufficient post-monsoon showers in Karnataka, Maharashtra and Rajasthan might play spoilsport.

Import impact & Chinese checkersGlobally, prices of yellow peas have surged in anticipation of large imports by India. Before India allowed free import, world market rates hovered around $400-$500 per tonne. After the import decision, they reached $510-545 per tonne, though they have softened a bit in the last few days.

Ukraine and Canada are major suppliers of yellow peas globally. Canadian prices escalated from $450-500 per tonne before December 8 to $545 per tonne upon India’s import announcement, eventually stabilising around $495-525 per tonne. Meanwhile, shipments from Russia jumped from $400 to around $510 per tonne before settling at $450-470 per tonne.

Canada produces 2.3-3.4 million tonnes of yellow peas every year, most of which is exported. In the past six years, owing to India’s high duties, the market for Canadian yellow peas had predominantly shifted to China for animal feed consumption. With India reentering the market, it could challenge China’s dominance in acquiring Canadian produce.

Traders suspect that anticipating India’s import decision, Chinese counterparts might have stockpiled substantial quantities of Canadian yellow peas at low prices. The impact of this hoarding on price stability remains uncertain.

“I anticipate that Canada might release a considerable stockpile, roughly 400,000-500,000 tonnes, into the Indian market by March. While this benefits consumers, it might pose challenges for millers,” said Agarwal from the All India Dal Mill Association.

Soaring demand & supplyDespite the current concern over pulses and yellow peas, India’s overall pulses production has seen substantial growth over the past decade. Annual output, which stood at 16-18 million tonnes a decade ago, is now consistently in the range of 22 to 25 million tonnes. In 2020-21 and 2021-22, it touched 25.46 million tonnes and 27.32 million tonnes, respectively.

This surge owes itself to robust demand, effective policy initiatives, new seed varieties and the creation of annual buffer stocks, encouraging farmers to continue cultivation of pulses despite potential price fluctuations.

A senior official from a farmers’ cooperative that deals in pulses said India’s reliance on imports has also shrunk from 

4-6 million tonnes to 2.5-3 million tonnes annually. Despite this, “the growth in demand due to rising population has been even sharper, which means though imports have come down, they haven’t dropped to nil,” he added.

Advancements in pulses technology and its widespread adoption across India could help achieve self-sufficiency.

For now, though, the hope is that matar will address the inflation matter.