Informist, Wednesday, Sep 25, 2024
--Pulses body chief: Govt must build buffer of 3-4 mln tn pulses
--CONTEXT: Comments by pulses body chairman Bimal Kothari in interview
--Pulses body chief: See FY25 imports less than or on par with FY24
--CONTEXT: India imported 4.73 mln tn of pulses in FY24
--Pulses body chief: Don't see any price rise in pulses after Nov
--Pulses body chief: See Australian chana crop at 2 mln tn
--Pulses body chief: Yellow pea duty-free imports to only help Canada
--Pulses body chief: Yellow peas Dec 31-Sep 15 imports 2.2 mln tn
--Pulses body chief: Almost 1 mln tn yellow peas lying at Indian ports
--Pulses body chief: See 800,000 tn more yellow pea imports by mid-Nov
--Pulses body chief: 10 mln tn yellow pea available in global market
--Pulses body chief: See India 2024-25 tur output at 4.2 mln tn
By Shreya Shetty and Pallavi Singhal
MUMBAI – The decision by the government to extend the duty waiver on the import of yellow peas earlier this month was absolutely unnecessary, considering the existing surplus of almost 1 mln tn of the pulse lying at various Indian ports, according to Bimal Kothari, the chairman of the India Pulses and Grains Association.
On Sep 13, the government extended the timeline for duty-free import of yellow peas by two months to Dec 31 from the previous deadline of Oct 31. The import duty of 50% on yellow peas was first lifted in December 2023, and this was to remain effective until March. However, the government kept extending the exemption.
Though the industry had asked for a withdrawal of duty-free imports of yellow peas and for the removal of duties on kabuli chana, the government ignored the pleas.
On the issue of removing the 40% import duty on kabuli chana, Kothari feels that when prices were high, the government should have removed the duty. However, there is no point in doing it now, because if the orders are placed now, the shipments will arrive only in October-November. By that time, chana from Australia will already be available.
After the government freed up imports due to persistent high inflation, India's imports of pulses in 2023-24 (Apr-Mar) surged 84% to a six-year high of 4.73 mln tn. However, Kothari is of the opinion that the total imports in 2024-25 will either remain on par with the imports of last year or see a slight fall.
Following are the edited excerpts from an interview with Kothari:
Q. What is your view of the recent extension of the duty-free import of yellow peas?
A. The extension of the duty waiver on imports of yellow peas was absolutely not required. The government had allowed duty-free imports of yellow peas in view of the overall shortage of pulses in India in the last two years, as our production of tur and urad had been hit. Last year, chana output was also affected. With chana, tur, and moong constituting almost 65% of the country’s total pulses output, the government’s step of lifting duty was justified. We needed the imports as our production had fallen. So, from Dec 31 to Sep 15, the country has imported more than 2.0-2.2 mln tn yellow peas.
Of these imports, around 900,000 tn to 1 mln tn of yellow peas are still lying in the various ports of India. Now, with the extension, the country is likely to face an influx of imports from various countries. Russia has around 4.5 mln tn, and Canada has about 3 mln tn. In total, about 10 mln tn yellow peas are available overseas.
Settlement of contracts made from August to October, of 700,000-800,000 tn, have already been done and shipments are to begin arriving by mid-November. With the new cargoes, the total yellow pea stock in the country will increase to 1.7-1.8 mln tn.
Currently, we have observed that the demand for yellow peas is picking up, as it is being used to substitute chana and tur. Demand for yellow peas is around 200,000 tn every month.
However, even with the current demand, the extension of the order means that the country will end up importing an excess of about 1 mln tn yellow peas. The stocks we have already are more than enough for the next eight to nine months.
Q. Why is the industry asking for the removal of the duty-free imports of yellow peas?
A. In 2018, the government restricted the imports of yellow peas as the cheaper imports were hurting farmers, and the production of yellow peas had nearly halted in the country. After the restriction, production revived, and it touched almost 1 mln tn.
Currently, with prices of yellow peas at 35 rupees per kg, and the prices of imported yellow peas as low as 25–30 rupees per kg, farmers will be discouraged again. India consumes about 1.5 million tn of yellow peas a year and produces only about 500,000-600,000 tn per annum.
The IPGA will be suggesting the government to reconsider the extension of the duty-free imports of yellow peas. The duty-free imports are not helping the country’s farmers, traders, or even the government. It will only encourage Canadian farmers and exporters.
Q. The government was mulling over removing 40% import duty from kabuli chana but decided against it. Do you think the step would have helped better than allowing yellow pea imports?
A. The government should have removed the 40% import duty on kabuli chana to encourage the entry of Russian chickpeas. Russian chickpeas of 6 mm would have eased price pressures on chana by filling the demand-supply gap during the festive season, as it can be converted into besan.
There is no point removing the import duty now. If the orders are placed now, the shipments will arrive only by October-November, when chana from Australia will already be available. And after the festive season, there is rarely a need for higher imports as demand for pulses sees a drop between Dec 15 and Feb 15 as the fresh vegetable crops hit the market.
Q. India's FY24 pulses imports grew 84% on year to 4.73 mln tn and hit a 6-year-high. What is the outlook for pulse imports for FY25?
A. The country currently has plenty of imported cargo. The domestic output is also looking good with higher kharif sowing and a positive outlook on rabi sowing.
The country imported 4.7 mln tn of pulses in 2023-24 as production took a hit. With the government allowing free imports of yellow peas, we assess that the total imports will either remain on a par with the imports last year or see a slight fall.
Q. There have been reports of crop destruction in parts of Karnataka, especially those of tur, due to extremely heavy rains. What is the IPGA’s assessment?
A. We do not think these rains will have any significant effect on the overall output. The state has seen heavy rainfall, but there are no reports of any wide-spread damage yet. We are going to see a robust tur crop this year. Tur acreage is 4.7 mln ha, which should give an output of around 4.1-4.2 mln tn.
Q. The government has lifted the 25% procurement ceiling for tur, urad, and masur. What do you think is the government’s rationale behind it other than supporting the sowing sentiments? Do you think the government is looking to build a big buffer stock?
A. The government's policy of supporting farmers of pulses is a step in the right direction. However, relying solely on procurement policies won't be enough to address the issue. India's production of pulses needs a boost, as the country's demand is expected to reach 40 mln tn by 2030. Last year, we only produced 25 mln tn, which means we need to increase production by 15 mln tn. Procurement alone can't bridge this gap. We need comprehensive production programmes that focus on growth, seeds, and other essential factors.
India's yield levels are the lowest globally, and we must take steps to improve this. Incentivising production of pulses, similar to what's been done for cereals, could be a game-changer. The good news is that the government is increasing its procurement of pulses.
Pulses in India are a staple food after cereals and thus India must ideally maintain a buffer stock of 3-4 mln tn at all times. This buffer will be crucial in ensuring food security, particularly as unpredictable weather patterns and global warming rise. With the threat of El-Nino and droughts looming large, a buffer stock would help mitigate the impact of crop failures and price fluctuations.
Moreover, having a buffer stock would enable the government to make timely market interventions, stabilise prices and protect consumers. Just as we maintain buffer stocks of wheat, rice, and sugar, it is equally important to prioritise pulses, given their significance in the Indian food basket.
Q. Pulse inflation has been in the double digits for some time now. Do you see prices easing anytime soon?
A. Currently, tur prices have come down significantly from their all-time highs earlier this year. From peak levels, prices have come down to 35 rupees per kg, which is a big fall.
Urad prices also fell by 10–12 rupees to 50 rupees per kg. Masur, which has a minimum selling price of 64 rupees per kg, is being sold at 59–60 rupees per kg. Prices of yellow peas have also fallen to 35 rupees per kg from 45–47 rupees per kg.
Prices of chana will also be affected now, since yellow peas are easily available as a cheaper substitute, lowering the consumption of chana.
Demand for chana will see a rise starting from October to Nov 15 due to the festive season. However, the country will receive chana imports from Australia from November. Australia's total crop output could be 2 mln tn, of which the majority will be shipped to India as exporters are getting a good price. Australian exporters are getting contract prices of 815 rupees per 100 kg for November and December. For the January shipment, exporters are already being offered 737.4 rupees per 100 kg.
I don't see any price rise in pulses post November. Chana will also be sown in abundance, which should help bring down prices further. End
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