Millers of pulses will soon be able to apply to import pulses from June 1, according to a trade notice issued on May 16 by the Commerce Ministry. This will be the first time that pulses imports will be opened up from registered agricultural traders to include dal mills as well.
“At first we tried to ask the government not to import pulses at all,” said Suresh Agrawal, chairman of the All India Dal Mill Association, which met with the Commerce Ministry on April 6. “But the government said India had to import pulses because of World Trade Organisation rules. So we asked them to let us be the ones to import instead.”
Agrawal’s argument was that if pulse prices were low in the market, agricultural traders were likely to stock pulses in their godowns instead of immediately processing and selling them. Hoarding was one of the reasons that the prices of pulses rose abruptly in 2016. Dal mills, he argued, would process the imported whole pulses and sell them as split pulses ready for consumption immediately.
The ministry will announce the allocation of the import quota for dal mills on the basis of their processing capacity on June 1. In their applications, dal mills have to declare their monthly and annual processing capacity and apply for a quantity to process within that capacity. The ministry will distribute the quota equally or according to the applied for quantity, whichever is lower. Contracts will have to be finalised by August 31.
India is the largest producer and consumer of pulses in the world. But domestic production often falls short of local demand. Importing a buffer stock of pulses will ensure that should production dip in the coming year – due to the monsoon, which is likely to be weak in pulse-growing peninsular India, or due to farmers sowing less after low agricultural market prices for pulses in the previous years – India’s consumers are not likely to face as much of a pinch.
But managing the price of essential commodities, including pulses, is a complicated juggling act. The government needs to rely on imports to ensure pulse prices do not rise for consumers, while avoiding the possibility of imports flooding the market and dampening the price at which farmers can sell their crops.
A part of this juggling act, which trade observers criticised last year, was India’s surprise introduction of a quantitative limit on the import of pulses for the first time in August 2017. The decision came belatedly, after a surge in pulses imports towards the end of 2016, despite bumper production in the domestic market, drove down pulses prices for farmers. The surge in imports was one of several triggers for farmer unrest in 2017.
The quantitative restriction in August 2017 limited the import of pulses to 2 lakh tonnes annually for toor, and 1.5 lakh tonnes each annually for urad and moong. It also disrupted existing private contracts in foreign markets, particularly in east African countries and Myanmar, which had begun to produce pulses exclusively for sale to India.
India has renewed the restriction this year, though it is likely to revise it by the end of June after the first estimates of pulses production comes in. The restriction applies to pulses imported from all countries except Mozambique, with which India signed a memorandum of understanding in 2016 to import a fixed amount of pulses each year, with a certain rise in quantity year on year. The Directorate General of Foreign Trade clarified in May that its new quantitative restriction will not apply to the import of the first 1.5 lakh tonne of pulses that bear a “Certificate of Origin” from Mozambique.
No respite for farmers
For farmers at least, this fresh import could come as yet another blow after a year when a production glut and the lingering impact of demonetisation has meant consistently low prices in agricultural markets.
The Centre announces a minimum support price for 23 crops every agricultural season, which stands as a promise to farmers that it will purchase from them should agricultural market prices fall below the government-estimated cost of production.
Swaraj India, an organisation led by politician and psephologist Yogendra Yadav that has been championing farmers rights, conducted a month-long survey of agricultural markets around the country between April and May and found that farmers were selling most crops well below the minimum support price. For pulses, the market price was well below the minimum support price in April, about two months after the bulk of winter crop arrivals in February.
Last year, the government procured around 20 lakh tonnes of pulses from farmers. India’s third advance estimate of pulses production in 2017-’18 pegs it at 2.45 crore tonnes. Meanwhile, farmers are estimated to hold around 6 lakh tonnes with them because of poor market prices.
In April, the Ministry of Consumer Affairs, Food and Public Distribution notified rules for how to dispose of stock procured under the Price Stabilisation Fund, asking that it be distributed to central and state schemes where there is a nutrition component, and, as a last option, be sold in open markets near where the pulses have been stocked. The same document notes that 3.88 lakh tonnes of pulses with the government are approaching the end of their shelf life and needed to be disposed of quickly.
“Prices are likely to remain low this financial or crop year,” said Bharat Kulkarni, chairman of the Indo-Global SME Chamber, a chamber of commerce that supports small and medium enterprises in growing their global business. “Carryover stock from last year is higher than what we ordinarily consume. With production low and carryover stock high, there is no need for the government to open up imports at this time.”
As India is both the largest producer and largest consumer of pulses, exporting pulses is not a viable option for Indian farmers. India’s export tariffs are high to ensure domestic produce is consumed in the domestic market. This makes it unviable for other countries to buy India’s pulses, when other producers have pulses at a lower price, explained Agrawal.
Foreign trade affected
At the same time, India needs to maintain a working relationship with pulse growers in African countries, as several attendees at a conference on India-Africa Partnerships organised in Mumbai in January emphasised. In drought years, after all, pulses would be unaffordable for domestic consumers in India without imports from east African countries, Canada and Myanmar.
Charity Kaluki Ngilu, governor of Kitui county in Kenya, spoke of this at another conference, on pulses, organised by the Indian Pulse Growers Association in New Delhi in March. “Policy uncertainty of India with regard to pulses imports has put us in a very difficult situation indeed, where at one point we even have had over 200,000 metric tonnes of stock with no buyers,” Ngilu said.
Quantitative restriction on imports by India, she said, has had a massive impact on east Africa’s small land holders who had increased cultivation area and pulses production after Modi’s visit to the region last year. She requested the Indian government to “give us a clear picture on what the future policy direction regarding pulses imports, especially for our region, would be like”.