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Pulses export policy change to take time to fructify

Pulses export policy change to take time to fructify

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

Pulses 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 pulses — close to 30 million tonnes (mt), including 6.6 mt of imports — India is ready to export them again. Considering the consumption of pulses in India at 22 mt, about eight mt is possibly stocked. 
The first few export registrations totalling 200 tonnes have been received by the Agricultural and Processed Food Products Export Development Authority (Apeda) in the first 10 days. With renewed exports, here is an attempt to throw light on questions that need urgent attention.

Due to an export ban, the pulses market in India was characterised mostly by consumption catered to by a combination of production and imports. “Pulses 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 pulses in the world, international prices have always trended along with Indian pulses prices. 

In India, fluctuating tur dal prices followed the ‘cobweb model’. As a response to drought, reduced productivity and thus production, prices of tur dal 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 dal. 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 dal 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 dal available on top global online marketplace ranges from $250-$400 a tonne, or Rs 16-26 a kg. International market agencies cite similar lower-than-Indian-dal 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 dal 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 pulses available cheaper in the international market. African pulses production has increased 10 per cent, resulting in an international pulses supply glut.  Thus, though farmers are getting a remuneration below the minimum support price (MSP) benchmark, the Indian dal 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 pulses 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, export value chains would potentially be established in about six months, since Indian pulses command a premium owing to their quality,” Pravin Dongre, chairman at the India Pulses and Grains Association, told Business Standard. 

Exports have been opened only for three pulses — tur dal, urad dal and moong — while masur dal and chana dal 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 pulses and chairman of Jalgaon Dal 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. Dal 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 export contracts. What if exports are disallowed again?” another exporter said.

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