India produces a quarter of the world’s pulses, accounting for one third of the total acreage under pulses. Indians consume 30 per cent of the world’s pulses, but domestic production of pulses has not kept pace with population growth. The per capita demand for pulses is declining in India. Yet they remain an important source of protein. Pulses neither receive sufficient official procurement support that wheat and paddy get, nor do farmers view them as commercial crops on par with cotton or soybean. It has resulted in their cultivation, over the years, being pushed to marginal lands prone to moisture stress. Breaking this impasse requires a conscious strategy to promote pulses production, including in irrigated areas. It raises larger questions on why the country isn’t able to increase pulses production. On the supply side, pulses’ production had hovered around 12 million tonnes during the last three decades. Stagnation in production has led to rise in the prices of pulses that further affected their consumption adversely. Traditionally in India, with relatively more focus accorded to food grains, especially rice and wheat, the pulses were relegated to marginal environments. Consequently, over the years despite many focused programs, there were only slight changes in the production of pulses. However, recent initiatives through National Food Security Mission and higher minimum support prices led to leapfrog in production to 18 million tonnes. However, weak technology delivery mechanisms, and continuing low profitability of the sector have failed the arrest the shifting of pulses areas to more remunerative crops. Over all dynamics of the pulses industry suggest that we still continue to be the net importer of pulses requiring about 2.5 to 4.0 million tonnes on an annual basis for the last five years.
Export and Import Direction
Currently over 182 countries around the globe trade in this sector and the Indian Subcontinent alone accounts for over 30 per cent of the same. While this should let India dominate the market, it has been unable to do so because the high supply deficit in India is known and the steady increase in imports has made negotiations quite redundant. Imports of pulses in India have been increasing and currently account for about 20 per cent of total domestic availability. India normally caters to the need of Asian and African nation’s requirement of pulses.
The major exporting destinations from India for pulses are given in the adjacent table. Pakistan still is the most preferred location in terms of the Indian pulses export with overall share of 29.13 per cent, followed by Algeria, Turkey, Sri Lanka and UAE. The major pulses exported from the India are Peas (Pisum Sativum), Chickpeas (Garbanzos), Moong/Urad, Lentils (Masoor) and Pigeon Peas (Tur). The analysis of commodity wise exports showed that Chickpeas constitutes of over 80 per cent of the total exportable pulses from India. Other pulses with sizable export volume are pigeon peas, moong and urad.
The country meets its domestic needs primarily through imports from USA, Australia, Myanmar, Turkey Tanzania and Canada. India accounts for 30 - 40 per cent of total world import of pulses. India has about 1215 major pulse importers, with the largest concentration located in Mumbai, followed by Kolkata and Delhi. These players reportedly account for 6070 percent of total pulse imports. Apart from the private players PSU’s like MMTC, PEC, STC and NAFED are also importing actively as per need. Importers rely primarily on personal networks and contacts with brokers in countries for market information, obtaining price quotes, and making purchases. Many traders remain with a given exporter even if they are able to obtain good market information owing to assurance of a guaranteed supply. Moreover, due to the limited incomes and price sensitivity of most Indian consumers, a large percentage (about 80 percent) of imported pulses is rated as FAQ. While quality is a consideration, importers are only willing to pay small premiums for better quality. Traders look for the lowest prices at acceptable qualities. The most important quality attributes are cleanliness, uniform size, color, and shape (important for milling).
The major commodity imported in India is the peas (green & Yellow) (35.70 per cent), followed by Chickpea (18.17 per cent), Moong & Urad (Black Matpe) (16.74 per cent), Lentil (13.19 per cent) and Pigeon peas (13.19 per cent). Major countries from where India is importing pulses are Canada, Myanmar, Australia, Russian Federation, USA, France, Tanzania, China, Mozambique and Malawi.
In the world, major markets from where India is importing the pulses are:
• Small Chickpea: Burma, Tanzania, Australia, China, UAE
• Pigeon pea: Burma, China and Tanzania
• Black gram: Burma, Singapore and Thailand
• Mung bean: Burma, Singapore, China and Australia
• Green and yellow peas: Canada, Australia, Hungary, Tanzania and US
• Lentil: Netherland, Syria, Canada, Turkey, China
• Large Chickpea or Kabuli: Australia, Canada, Turkey, Iran and Burma
Logistic Movement of Imported Pulses in India
The major ports in India where pulses consignments are offloaded are JNPT (Maharashtra), Mumbai (Maharashtra), Chennai (Tamil Nadu), Tuticorin (Tamil Nadu), Haldia (West Bengal) and Kakinada (Andhra Pradesh). Pulses in Boxes / Containers from Africa, Canada, UAE, Hungary, Iran, US and Turkey are offloaded at JNPT whereas, the bulk consignments are offloaded at Mumbai. These two ports in the Western India cater to the need of miller located in Western & Central parts of India. Some pulses, which are imported by Indian PSU’s (MMTC, PEC, STC & NAFED), are moved to the northern India (Delhi, Himachal Pradesh, Punjab, Haryana and Jammu & Kashmir) to be sold through Public distribution System of Government of India. In the eastern part of the country, the major port handling the pulses are Chennai, Haldia and Tuticorin which handles bulk as well as box / container consignments from Burma, China, Australia, Singapore and Thailand. The Chennai, Tuticorin and Kakinada port caters to the pulses requirement of Southern states (Tamil Nadu, Karnataka, Andhra Pradesh and Kerala), whereas majority on the consignments at Haldia port heads directly to Kanpur (Uttar Pradesh).
The marketing channel for the imported pulses in India is given as under:
Import Policy Needs a Serious Revamp
In spite of the above promising statistics for the import and exports from India, the gap between the supply and demand continues to pose challenges for the Indian pulses industry. India continues to be the largest pulses processor, as pulses exporting nations such as Myanmar, Canada and Australia, do not have adequate pulses processing facility. In order to strengthen the Indian market the import policy needs a serious rethinking.
As per the present policy, the Government Agencies invite tenders for sale of imported pulses in the domestic market. They invite bids from interested parties and after scrutiny allocate the stock to highest bidder. Normally, the bids are accepted only if the bid quantity is more than a threshold limit, such as 200 MT or 500 MT. The Government agencies do not sell in smaller lots of 1020 MT due to operational inconvenience and for various other reasons. While the highest bidder gets the bid quantity, the bids of other interested buyers is rejected. Hence, mostly the stock goes into the hands of a few buyers. It is observed that since the stock is allocated only to the highest bidder it creates a temporary monopolistic scenario in favor of such successful bidders. In such a case, it is possible for him to take advantage of such a scenario and to jack up the price for a short while to earn handsome profit. Since the Government does not have any control on selling price to be quoted by the successful bidder, it goes on uninterrupted. The result is that the basic purpose of keeping prices under control is somewhat defeated.
Another, policy hindering the Indian Competitiveness is the introduction of 15 per cent subsidy for government entities. The entry of Government agencies armed with 15 per cent subsidy has changed the trade dynamics completely. Private importers are not able to compete with Government agencies. Therefore, when private importers attempted to import, they lost heavily, as the Government agencies sold their stock at a price lower than the import parity. As a result, most of the private importers stopped import of pulses and lot of importers have went out of business. At present, there is no level playing field, because private importers cannot claim subsidy, while Government agencies enjoy 15 per cent subsidy.
Pulse importers face a number of risks that threaten the profitability of their transactions. Many importers forward sell their products before taking physical possession of them. Falling domestic prices prior to delivery provide incentive for buyers to renege on contracts. Domestic market conditions, particularly variability in domestic production and import activities, also affect pulse prices. The volume of business and the prices contracted by other importers serving the same market are key factors affecting an importer's profitability. Multiple impending shipments can flood the market and lead to lower prices, increasing the probability of default by domestic clients. Indian importers also face foreign exchange risk because transactions with every country are conducted in U.S. dollar.
Indian traders are finding it difficult to negotiate imports of pulses from Myanmar as the market in the neighboring country is dominated by private traders and no government agency is involved. Private traders in Myanmar tend to increase prices whenever they come to know that the Indian government is seeking to import the pulses from them. Once government announce the quantity of pulses we plan to import from Myanmar, the prices of pulses gets pushed up.
To conclude, The Government should recognize the economic relevance of pulses futures trading in term of providing instrument to hedge price risk especially for those who are in pulses import and trade. I feel that the role of the Government should be to formulate policies and to decide the macro level parameters. The Government should not enter into business themselves; rather act like a facilitator and regulator. Even without engaging themselves into trading directly, they can regulate the prices by allowing the private importers to import, rather than importing themselves. Moreover, Instead of selling stock through a tender process, the Government agencies should sell the entire imported stock through an electronic platform. This will reduce the cost of inviting tender and other administrative costs incurred by the Government agencies. In addition, it will encourage participation by smaller players.
Handbook on Minor and Imported Pulses of India -2014
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