It is a welcome sign that the Government's restrictive agricultural-export policy is slowly opening up. Sugar, wheat and rice exports have been allowed under a ceiling. May be it is time to allow export of pulses, too, under a quantitative limit.

The case for reopening pulses export has never been stronger. After years of sluggish growth, pulses output in 2010-11 has rebounded to an unprecedented 183 lakh tonnes, higher than previous year's 146 lakh tonnes. The quantum leap in output, though nowhere near self-sufficiency, has vastly improved the availability of pulses. Imports, too, are continuing and help further augment supplies and moderate prices. Open market prices have declined by 20 to 40 per cent from the levels a year ago and are are seen encouraging pulses consumption.

In case of most pulses, prices are close to the minimum support price (MSP). If anything, in some parts of the country, Maharashtra for instance, moong prices have reportedly dipped below the MSP. For 2010-11, MSP for moong was Rs 3,500 a quintal, up Rs 330 from the previous year. Prices below MSP are sure to discourage growers.

One way to retain growers' interest in pulses, improve marketability of the crop and ensure remunerative returns is to allow export of milled pulses or dals. This will not only provide improved price support at the farm-gate but also encourage mills to accelerate purchase of the farm produce and capture market opportunities overseas. Growers will be happy to dispose of the produce as quickly as possible.

The dal milling industry

An important reason for supporting dal export would be the status of the dal milling industry. There are over 10,000 dal mills in the country, most of them small or medium. Currently, they carry huge idle capacity. Many mills were set up before 2006 with the hope that the export policy would be liberal. But the Government decided to ban pulses export because of tight availability and rising prices in the domestic market. Investment in dal mills has turned unproductive.

With improved supplies and softer prices, the market conditions today are vastly different from those obtained until a year ago. Many dal millers point out putting a ceiling, of say three to five lakh tonnes, to pulses export will not impact domestic market, but will be a boost to India's liberal foreign trade policy.

What are the implications of exporting three lakh tonnes of dals? Indian dals are sure to fetch not less than $1,000 a tonne in the overseas market. On export of three lakh tons, the total foreign exchange earnings could be as high as Rs 1,500 crore.

Importantly, dal export will help improve capacity utilisation among small and medium dal mills, and in course of time, attract new investment for modernisation and improvements in the supply chain.

“India is currently seen as an importer of pulses; but we also have the potential to be an exporter. Keeping both export and import open will send out strong signals to the world market about India's readiness to advance liberal trade policies in agriculture,” an industry representative said.

(This article was published on October 21, 2011)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.