Agri Business

Centre must scrap curbs on import of pulses

G Chandrashekhar May 13 | Updated on May 13, 2021

The quantity restrictions have outlived their utility

The pulses market deserves close policy attention. The quantitative restrictions (QRs) imposed by the government on select pulses like tur/arhar (pigeonpea), urad (black matpe) and moong (green gram) in August 2017 are possibly outliving their utility under the present circumstances.

The rationale that existed nearly four years ago — to prop up weak domestic prices and support growers here from the so-called onslaught of imported pulses — does not apply any more. Current market prices of these pulses are well above the minimum support price (MSP) announced by the government; and importantly, QRs have not helped expand domestic cultivation to any significant extent.

To be sure, at about ₹6,750 per quintal (100 kilogram trading lot), tur/arhar rates are at least 12 per cent above the MSP of ₹6,000 while urad (fair average quality) is trading at ₹7,700 a quintal, close to 30 per cent above MSP. Moong rates are also far higher than they were a year ago.

Make pulses policy demand-centric

Kharif production stuck in narrow range

The sustained rise in pulses prices in recent months with threat of further increase is the result of tightening supplies in the domestic market and gradually improving demand conditions. The Agriculture Ministry’s production estimates are widely believed to be overstated, while the actual crop size is lower, especially the Kharif season pulse crops.

Importantly, the QRs have hardly exerted any positive effect on Kharif season pulses production as evidenced by the estimate of the last three years. If anything, after the QRs were imposed, Kharif season production has got struck in the narrow range of 80-85 lakh tonnes. Actual production has been well below the target set for the season.

Building a viable value chain for pulses

Clearly, the QRs currently have little utility, and therefore deserve to be thoroughly reviewed and scrapped. The quota and permit system and the attendant uncertainties relating to issue of permits create more unease in the trade than facilitate smooth import.

Currently, the quota is 10 lakh tonnes, comprising 4 lakh tonnes each for tur and urad, and 2 lakh tonnes for moong. In addition, there is 2 lakh tonnes import from Mozambique in terms of MoU. Myanmar and East African countries are the origins to supply these pulses.

Even if QRs are removed, the actual quantum of import is unlikely to be far greater than what the quotas allow. Actually, even the availability of these pulses overseas is limited.

Pulses trade urges Centre to fix import quota soon

At the same time, if import is not liberalised, there is real risk that pulses prices will escalate to even higher levels during the upcoming festival season from August to October. The next harvest is at least four months away. The stocks with public agencies are limited.

Monsoon forecast, a silver lining

The forecast of a ‘normal’ south-west monsoon is a silver lining. It would be rational to withdraw the QRs on pulses (tur/arhar, urad and moong) once the monsoon breaks over Kerala early June.

The risk of food inflation is real. Not only pulses, but prices of edible oil too are also at a record high. Coarse cereals such as maize are not lagging much behind. Crude oil prices in the world market are high (Brent at over $65 a barrel), adding to inflation pressure.

The author is a policy commentator and agribusiness specialist. Views are personal

Published on May 13, 2021

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