Import pulses on ‘actual user’ terms

A repeat performance in pulses production looks highly likely in 2017-18, following the record harvest of 22.95 million tonnes (mt) in 2016-17. As a result, the country’s dependence on imports is reducing substantially.

Additionally, a series of trade and tariff measures in recent months compounded by recent uncertainty over methyl bromide fumigation (since extended by six months), low domestic farm-gate prices and sluggish market conditions have considerably slowed the arrival of imported material.

In the financial year 2017-18, pulses import will be about 5 mt down from 6.6 mt in the previous year. A substantial part of the import took place in the first six months of the current fiscal before trade restrictions started to kick in.

While the government must do everything possible to achieve self-sufficiency in pulses on a sustained basis, risks associated with production of the crop cannot be wished away. So, it would be prudent to keep the import window open in case of an eventuality.

Simultaneously, it is necessary to encourage enhanced consumption of pulses as an economical vegetable protein to advance our nutrition security. Supplying pulses under the public distribution system makes eminent political and economic sense.

Regulating imports

It is necessary to ensure that excessive quantities are not imported, but just the right quantity that is needed to bridge domestic shortfall, if any. For this, it is necessary to prepare an annual demand-supply estimate by factoring-in income and price elasticity.

It would be prudent to regulate pulse imports by allowing only ‘actual users’, that is, dal mills, to import. Dal mills convert raw pulses into split /processed dal. ready for consumption.

‘Actual user’ condition will be in the interest of domestic pulse growers, consumers and the processing industry.

Dal milling industry

There are multiple benefits in allowing pulse imports under ‘actual user’ condition. The dal milling industry carries huge idle capacity. Allowing it to import will help enhance capacity utilisation.

After all, it is the core competence of dal mills to process raw pulses and bring them to the market. They have invested money, time and energy in setting up facilities. They need policy support. Allowing pulses import under ‘actual user’ condition will lead to elimination of intermediaries, who add to the cost but not to value.

Importantly, dal mills need to modernise. ‘Actual user’ condition will provide them a much-needed boost and encourage them to invest in scaling up. It will also generate employment and incomes in the dal milling industry, and in the associated logistics and supply-chain segments.

There are several thousand dal mills (estimates are between 12,000 and 15,000 units). So, no single mill or even a group can dominate the market. Supplies will be well-spread and round the year. Because actual users usually import the required raw material in a phased manner, that would ensure a smooth and steady flow of pulses.

Dal mills help advance growers’ and consumers’ interests. For the government, monitoring of imports under the ‘actual user’ condition will help take proactive decisions with respect to any trade or tariff policy.

Importantly, the country may not face any ‘dal shock’ of the type faced in 2015-16, nor would there be excessive import that can hurt domestic growers.

The writer is a global agri-business and commodities market specialist. Views are personal.

COMMENT NOW