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East African nations — Tanzania, Ethiopia, Mozambique, Uganda, Malawi — are upset with the Indian government. Pulse growers in these countries are let-down by the Centre’s sudden decision to shut the door on pulse imports from these origins which has inflicted huge losses on African growers.
After encouraging African nations to produce more for meeting the country’s ever-rising demand, the Indian government imposed quantitative restrictions (QRs) on import of tur/arhar (pigeon pea) and urad (black matpe) and moong (greengram) in August last year which has effectively denied market access to pulses from Africa.
The widespread discontent following India’s decision is sure to have a medium- to long-term implication for India’s political and economic relation with East African nations. India’s image as a reliable trade partner has surely taken a beating.
Wooing Africa
The wholly unexpected decision (from the African side) to clamp QRs has meant that African farmers, most of them smallholders like in India, have been denied access to the world’s largest pulse market.
When faced with serious shortage of the protein-rich legume during 2014-2016 period, Indian government officials, including the Prime Minister, went around these countries, desperately engaged with the governments there and urged them to produce more and supply more to India.
In 2016-17, India harvested a record crop of 22.9 million tonnes (previous year 16.4 mt); but the policy of unrestricted duty-free import continued until August 2017 by which time traders had already imported nearly 4 mt.
This led to a glut that sent domestic prices spiralling down. Demonetisation of high-value currency in November 2016 and a trading community demoralised by imposition of stock limits and seizure of pulses exacerbated the price action.
Domestic price collapse and agitation by growers forced the Indian government to take precipitate action; and the Centre made the facile decision to impose controls on imports through trade route and tariff route.
Taking India to WTO
The anger among the East African governments and pulse growers is palpable. They have incurred heavy financial losses; and there are not many markets for them to service. Some of them are keen to drag India to the WTO and to the courts.
Some are said to be examining the possibility of legally challenging the imposition of QRs on pulse import. India has committed to WTO years ago that QRs will be removed. Some form of retaliatory action from African countries cannot be ruled out.
It is unclear if New Delhi is ready to face the political and diplomatic challenge. India’s ongoing efforts to engage with Africa may be jeopardised. It is necessary to recognise that Indian agriculture, in general, and pulses production, in particular, is vulnerable. What if there is a setback to pulse crops next year? Who will supply to India because India has alienated its trade partners?
The validity of QR on pulses — tur/arhar two lakh tonnes and on urad and moong combined three lakh tonnes — is till March 31, 2018.
Despite imposition of QRs on aforesaid pulses and subsequently, customs duty on others (chickpea, yellow pea and lentils), market conditions within the country have not improved.
Prices are still well below the minimum support price and growers are still unhappy.
For a country that year after year procures 50-60 mt of rice and wheat, sourcing 3-4 mt of pulses should not be difficult at all; but that calls for political will. The government should strengthen pulse procurement.
It is desirable to engage professional warehousing companies in the private sector and work towards including pulses under welfare programs.
Importantly, the Indian pulses sector needs holistic solutions — production, processing, distribution, consumption, value-addition and foreign trade.
Solutions are available; but sadly, there is no policy, nor is there political will to make the sector competitive.
We see only knee-jerk reactions from time to time.
The author is a global agribusiness and commodities market specialist. Views are personal.
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