G Chandrashekhar

India’s pulses consumption demand may be underestimated

G CHANDRASHEKHAR | Updated on January 13, 2018


Are we underestimating the consumption demand for pulses? Consider the following data. For 2016-17, there is a massive rebound in pulse production and the country is harvesting record crops. While Kharif output is estimated at 87 lakhs tons (previous year 55 lakh tons), the latest estimate from the Ministry of Agriculture for Rabi pulses suggests harvest of 134 lakh tons (108 lakh tons) taking the annual total to a humungous 221 lakh tons (164 lakh tons).

In other words, we have as much as 57 lakh tons of incremental production this year. At the same time imports are continuing without any marked let up. According to data compiled by the Ministry of Commerce, April to November arrivals were 39 lakh tons, five lakh tons higher than 34 lakh tons imported during the corresponding period in the previous year. Indeed, the month of November alone registered arrivals of 11.7 lakh tons.

Projected import for the entire financial year 2016-17 is well set to cross the 50 lakh ton mark. For comparison, aggregate imports in 2015-16 were 59 lakh tons. Clearly, despite a massive 57 lakh ton higher output this year, imports have continued unabated and expected show only a marginal decline. Admittedly, while our crop production estimates are on crop year basis (October to September), import data are on the basis of financial year (April to March).

These numbers clearly suggest that India’s consumption demand for pulses is ravenous and far higher than what the policymakers have been projecting (220 lakh tons). One of the factors contributing to higher consumption demand could possibly be an increase in rural incomes following a near-normal southwest monsoon and rebound in fam output. Also, softening of food prices is encouraging consumption higher than what was seen in the previous two years.

The Rabi pulse crop numbers are really large with chana (chick pea) output estimated at 91 lakh tons (71 lakh tons). O, pulse prices are most likely to continue to remain soft in the coming months. It is necessary to ensure that growers are well supported and not made to feel disappointed or disillusioned over prices.

Growers in major exporting countries have had a dream run in the last three years as they realized most remunerative prices following demand spike in India. They may have to review their price expectation for this year in the wake of changed Indian scenario in terms of higher production. It looks like 2017 may not be their year for two reasons.

One, unlike last two years, Indian importers have turned wary of taking speculative positions several months in advance. During March, April and May 2016, Indian importers made huge advance commitment for import, estimated at 25-30 lakh tons for arrival in the last quarter of the year. No big deals are reported this year.

Another reason is the looming threat of Indian government insistence on methyl bromide fumigation of imported cargo at the origin. If implemented, it is likely to disrupt normal business after the cutoff date of March 31. Canada and USA would be the worst affected as these countries have banned the use of the fumigant on environmental grounds. In the event, overseas prices (especially export prices) are likely to come under downward pressure.

Indian importers, especially the large ones, are already devising strategies to address the potential risk of non-clearance of cargo in the event methyl bromide fumigation does not happen at the origin. It is possible, such fumigation may be done at some intermediate port in order to satisfy the Indian plant quarantine rules.

(The author is Global Agribusiness and Commodities Specialist)

Published on February 22, 2017

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