Pulses policy must break new ground

G Chandrashekhar | Updated on January 16, 2018

Much neglected: Nothing colourful


This kharif, with its high pulses output, provides an opportunity to push procurement, processing — and lift curbs on exports

Pulses have been in the news over the last one year and for all the wrong reasons. Sharply lower harvests two years in a row (2014-15 and 2015-16) due to a below-normal southwest monsoon in the kharif season and unseasonal rains during the rabi harvest combined with rising domestic demand sent wholesale and retail prices soaring.

Indeed, retail prices escalated to unconscionably high levels (tur dal sold at over ₹200 a kg). The international media termed it the “pulse shock” and the local media panned the Government for its failure to contain the price rise. Indeed, there is a belief that rising dal prices influenced the outcome of the Bihar election. Eventually, the Government cracked down on speculative hoarding, imposed storage limits and seized stocks; but the damage was done.

Delayed reaction

Despite continuing imports, prices at the wholesale and retail levels went through the roof. The huge differential between wholesale and retail prices — often as much as 30-40 per cent — exacerbated the situation. The Government’s response was knee-jerk and delayed. Some parastatal agencies were directed to undertake imports but the quantities were so meagre that there was no meaningful impact on domestic prices.

Meanwhile, sensing India’s political desperation to contain rising pulse prices and the dire need to augment supplies through imports, international market prices moved up sharply. Many pulse exporting countries produce with India as the target market. They closely monitored Indian market conditions and happily jacked up their export prices knowing the tightening supply situation in India.

The ‘pulse shock’ was in the making for many months. It was clearly a case of lack of attention by policymakers ( see table).

Pulse output declined by two million tonnes in 2014-15 and by close to three million tonnes the following year from the peak harvest of 2013-14. Yet, import volumes did not match the extent of the decline. In other words, while the country produced about 5.2 million tonnes less over two years, imports increased by a mere 3.2 million tonnes. Meanwhile, demand expanded amid tightening supplies. The market did the rest in terms of price effect.

Clearly, the price spike was a “failure of commercial intelligence within the policymaking circles” and lack of consultation with market participants and domain experts.

Revisit the sector

Now that the dal price shock is behind us following a huge rebound in kharif 2016-17 harvest, it is time to recognise that Indian pulses deserves sound, long-term policy support. As such, there’s hardly any policy for pulses. It is not given the status and treatment it actually deserves.

Many will recall the pulse price spike of 2007 when the Government imposed draconian restrictions such as stock limits, restricted exports, suspended futures trading and so on. We do not seem to have learnt any lesson from that.

The pulses sector deserves a long-term policy encompassing production, processing, consumption and trade. Pulses have not received adequate policy, research and investment support (unlike rice and wheat) in the last two or three decades. Growers need more remunerative prices and assured marketing outlets. Procurement is a strong need to gain growers’ confidence about marketability; but government efforts seem half-hearted.

Given the poor nutritional status of most in the country, consumers deserve pulses as an economical source of vegetable protein at affordable prices. So, in addition to rice, wheat and sugar, pulses should be delivered through the public distribution system.

The dal mills are too fragmented and milling technology antiquated. They need modernisation and consolidation to capture scale economies. The supply chain is inefficient. There is the possibility of attracting FDI in dal milling with modernisation.

Pulses lend themselves to value-addition. There are immense value-addition possibilities —wholesome protein-rich energy bars, for instance.

Pulse export should be opened up. Currently, imports are free but exports are prohibited, except for kabuli chickpea. The restriction on pulse export is anti-grower. Given the global market conditions, India may be able to export about 500,000 tonnes of pulses such as moong. This is a modest quantity in relation to total production and availability; but it is sure to send a positive signal to growers and the world market.

The writer is an agribusiness and commodities specialist

Published on October 23, 2016

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