Export opportunities for pulses | India revives pulse import subsidy to control food price inflation
India’s faltering pigeon pea crop and its revamped pulse import subsidy could provide much-needed support to Canadian lentils and yellow peas, says an analyst.
A story in India’s Business Standard said the country’s reliance on imported pulses will increase be-cause of pest damage to the summer season pigeon pea crop.
A veteran Indian pulse trader quoted in the article said pod borer has reduced yields by a minimum of 10 percent.
Other reports peg the damage at far more than that.
“They always have some pest problems. It seems to be much bigger this year. I’ve heard as high as 25 to 30 percent,” said Marlene Boersch, analyst with Mercantile Consulting Venture.
“That’s why it surprised me that we haven’t seen a little more follow through on lentils.”
Green lentils are a good substitute to pigeon peas, but Canada faces stiff competition in India from excess pigeon pea production in Myanmar and Africa.
Boersch thinks Canadian lentils should be a good deal, but importers are hesitant to buy because they believe markets could be turning down.
“I have little doubt in my mind that there are some shortfalls that they will one way or another have to address,” she said.
“We really need some help with green lentils right now.”
Alliance Grain Traders president Murad Al-Katib said there are differing views on the severity of the pest damage.
However, what appears certain is that the poor start to the monsoon season caused significant production problems for the summer crop. He said the Indian government has reduced its estimate of summer pulse production by one million tonnes. There are also lingering subsoil moisture concerns as the winter crop is seeded.
“We think that there will be a sustained demand event in India that will last through until March of the 2014 crop,” said Al-Katib.
Another encouraging development for Canadian growers is that India has revived a pulse import subsidy that was in place between August 2008 and June 2012.
According to an article in the Hindu Business Line, the government will subsidize imports of one million tonnes of pulses to be distributed in 2012-13 through India’s Public Distribution System (PDS).
The subsidy has been doubled to $385 per tonne. The goal is to keep food price inflation in check following what is expected to be a disappointing kharif harvest.
“I would expect that we might see some of these state buying agencies coming to the market and buying on that basis later in the year, which would be very, very supportive to us,” said Boersch.
The Hindu Business Line article said states participating in the PDS program have shied away from Canadian yellow peas in favour of chickpeas, pigeon peas, black gram and green gram from Myanmar, Tanzania, Malawi and Australia.
However, this year could be different because of a “paucity of surplus supplies” of products such as chickpeas in export markets. The subsidized price of yellow peas of $37 US per tonne could be lucrative given the open market price of $441 per tonne.
Boersch said growers will likely have to wait until winter for demand through the PDS system to materialize because importers are sitting on ample pea supplies.
“They’ll be waiting to clear some of that out before they bring more material in,” she said.
Earlier this month, India’s government said it was increasing minimum support prices for domestically produced rabi chickpeas and red lentils, while keeping barley and wheat support unchanged.
“They are supporting the two key pulses to wean them off import dependence,” said Boersch.
However, she doesn’t believe the seven percent increase in the chickpea subsidy and the 3.5 percent increase in red lentil support will be enough to convince growers to plant more pulses because of poor yields for those crops.
“In spite of keeping wheat unchanged, it’s still the highest return per acre,” said the analyst.
Boersch used five-year average yields to determine that chickpeas rank third in estimated returns, providing Indian farmers with three-quarters of what they can get from wheat and rapeseed-mustard. Lentils are even worse, ranking fifth out of the six major rabi crops.
“This (incentive) is not doing much, certainly not doing anything special to support pulses,” she said.
Al-Katib said slumping lentil prices will lead to acreage contraction around the globe in 2012-13, but that will help lower the surplus.