Rumours fly on Indian pulse ban

This week’s rumours of India placing an all-out ban on pulse crop imports are likely just that, rumours.

A pair of good crops in a row have left the country with ample supplies of most pulses, and with half of the population involved in agriculture and a federal election coming, the government is looking to make good on some promises to farmers.

However, a ban would not fit within World Trade Organization rules, and India still has tools it can use to improve farm margins.

The rumours began with social media posts in the grain trade March 30 suggesting that a complete closure of pulse crop imports was imminent.

Serious restrictions to trade in crops such as lentils and chickpeas began last December with a 30 percent tariff, followed by 10 percent more in February and 20 percent again in March. The 60 percent tariff has shut down imports of pulse crops to India.

Grain Producers Australia says the rumours of further restrictions are unproven so far, but it has been looking into the subject.

Chair Andrew Weidemann said the current 60 percent tariff is having that effect already because none of the Australian crops are currently moving into that market.

He said the rumour and the tariffs are likely a political situation that is aimed at attracting farmer and rural votes.

Last week the Indian government did go one step further by adding a seven percent export subsidy to chickpeas with its Merchandise Exports for India Scheme. Put in place until June, the MEIS provides grain traders a credit they can invoke at a later date when they import product.

India had banned exports of pulse crops for nearly a decade. Last September it allowed the export sale of split green lentils and black gram, later expanding that to all pulses last December. However, because of relatively high domestic prices, Indian pulses have not been attractive to international buyers.

The winter, or rabi, crop that is being harvested in the important west-central and northern growing areas of Madhya Pradesh, Karnataka, Maharashtra, and Rajasthan now appears to be yielding well, say Indian officials.

Government-supported prices for pulse crops have seen farmers shift from wheat to crops such as chickpeas in Madhya Pradesh, say officials. However, those added supplies are also costing the government money as it ensures that producers receive reasonable returns from the crops.

The All Indian Dal Millers Association suggests that chickpea production for this season will be as much as two million tonnes greater than last year.

Suresh Agarwal, head of the organization, told India’s Economic Times that under another of the government’s crop subsidy programs, the Minimum Support Price, at least 2.5 million tonnes would need to be exported to cause that protection to kick in.

The recent rumour might have stemmed from lobbying efforts by the Indian pulse industry. In the heart of the pulse-producing region, Indore miller Suresh Aggarwal, representing a group of processors, had asked two weeks ago for the cancelling by the end of March of a government quota for five million tonnes of pulse imports in 2018. That would have created a complete ban on imports.

In March, the U.S. Trade Representative’s office registered a dispute with the WTO, charging that India should not be using export subsidies.

Rabobank’s March regional agribusiness report suggested the 60 percent Indian tariff on pulse crops made Indian imports “unviable.”

“But if that doesn’t stem the flow, we can expect further increases to the chickpea tariff, plus there is still room to move on the Indian wheat, field pea and lentil tariffs,” said report author Rohit Dhanda.

“A well-supplied Indian market with low prices and upcoming elections support desi chickpea prices staying in the low A$500 per tonne range over the coming nine to 12 months. Lentils and field peas can expect similar ongoing pressure over the year.”

India is expected to produce a record 24 million tonne pulse crop in the 2017-18 crop year, compared to last year’s 23 million.

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