India may raise pulse imports following poor harvest

Concerns are rising in India about its 2019-20 pulse crops.

The Western Producer has already noted that heavy rain and flooding at the end of the monsoon season damaged crops including pulses in some states.

This raises the potential for India to import more pulses in 2020 but much depends on whether the government there will relax its various restrictions on pulse imports and on the weather during the winter growing season.

Even before the autumn flooding, India’s government expected a smaller summer, or kharif, pulse crop.

The official first advanced estimate of the summer crops released in September pegged kharif pulse production at 8.23 million tonnes, down from last year’s 8.59 million and 2017-18’s 9.22 million. The estimate was also well off the government’s target of 10.1 million tonnes.

Some analysts believe the next advance estimate will show summer production closer to 7.6 million tonnes.

The hardest hit crops were moong beans and particularly urad production, which might be slashed by half.

Last week, the Indian Pulses and Grains Association asked the central government to increase the import quota by 600,000 tonnes, including 200,000 tonnes each of urad, moong and yellow peas.

Neighbouring Myanmar, which also grows urad, might be the biggest beneficiary if India allows increased imports, but Canada might get some of the yellow pea business.

The official target for dry season winter, or rabi, pulse production is an ambitious 16.2 million tonnes but the weather has implications for that crop too. Good soil moisture and full irrigation reservoirs following the wet autumn should support yields but in many areas it is still too wet to seed.

As of Nov. 22, winter pulse seeding was 19.3 percent behind the normal pace.

The winter pulses are types such as chickpeas and lentils that more directly compete against the pulses grown in Canada.

Another factor going against winter pulse seeding is the high support level for wheat. The government this season lifted the support price 4.6 percent to 19,250 rupees per tonne, or $357 converted to Canadian dollars. The strong price is expected to cause farmers to seed more wheat at the expense of other winter crops.

As for all pulses, the government’s goal for the combined summer and winter crops was 26.3 million tonnes, which would have been a record and far greater that what was the norm only a few years ago.

Before the government raised the floor price and implemented other incentives for pulse production in 2016-17 to promote self-sufficiency, production ranged roughly between 14 million and 19 million tonnes, which was a major shortfall considering Indians consume about 24 million tonnes a year.

The incentive programs and a string of good monsoons saw production jump to 23.1 million in 2016-17, 25.4 million in 2017-18 and 23.4 million last year.

With domestic production close to matching consumption, India did not need large pulse imports that would undercut domestic prices. It instituted several barriers such as quotas and the limits on fumigated product.

Canada, Australia and the United States are challenging India’s domestic support for pulses and the trade restrictions at the World Trade Organization.

One aspect of the complaint regards the way India reports its Market Price Support to the WTO.

Canada and the U.S. complain that by converting the MPS to U.S. dollars and including only the volume that the government actually buys, India substantially under reports the impact of the domestic support. India’s method of calculating support indicated that it was worth only 1.5 percent of the total value of production whereas the complaint says a more realistic calculation puts the support at between 31 and 85 percent of the total value, well above the level that India must follow under WTO rules.

New information about the complaints was filed with the agriculture committee of the WTO as recently as the end of October but there is no way to know when the issue will be resolved.

I doubt that we will ever see a return to the glory days of Canadian pulse exports to India. It is now serious about self-sufficiency and is unlikely to backtrack. If Canada and partners do win at the WTO it will likely result in more hassle-free, but modest Indian pulse imports except in years when they have severe weather problems.

When India mostly disappeared from the international pulse market in 2017 Canadian exports took a massive hit.

But they are performing better this year than in the past two years.

As of week 16, bulk exports of peas to all destinations stood at slightly more than one million tonnes, up 50 percent over the same point last year and the best pace in three years but still well behind 2016, according to Canadian Grain Commission statistics.

Lentil bulk exports stood at 248,000 tonnes, up 77 percent from the same point last year and also the best pace since 2016.

India is still the biggest export market for Canadian lentils but China is the biggest foreign buyer of peas.

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