Increased demand for Canadian pulses expected Pulses are expensive items for India’s poor, while the country expects a small crop
India has doubled its subsidy on imported pulses that are supplied to poor people through the public distribution system.
The new subsidy amounts to 37 cents per kilogram of imported pulses. It will be in place until March 31, 2013. The government will decide early in the new year whether it will be extended.
Raghavan Sampathkumar, an international market promotion consultant with Saskatchewan Pulse Growers, said it is a big incentive for India’s poor because pulses are one of the most expensive items in their family budgets.
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
The move was prompted by an expected pulse shortage. India’s food minister is “slightly worried” about kharif (summer) pulse production.
India’s department of agriculture estimates kharif pulse production at 5.26 million tonnes, which would be 15 percent below last year’s output and 25 percent below the government’s target.
Sampathkumar said doubling the distribution subsidy is a way for the government to keep food price inflation in check.
However, there is some doubt whether the subsidy will have its intended impact because the program is fraught with corruption and bribery. Last year, the government unearthed a $223 million scam related to the subsidy.
Sampathkumar thinks the subsidy combined with the strengthening Indian rupee should lead to brisk activity from Indian traders and increased demand for Canadian pulses.
Chuck Penner, analyst with LeftField Commodity Research, is more reserved. He said the subsidy applies only to certain states.
“I don’t know that it’s going to have a large impact on demand. It will probably have some, but I don’t know how much,” he said.
Penner said the rupee has appreciated by six to seven percent against the U.S. dollar over the past two to three weeks, which could have a bigger impact on demand.
“It makes pulses that much more affordable in the country for them to bring them in,” he said.
However, he has the sense that India has already bought enough peas and lentils to meet its needs for awhile.
“Right now, I don’t think they’re really actively seeking pulses.”
Sampathkumar said India’s monsoon season started weak but finished strong, propping up prospects for the rabi (winter) crop, which produces the majority of the country’s annual pulse harvest.
The rabi chickpea prospects appear to be good, which will likely keep a cap on demand for Canadian yellow peas.
Penner said the late season rains have enabled Indian farmers to get an early start on their rabi chickpea crop, planting it in ground that wasn’t seeded during the kharif season.
“The earlier you get planted the better your odds are of a good crop, just like in Saskatchewan,” he said.
Sampathkumar expects to see good demand for Canadian red lentils in the next two to three months because of rising prices for that crop in India.
On the flip side, pigeon pea prices have decreased because of the government forecast for a four percent increase in kharif production of that crop and plenty of supply available from Myanmar and Africa. That will make it harder for Canadian green lentils to remain competitive in that market.
