Policy Issues in Pulses in India

A Amarender ReddyPrincipal Scientist(Agricultural Economics)

Division of Agricultural EconomicsICAR-Indian Agricultural Research Institute, New Delhi

Email: amarender@iari.res.in; anugu.amarender.reddy@gmail.com

Overview of the sector • Production increased from 13-15 mt in 2009-10 to 19 mt in 2014.

• Export ban, zero import duty, stock limits in 2006 (short term measures)

• NFSM-pulses, A3P, increase in MSP from 2007 onwards, good monsoonfrom 2010 to 2014 (combination of technology and price with goodmonsoon)

• 2015 and 2016 bad years

• About 90% of the pulses growing districts with less than 1 t/ha yield.

• Demand growing faster (4-5% per annum)

• Indias imports about 3-5 million tonnes. (world trade only 12 MT)

• By 2025 IIPR estimates 25.39 million tons demand. (some other estimate 27 MT to 30 MT)

– Production needs to grow atleast 5% per annum” Approach paper 12th Plan

– In fact some econometric estimates of the income elasticities of demand ofpulses range from 1.5 to 2.0. This would mean that with an increase of around6.5% annual in per capita income demand for pulses would increase aroundten percent annually.(Y.K. Alagh, The Future of Indian Agriculture, IndianEconomic Journal, April 2011, pp. 40-55:also the same title, NBT,2012)

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Trends in production, net imports and availability(MT) and forecast

Net imports Production Total availability

Production and availability of Pulses (Million Tons)

Year Production Net imports Demand 2008 14.8 2.0 16.82009 14.6 2.9 17.52010 14.7 3.6 18.32011 18.2 2.6 20.82012 17.2 3.3 20.52013 18.3 3.8 22.12014 19.8 3.3 23.12015 17.2 4.4 21.62016 18.3 5.2 23.52020 21.3 5.8 27.12025 24.0 7.3 31.3

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Area(MHa), production(MT), % irrigated area and yield pulses

Area Poduction % irrigated area Yield

35 180 268579

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Exports and imports of pulses (1000 tons)

Exports Imports

Sudden increase in imports due to zero duty from 2006 onwards

and also recent shortfall.

Lentil is major export until 2001, but now chickpeas.

Relative increase in MSP for

pulses, evoke interest in

pulses by farmers, area

increased

10 123 5

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UP Bihar MP Rajastan Punjab Other states All India

Pulses consumption (gm/capita/day)

Arhar Gram Moong Masur Urd Peas Khesari Other

Consumer tastes: arhar is preferred even at Rs.70/kg, compared to peas at Rs.14/kg

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UP Bihar MP Rajastan Punjab

Consumption of poorest and richest consumers(gm/capita/day)

Poorest Richest

% of households consumed pulses in the reference month

Pulses UP Bihar MP Rajasthan Punjab others India

gram-split 32 52 42 71 85 38 41

besan 54 35 49 66 68 30 36

gram-whole 15 30 9 9 83 27 26

arhar 81 38 89 26 11 59 58

moong 29 31 55 87 89 51 51

urad 46 3 28 39 50 42 40

peas 39 6 5 1 1 12 13

kesari 0 6 2 0 0 2 2

Growth in per capita income

at 6% boost demand

further.

Demand growth is projected

at 27 MT by 2020 and 31

MT by 2025 (IIPR projected

26 MT by 2025)

Need to import 5-7 MT

(world trade is only 12 MT)

Arhar, moong,

urad: world

supply is limited

Pulses Exports

(1000 tons)

Share in total

pulses exports

(%)

Import

s(1000

tons)

Share in total

pulses imports

(%)

Peas 0.7 0.3 1351 38

Moong/Urad 1.6 0.6 634 18

Lentils 0.9 0.3 608 17

Chickpeas 264.4 98.5 487 14

Pigeonpeas 0.8 0.3 486 14

Total 268 100.0 3564.5 100.0

India’s imports and exports

(average of 2012-13 and 2013-14)

Is India is competitive enough for import substitution?

Productivity of pigeonpea

Productivity of chickpea

Technology

reduced cost of

production in rabi,

but not in kharif

pulses

(the production of

kharief pulses

mostly depend on

good monsoon)

Instability

decreased in all

pulses

Cost of production (Rs/q)

Instability index

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Jan Feb Mar April May June July Aug Sept Oct Nov Dec

Monthly average prices (2009 to 2014)

Moong Arhar dal Urad Masoor dal Gram dal

Throughout year prices of moong and arhar are higher and gram and masoor lower

Challenges • Production =f(area, yield); area =f(profitability, risk)

• Profitability =f(yield, price)

• Area Stagnation: The main reason for stagnation in area under pulses has been differential impact of technology and relative profitability leading to shifting of area under pulses to more remunerative crops.

• Expansion of irrigation was another factor. Uncontrolled water flows(flooding) common in canal systems is incompatible with large scale area under pulses.

• Even though instability decreased, still risk in production of gram is more than wheat; arhar is more than maize.

• Pulses grown under unirrigated, rainfed conditions in marginal lands.

• Productivity below 750 kg/ha, while competing countries like Canada, Australia reached 2000 kg/ha.

• Technology breakthroughs in the difficult regions and adverse farming conditions ( rainfed regions, the ghats and hill regions) was just not there on a large scale

Challenges I. Scattered and thin distribution, with each crop contributing

a small share in total pulses area – the biggest hurdle for crop specific strategies (to procure at MSP, to distribute HYVs, rizobium culture) institutional support;

II. Low genetic yield potential

III. low response to input management

IV. shifting of pulses to low-productive and marginal lands

V. high frequency of crop failure and yield instability due to biotic and abiotic stresses

VI. Low priority by policy makers and also by farmers

Opportunities: Low hanging fruits• Seed replacement rate to 33%- truthful seeds

• Focus on kharif pulses (low productive and high potential)

• Yield gaps –NFSM, A3P, RKVY

• high MSP

• Incentive schemes(income insurance/income deficiency payment).

• Life saving irrigation/micro-irrigation

• Inter-cropping and mixed cropping/bunds – short duration

• Area under pulses is price elastic (fallow lands, reclaimed waste lands, harsh condition)

Opportunities

– rice fallow lands 3 to 4 million ha – this has the potential for additional production of around 2.5 MT. (eastern India)

– About 5 lakh ha area of upland rice and other water intensive crops grown under water scarcity conditions, currently giving low yields can be brought under kharif/rabi pulses.

– short-duration 60-65 day summer moong and urad where adequate irrigation facilities exist

– Blue bull is to be contained.

– Similarly pigeon pea on rice bunds and intercropping in specific agro climatic regimes is identified

– Land development through watershed programme (around 9 million ha)

Policy variables• MSP and government procurement not effective-(deficiency payment)

• Price monitoring- timely intervention (reduce hoarding)

• Maintain price band ( trigger procurement and import subsidy)

• Buffer stock purchase from open market

• Subsidies for micro-irrigation/mobile sprinklers/rizobium innoculum compatible with WTO (infrastructure, buffer stock, food security)

• farm mechanization (simultaneous harvesting of rice crop and sowing of pulse crop)

• Procurement centre with adequate storage facilities at block level in majorpulse growing zones.

• Removal of controls like export ban, stocking limit to facilitate nationalmarket

• Contingency planning

• Futures and spot markets

• Aggregators/producer companies (Rs.500 crores special purpose vehicle)

Newer Business Models• Pulses development require some innovative institutions like

PPPs– Rallis India – Tamil Nadu Govt. and partnership for enhancing black gram

cultivation in 3 blocks of Pudukkottai district of Tamil Nadu.

– Tata Chemicals Ltd.- Punjab state Govt. partnership for promotion of summer moong in Punjab.

– Agriculture Consultancy Management Foundation (ACMF)- Rallis India Ltd. partnership at Somangalam (Chennai) in Tamil Nadu for promotion of black gram cultivation.

– Seed production with active involvement for producer companies.

– Improved storage facilities

– Farm Extension to rizobium culture, pulses in waste/fallow lands.

– Crop-insurance and credit delivery.

– Procurement of produce from farmer at market rate + incentive.

Key Recommendations

• Atleast 50% of the districts reach 1t/ha yield level is possible as it happened in chickpea (66%).- NFSM/RKVY/A3P

• 5 million ha additional area in next 5 years is possible- watershed development

• Market based policy instruments with better price monitoring system

• Transgenic crops – a long term strategy

Thank you!