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What’s Happening with Indian Pulse Crops?
 
By now, it’s well known that India’s approach to the pulse market has caused a lot of turmoil for farmers and traders. Much of the media attention has been on India’s 50% import tariff imposed on peas in early November. The ripple effects of that decision also spilled over to lentils and, to a lesser extent chickpeas as there’s some concern about tariffs on these crops as well.
 
While the pea import tariff was blamed for the halt in Indian pulse imports, the truth is that heavy inventories in India had already caused a sharp slowdown in demand earlier in fall. Heavy Indian imports from the Black Sea region and eastern Europe added to that heavy feeling. The tariff on peas was just a more abrupt (and newsworthy) event.
 
 
Essentially, the Indian government was trying to shore up prices for its farmers as they began to plant the winter (rabi) crop starting in November and it certainly did that, at least for peas. Higher Minimum Support Prices (MSPs) were also announced for desi chickpeas and lentils, but that’s had little impact on those prices.
 
India’s stated goal is to develop greater self-sufficiency in pulses and encouraging farmers through artificially inflated prices seemed like a good idea, at least to them. Basic economics clearly indicates that expanding production will cause prices to drop further and the problem just gets kicked further down the road.
 
The pea import tariff and higher MSPs seem to have had the desired effect of supporting pulse planting. The pace of planting all three main pulse crops is above the 5-year average and for chickpeas and lentils, seeded area is above last year’s record levels. This is setting the stage for another large Indian pulse harvest early in 2018 and if that’s the case, Indian demand for pulses will remain weak.
 
 
With the acreage side of the Indian production outlook now fairly well established, the attention has shifted to the yield potential. It should be emphasized that yield forecasts at this point in the year are very early, the rough equivalent of predicting the Canadian crop in mid-June.
 
With that disclaimer, rainfall since the beginning of the rabi season has been low in the northern third to half of the country, where pulse production is more heavily concentrated. Winter in India is the drier portion of the year anyway but precipitation amounts so far have been significantly below average. This doesn’t mean the crop is written off yet as temperatures later in the rabi season are often the biggest make-or-break factor for yields. And even if the crop performs worse than normal, the increased acreage would offset some of those losses.
 
Based on the information in front of us, it doesn’t look like India will be short of pulse supplies in the short to medium-term. Increased acreage, even with poor yields, will keep a supply cushion in the market. Unfortunately, this means the import tariff on peas could stay in place for an extended period and Indian buyers of lentils and chickpeas won’t be buying heavily anytime soon.
 
Source : Albertapulse