Government Initiatives Aim to Stabilize Rising Pulse Prices

With pulse prices showing no signs of decline, the Indian government has removed import duties on desi chana (Bengal gram). Simultaneously, it extended the import window for yellow peas until October 31, 2024, to enhance supply. Previously, chana or chickpeas faced a substantial 66% import duty. These changes, effective from Saturday, May 4, were announced through a late Friday night gazette notification. The extension for yellow peas, often used as a chana substitute, is intended to alleviate supply constraints.

Background and Recent Government Measures

In response to an expected shortfall in chana output, the government initially allowed duty-free chana imports until March 31, 2024. Subsequently, this was extended to April 30. Earlier in April, the duty-free import period for yellow peas was also extended by two months to June 30, 2024.

Market Impact and Price Trends

Chana prices have consistently been 10-15% above the minimum support price (MSP) of approximately $0,65 per kg in Central India's main producing regions. This price rise primarily results from reduced production due to decreased acreage. For the 2023-24 period, the chana crop size is estimated to be marginally lower at about 1.2161 million tonnes compared to 1.2267 million tonnes last year.

Procurement Challenges and Industry Reactions

The rise in chana prices has complicated efforts by government agencies to procure pulses at MSP for buffer stocks. Up to now, procurement data reveals that only 765 tonnes of chana have been purchased this season. Bimal Kothari, chairman of the India Pulses and Grains Association (IPGA), criticized the recent policy changes. He expressed concern that cheaper imports would undermine Indian farmers' interests and negatively impact future crop prospects. Kothari suggested that imposing a duty on yellow peas could align their landing costs closer to chana's MSP.

Global Market Dynamics and Domestic Concerns

The removal of the duty is expected to increase chana imports from countries like Australia, where anticipated shipments to India could reach between 1.5-2 million tonnes. However, the timing of Australia's new chana crop in November—coinciding with India's sowing period—may influence local market sentiments. While India has been importing chana from least developed countries like Tanzania with zero duty, other major producers like Australia were previously hindered by high duties. For the 2023-24 period, India's chana imports are projected to more than double to about 1.49 lakh tonnes from the previous year's 59,255 tonnes.

Overall Pulse Production Forecast

Overall, pulse production for 2023-24 is expected to decrease to about 2.3442 million tonnes from 2.6058 million tonnes last year. This reduction is mainly due to decreased production of urad, moong, and chana. This situation underscores the significant challenges in meeting domestic demand and maintaining stable market conditions.