Indian Pea Prices Unlikely to Drop Significantly Despite Duty-Free Extension

The Indian government has extended duty-free imports of peas until May 31, 2025, following the initial expiration on February 28. However, market experts believe that this extension will not cause a sharp price drop, as domestic production remains exceptionally low, and import costs have increased.

Limited Domestic Production Keeps Pea Prices Firm

Farmers in India have primarily cultivated white peas for vegetables, leaving dry pea production at just 10% of normal levels. Additionally, imports have slowed due to a recent USD 25-30 per tonne price increase in Canada, making new shipments more expensive.

Domestic stocks are nearly exhausted, with 80% of imported peas already sold at ports. As a result, even with duty-free imports, prices are unlikely to decline sharply.

Market Reaction to Duty-Free Extension

The announcement of the import deadline extension caused a temporary price drop, bringing port prices down to USD 0,432 per kg, from USD 0,438 per kg. However, this decline is expected to be short-lived due to:

• Low domestic production caused by reduced winter conditions and unfavorable weather.
• Farmers shifting to alternative crops such as tomatoes, cabbage, green chilies, and potatoes instead of white peas.
• Limited supply pressure despite new crop arrivals, as farmers hold onto stock due to high vegetable prices.

Weather Impact on Production

Pea production in Lalitpur-Jhansi region has declined by 75-80%, worsening supply shortages. As a result, traders believe that pea prices will remain sluggish only for a short period before stabilizing.

Short-Term Price Trends

Before the announcement, raw unprocessed peas were trading at USD 0,528 per kg, but prices dropped to USD 0,468 per kg post-extension. However, given the tight supply and rising import costs, prices are expected to recover soon.

Conclusion

Despite the duty-free import extension, Indian pea prices will not decline drastically. Low domestic production, increased import costs, and high vegetable prices will support the market. Farmers and traders are cautious, and supply pressures could lead to price stability or a slight recovery in the coming weeks.