Pulses: Still Short of Need but Set to Pull Down Global Prices.

NEW DELHI: India’s import of pulses could drop by about a million tonnes next year, with good rains and higher purchase prices announced by the government promising to boost production.

The projected increase in pulses crop in the world’s largest consumer this year could trigger a fall in global prices of pulses next year, helping the government’s efforts to rein in sticky food prices.

While the higher than average pulses crop will not help India break out of the vicious cycle of import dependence, it will pressure large exporters such as Canada, Myanmar, Australia, the US, Ukraine, France, China and Tanzania to peg prices lower.

Pulses have contributed a good deal to the food inflation that stood at 15.53% in early October despite government’s efforts to address this politically sensitive issue.

A recent Citigroup report said pulses production is likely to be in the vicinity of 15.7 million tonnes in 2011-12 against a demand of 19.9 million tonnes, necessitating imports of 4.2 million tonnes.

Pulses importers association president KC Bhartiya expects imports to fall to 2 million tonnes from an average of 3 million tonnes over the last few years, as he expects kharif and winter-sown pulses output to increase sharply.

Winter-sown crops account for around 60% of all pulses produced. The sharp 20% pre-season increase in the government purchase price of Masur and Chana will result in a rise in area under cultivation.

A similar increase for the last kharif season had boosted acreage under pulses by 20 lakh hectares to 110 lakh ha, which is expected to deliver a higher crop ouput of 6 million tonnes compared to only 4.3 million tonnes in 2009-10 . Another 1 million tonnes increase is expected in the winter crop from additional acreage.

During the festival season last year, prices of urad, chana and arhar shot up phenomenally. Prices remain at the elevated levels, but commodities experts do not see them rising further.

“Demand will rise by 15% in the peak demand season but would calibrate downward once the rabi pulses marketing season begins in March 2011,” said one expert.

The output gains this year may, however, be a temporary phenomenon as unless there are sharp productivity gains, the growth is not sustainable over a period because of limited land availability.

Pulses yield remains abysmally low at around 600 kg a hectare, resulting in per capital availability of pulses dropping alarmingly over the years.

“There is a dire need to develop high yielding varieties of pulses to boost domestic production,” said a commodities analyst with industry body Assocham.

Meanwhile, rising incomes will spur demand, creating further pressure on prices. In the long run, prices could fall in a sustained manner only if domestic production expands to match local demand.

Source : economictimes.indiatimes.com