ifpri pulses policies

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Pulses production and marketing strategies A Amarender Reddy Principal Scientist Division of Agricultural Economics Indian Agricultural Research Institute, New Delhi Presentation at IFPRI, New Delhi Pulses for Sustainable Agriculture and Human Health 31 May-1 June 2016

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Page 1: Ifpri pulses policies

Pulses production and marketing strategies

A Amarender ReddyPrincipal Scientist

Division of Agricultural EconomicsIndian Agricultural Research Institute, New Delhi

Presentation at IFPRI, New DelhiPulses for Sustainable Agriculture and Human Health

31 May-1 June 2016

Page 2: Ifpri pulses policies

Overview of the sector • Production increased from 15 mt until 2009-10 to 19 mt by 2014.• Export ban, zero import duty, stock limits in 2006 (short term measures)• NFSM-pulses, increase in MSP from 2007 onwards, good monsoon from

2010 to 2014 (combination of technology and price with good monsoon) • 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) • 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)– Production needs to grow atleast 5% per annum” Approach paper 12th Plan – In fact some econometric estimates of the income elasticities of demand of

pulses range from 1.5 to 2.0. This would mean that with an increase of around 6.5% annual in per capita income demand for pulses would increase around ten percent annually.(Y.K. Alagh, The Future of Indian Agriculture, Indian Economic Journal, April 2011, pp. 40-55:also the same title, NBT,2012)

Page 3: Ifpri pulses policies

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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

Total availability

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

Page 4: Ifpri pulses policies

35 180 268579 417

3565

0500

1000150020002500300035004000

1992/94 1999/2001 2013/14

Exports and imports of pulses (1000 tons)

Exports ImportsSudden increase in imports due to zero duty from 2006 onwards and also recent shortfall.Lentil is major export until 2001, but now chickpeas.

Page 5: Ifpri pulses policies

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

Page 6: Ifpri pulses policies

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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

Source: NSSO

Page 7: Ifpri pulses policies

32 30 29 27 29 28 27 25

3329 29 27

22 20 19 18

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10152025303540

FC ST OBC SC FC ST OBC SC FC OBC ST SC FC SC OBC ST ST FC OBC SC

UP Bihar MP Rajasthan Punjab

Pulses consumption by social group(gm/capita/day)

Page 8: Ifpri pulses policies

Pulses UP Bihar MP Rajasthan Punjab India

gram-split 32 52 42 71 85 41besan 54 35 49 66 68 36

gram-whole 15 30 9 9 83 26

arhar 81 38 89 26 11 58

moong 29 31 55 87 89 51

urad 46 3 28 39 50 40peas 39 6 5 1 1 13

kesari 0 6 2 0 0 2

% of households consumed pulses in the reference month

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

Source: NSSO

Page 9: Ifpri pulses policies

Type of food Frequency of consumption Daily Weekly Occasionally Never Total

Women Pulses or beans 52.7 36.8 9.6 0.9 100Milk or curd 39.8 15.6 33.2 11.4 100Dark green, leafy vegetables 64.2 28.7 6.8 0.3 100Fruits 12.7 27.2 56.6 3.5 100Eggs 3.5 28.8 32.9 34.8 100Fish 6.3 21.9 34.3 37.5 100Chicken or meat 0.9 21.8 42.2 36.1 100Fish or chicken/meat 6.8 28.5 32.0 32.6 100Men Pulses or beans 52.1 38.6 8.4 0.9 100Milk or curd 46.7 20.5 25.8 7.0 100Dark green, leafy vegetables 59.1 34.5 6.0 0.4 100Fruits 13.1 34.4 50.0 2.6 100Eggs 5.2 36.1 36.3 23.3 100Fish 6.2 25.1 38.2 30.5 100Chicken or meat 1.2 27.1 46.0 25.6 100Fish or chicken/meat 6.9 34.1 36.1 23.9 100

Pulses are part of daily consumption basket

Source: NFHS

Page 10: Ifpri pulses policies

Crop local private trader

mandi input dealer

government agency

processor others all

arhar 45.2 44.0 9.7 0.1 0.0 1.0 100urad 68.2 25.4 5.8 0.8 0.0 2.4 100moong 69.0 26.4 2.3 0.9 0.0 1.5 100gram 41.9 46.8 10.9 0.4 0.0 0.6 100masur 55.7 21.4 23.2 0.0 0.0 0.0 100Pulses 56.5 33.5 8.9 0.5 0.0 1.2 100

Percent share of farmers reporting sale to different agencies

aware of MSP

aware of procurement agency

sold to procurement agency

% of sale at MSP to total sale

average sale rate received at MSP

arhar kharif 4.6 3.8 1.3 1 35urad 5.7 3.7 1.6 1 38moong-kharif 9.8 7.2 1.8 1 53gram 12.6 9.7 3.9 5 30arhar-rabi 14.2 13.1 4.7 1 47moong-rabi 9.1 3.7 1.9 2 58masur 18.1 15.5 2.0 0 36

% of agricultural households having awareness about MSP

aware of MSP

sold to procurement agency

Procurement agency not available

no local purchase

poor quality of crop

Received better price over MSP

others Total

arhar_k 4.6 1.3 0.2 0.5 0.1 1.5 1.1 3.3urad 5.7 1.6 0.2 1.3 0.1 0.4 2 4.1moong-K 9.8 1.8 0.7 0.6 0 1.6 5 7.9gram 12.6 3.9 0.9 0.7 0.2 1.5 5.5 8.7

Did not sell to procurement agency by reason

Page 11: Ifpri pulses policies

Major marketing channels

Page 12: Ifpri pulses policies

Item channel-1 channel-2 channel-3 channel-4Price spread (%)farm gate price 54 57 58 52producer market price 56 57 60 53village tradeer selling price 60 56mandi trader selling price 64 66 66 64millers selling price 90 90 90 89wholesaler selling price 94 94 94 93retailer selling price 100 100 100 100Price spread 46 43 42 48consumers price (Rs/q) 6868 6340 6160 7128farmers share in consumers price(%)producer price 54 57 58 52marketing cost 22 21 21 22marketing margins 24 22 21 26consumers price 100 100 100 100

Price spread and farmers share in consumers price

Page 13: Ifpri pulses policies

Factors helping higher farmer harvest prices (district level panel data)

Independent variable Coef. t

Minimum Support Price 1.4* 8.5

Road density 8.85* 5.14

Irrigation area (%) 0.82 0.76

Market density 0.05* 1.97

R2 0.83

Number of observations 468

Page 14: Ifpri pulses policies

Pulses Exports (1000 tons)

Share in total pulses exports (%)

Imports(1000 tons)

Share in total pulses imports (%)

Peas 0.7 0.3 1351 38Moong/Urad 1.6 0.6 634 18Lentils 0.9 0.3 608 17Chickpeas 264.4 98.5 487 14Pigeonpeas 0.8 0.3 486 14Total 268 100.0 3564.5 100.0

India’s imports and exports (average of 2012-13 and 2013-14)

Is India competitive enough?

Page 15: Ifpri pulses policies
Page 16: Ifpri pulses policies

Competitiveness of pulses

Page 17: Ifpri pulses policies

Indias trade destinations of major pulses for 2013-14

Pulses Top 5 export destinations Top 5 import sourcesPeas Myanmar (84.70%), Pakistan

(7.37%), Nepal (5%), Shri Lanka DSR (2.82%), Malaysia (0.04%)

Canada (70.59%), Russia (11.06%), USA (8.37%), Australia (6.19%), France (1.74%)

Chickpeas

Pakistan (29.93%), Turkey (18.11%), Algeria (17.24%), Sri Lanka (5.34%), U Arab EMTS (4.43%)

Australia (61.43%), Russia (22.77%), Tanzania (7.84%), Myanmar (6.40%), USA (0.47%)

Moong/urad

USA (49.69%), Unspecified (10.21%), Sri Lanka (7%), Canada (7.72%), Kenya (4.29%)

Myanmar (82.83%), Tanzania (4.23%), Kenya (3.55%), Australia (3.05%), Mozambique (1.61%)

Lentils Myanmar (35.16%), USA (25.17%), Kuwait (7.17%), Bhutan (6.55%), Singapore (5.92%)

Canada (79.33%), USA (10.70%), Australia (9.85%), Uzbekistan (0.01%), Turkey (0.01%)

pigeonpeas

Nepal (78.79%), Canada (19.19%), Israel (1.92%), Korea (0.09%)

Myanmar (51.37%), Tanzania (27.44%), Mozambique (14.69%), Malawi (4.53%), Kenya (1.79%)

Page 18: Ifpri pulses policies

Domestic supply projections

Estimated demand by 2025

CropNormal production

Scenario-1(BAU)

Scenario-2(High income growth)

Tur 3.72 6.7 7.8gram 9.3 13.0 15.1Urad 1.61 2.9 3.4Moong 1.5 2.7 3.1Others 3.37 6.1 7.0Total 19.5 31.4 36.4

Source: IIPR, Kanpur

Page 19: Ifpri pulses policies

Major observations • MSP is not relevant most of the times (deficiency payment)• Time lag- timely intervention (imports/reduce hoarding)• Maintain price band ( trigger procurement and import subsidy) • Buffer stock (10% of consumption)• Procurement centre with adequate storage facilities at block

level in major pulse growing zones.• Removal of controls like export ban, stocking limit to facilitate

national market • Futures and spot markets • Aggregators/producer companies• PPP models

Page 20: Ifpri pulses policies

Policy variables• MSP and government procurement not effective-(deficiency payment)• Price monitoring- timely intervention (reduce hoarding)• Maintain price band (procurement and import subsidy) • Buffer stock purchase from open market• Subsidies for micro-irrigation/mobile sprinklers Compatible with WTO.

(infrastructure, buffer stock, food security)• Procurement centre/rizobium inoculations with adequate storage

facilities need to be established at district and block level in major pulse growing zones.

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

• Contingency planning • Futures and spot markets • Aggregators/producer companies (Rs.500 crores special purpose vehicle)

Page 21: Ifpri pulses policies

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 – Extension to rizobium culture, pulses in waste/fallow lands.– Crop-insurance and credit delivery.– Procurement of produce from farmer at market rate + incentive.– farm mechanization (simultaneous harvesting of rice crop and sowing of

pulse crop)

Page 22: Ifpri pulses policies

Conclusions• Atleast 50% of the districts reach 1t/ha yield

level is possible as it happened in chickpea (66%).

• Additional area in next 5 years is possible• Market based policy instruments with better

price monitoring system• Transgenic crops – a long term strategy

Page 23: Ifpri pulses policies

Thank you!Thank you!