Market Update – Chickpeas: Will India come back to the market?

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International desi chickpeas markets were generally unchanged during the past couple of weeks.

The market is trying to measure the effect of the on-going political interventions in India, and how this will impact their long-term demand. There has been strong official reaction and criticism towards India after their introduction of numerous import duties for pulses since August 2017. As it stands today, the import duty for yellow peas is 55%, lentils at 33% and chickpeas at 44%. The issues continue to be discussed by the World Trade Organisation and during Ministerial level meetings with Australia and Canada.

Out of the countries exporting to India, Australia was probably the most affected by changes in India's approach to imports. Our desi chickpea and field pea crops are grown mainly for the Indian subcontinent. While the impact on Canada is significant, yellow peas are more versatile, and new growing markets have emerged in the last few years. Yellow peas and chickpeas from the USA can be worked into alternate markets such as Turkey and South America. They also have the US government food aid program tenders where pulses are sold to the Government and shipped to third world countries such as Ethiopia as food aid, which is providing price support for yellow peas at the moment.

One of the key changes requested by Australia and Canada is that If India were to impose duty changes, it should not apply to afloat cargoes. As there were numerous reports of contract defaults by importers, the issue of default contracts was a main topic discussed during the recent Pulses Conclave in New Delhi. The issue was also raised in the country's parliament, with the Minister of Commerce and Industry commenting, "No individual foreign exporter has approached the government for help on account of reneged contracts by Indian pulses importers.”

It is a testament to the increased global importance of pulses that India's government has been forced to adopt a defensive tone in numerous forums. The country's Commerce Ministry forcefully argues that its "India First" policy is “not up for discussion.” It is worth noting that a significant percentage of voters in India are employed in the agriculture industry.

It is clear that India’s political campaign will be ongoing, until at least the political dust settles. However, with politics aside, the question remains whether India will be back in the market and when? Looking at it from a statistics point of view, it’s important to remember India's annual average pulse deficit is greater since 2007, and growing… Between 1999 and 2007, all pulses import average 2.36 million MT per year. Even so, India still had an average deficit of 2.84 million MT per year based on its minimum recommended dietary requirement and 5.48 million based on the per capita availability recommended by nutritionists. India's population grew from 989 million to 1.12 billion during that period. Since 2007, imports averaged 3.12 million MT per year. Combined with rising production, the country has, on average, met its minimum dietary need for pulses, but was still short an average of 2.29 million MT of pulses annually versus optimal recommended consumption levels. A long-term self-sufficiency is still a distant target.

Whilst India is set for a bumper crop and it’s appetite for immediate imports is highly unlikely, looking at these statistics, India is only one failed crop away from coming back to the buying seat.

Another important point is the country’s economic growth – the impact of changes in India's economy cannot be understated. During the years the world was arguing about using field crops for food or fuel, the rise in commodity values allowed farmers to upgrade their diets and coincidentally, India's middle class started its rapid growth. This combination of factors allowed the country to import more pulses and to fund efforts to expand farm support programs to stimulate production.