Contributor Raghavan Sampathkumar answers questions on the Indian pulses sector and expresses the need for a holistic understanding on the issues affecting the pulses value chain

By Raghavan Sampathkumar

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Recently, I had a discussion with a group of people who were involved in the pulse trade and looking to gain some insight into the Indian pulses sector as part of their due diligence process to make investment decisions.

Naturally, there were questions on policy overview, demand and consumption forecast, the need for innovations and ways to increase demand and production, etc. The key points are summarized in the transcript below.

Disclaimer: Views expressed are personal.

There are reports on India aspiring to become self-reliant in pulses and oilseed production by 2022. How is it possible and what are the challenges and opportunities?

This is an interesting but enormous challenge. While it is certainly not impossible to achieve, there are significant issues to be addressed on priority. For example, first, to meet the gap in demand without imports, given the average yields, we need nearly 7 – 8 million additional ha of land. Where can this come from? We also need a holistic understanding of the food value chain, agrarian situation in the country, a review of current Ag-Food policies and investments in R&D and infrastructure for storage, food processing and marketing.

Looking at the past, what has been happening in India’s pulses sector that is unique but less obvious?

To understand the whole picture, let’s go back a few hundred years ago when India’s culinary tradition, diets and cuisines were rich and possessed enormous diversity in using various commodities including pulses and minor millets. There was significant demand since the commodities were available at affordable prices or vice versa. Though the dynamics of both farming and household consumption changed drastically particularly after the Green Revolution and become most skewed in favor of rice and wheat, pulses are one of the most basic staple food items, regardless of the side – North or South – of the great hills of Vindhya. Every household consumes pulses almost every day. But the type and preferences vary with culinary traditions, tastes, diets and socio-economic status.

In the South, sambar and rasam are the most basic foods made using toor dal (pigeon pea) to go with rice, while Indians in the North prefer masoor dal (red lentils ) boiled with spices as the perfect accompaniment with roti. Mung is used as whole or split and is used in many main courses and sweets. Chana (chick pea), the biggest pulse crop produced and consumed in India, is an essential ingredients in snacks, crispies and sweets across the country and used as both flour and as whole peas in curries.

Considering that India’s is not monolithic in the context of culture, every 100 kilometers everything from food, language, accents, culture and customs change dramatically. So the enormous diversity and uniqueness of cuisines and ingredients used need to be considered in order to understand the importance of pulses in Indian diets.

But what surprises me is the fact that India is the largest producer, consumer and also importer of pulses in the world, and this is not known to many including those who are working in the food and agriculture industry in the country. When I learned nearly 3 – 4 million MT of pulses are imported every year to India, as a vegetarian by religious and family tradition like millions of my fellow Indians whose diet primarily depends only on pulses for protein, I always wonder why the country has come to import pulses.

Is it true that the majority of Indians are vegetarians and they depend only on pulses for protein?

It is an interesting and very popular “myth” that most Indians are vegetarians and depend only on plant protein. If one looks carefully beyond the ethnic, religious and cultural aspects, it is evident that most Indians can and do consume animal protein. Chicken is the most preferred meat and has no religious taboos attached to it. However, there are some religious restrictions for some who do not consume pork and/or beef. So only a minority (about 7%) is strictly vegetarian, and no matter how much their income or purchasing power increases, they will never consume meat. This contradicts popular economic models on food consumption that usually project increases in meat consumption as a result of economic growth and per capita income. However, as incomes in India continue to grow particularly among the middle-class, growth in consumption of animal protein is, in fact, limited by availability and affordability. This is also true in the case of plant protein sources – pulses – where consumption is limited by availability and affordability.

How important are pulses in the food basket particularly in the context of inflation?

Recently the phrase “protein inflation” emerged as a hotly debated issue as prices of pulses and meat were causing food inflation to rise. However, the impact of the increase in pulse prices usually varies quite frequently with the monsoon situation in India, as seasonally the prices used to rise and fall according to arrivals. Obviously, when the monsoon fails, the whole world will look towards India to market lentils, pigeon peas and chickpeas to satisfy its enormous demand. But at the same time, interestingly, even during good monsoon years imports of pulses may not come down. This is because of the strong rural demand due to good harvest and increase in incomes of the farmers and rural community. However, in recent years, the volatility in prices of pulses is quite troubling and also remains higher than the decade averages due to factors such as increased demand and fall in domestic production. One must understand that no efforts to mitigate protein inflation will pay off unless the issues in the pulses sector are addressed holistically.

How does this affect consumers at the household level, particularly the poorer sections of the society?

Let’s think about this from the perspective of a poor household in South India. Many states in India sell rice and wheat at Rs. 1 and Rs. 2 respectively mainly through the PDS (Public Distribution System). But toor dal (pigeon pea), which is the main ingredient to make sambar and rasam is sold even at the PDS shops for Rs. 40. So they naturally cut down consumption of pulses to maintain their already squeezed monthly food budget since the vast majority of these households spends as high as 50 – 60% of their earnings on food.

Even for the middle class, for salaried households in urban India, this is a budgeting nightmare if balanced nutrition is to be maintained as even small increase in prices will cause greater fall in consumption as the prices of rice and toor dal in the open market are around Rs. 30 and Rs. 70 respectively.

From the nutrition and well-being perspectives, how serious are the implications?

I would simply call it “calorie catastrophe”. One can sense what is happening with the calorie intake among larger sections of the population. As rice and wheat are available cheaply and they are more stomach-filling, households have no option but to cut consumption of pulses when prices go through the roof. More and more intake of carbohydrates that are cheaper in place of more expensive proteins may lead to imbalanced nutrition. It may even make people more prone to health issues like diabetes and cardio-vascular diseases. Already, India is competing with China for the notorious crown of “the diabetic capital of the world” with nearly 66 million diagnosed diabetics plus 77 million more likely to have pre-diabetes conditions.

India boasts a young and energetic population, as more than two-thirds of its population are below 35 years old. But what will be the impact in the long term if these issues are not addressed appropriately? It could become a public health disaster in the future affecting the health and productivity of the workforce in India and will in turn significantly affect the country’s future economic growth.

Going back to the question of self-sufficiency, why is the country not able to produce enough pulses to meet its demand and why has it become greatly reliant on imports?

There is no simple answer to this question. But there are some direct and also less obvious causal factors including, firstly, lack of appropriate policy measures to support pulses, lack of marketing opportunities, archaic and outdated produce marketing laws and also fertilizer pricing policies to some extent.

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Photo: Raghavan Sampathkumar from his 2013 interview with IFT Magazine

How may agricultural policies have impacted the pulses sector?

When policy making happens in silos without a holistic understanding of the decision making process by the farmers when they plan to grow a certain crop, the impacts on the ground can be drastic. This is evident in the case of not only pulses, but other “orphan crops” such as coarse cereals and oilseeds, since edible oil has become one of the largest imported items after crude.

In India, in general, food means only two crops – rice and wheat. And it is always “politics” winning over “economics”. This is evident from entrenched policies such as MSP (Minimum Support Prices) and procurement systems seem to favor only these two crops – rice & wheat. By their nature, these policies encouraged more and more production of rice and wheat beyond what the country can actually store and let food grains waste and rot in open spaces. These two crops are possibly the biggest “vote banks” and any policy amendment or move that might seem to affect the status quo will be fought down vociferously by various stakeholders with diverse interests.

In contrast, the country imports huge quantities of pulses and edible oil from global markets, which could well be produced domestically if appropriate policy measures are put in place. This not only affects the options available for a farmer to choose between crops he can grow, it also comes with a huge import bill, a skewed trade balance, affects the fiscal health of the economy and also the food we consume every day. But it is highly unlikely that the support measures given to rice and wheat will be revisited holistically in order to promote the production of pulses.

The established thinking that Minimum Support Prices are sufficient to encourage farmers to produce pulses without other necessary mechanisms, including marketing, certainly needs to be revisited.

Further, due to lack of consistency or predictability in the import policy, including duties and permits as it is reviewed annually, the value chain players are hesitant to come forward to make investment decisions including those related to R&D, marketing and input supplies.

What are the other issues across the pulses value chain that impact domestic production? To start with, primary production?

There are significant issues to be addressed at each stage of the value chain for pulses, from input (seed) supply, production, marketing, processing and final consumption. On the primary production front, given the situation currently and in the near future, we are unlikely to see increased domestic production of pulses unless there are some drastic changes in policy supported by much needed investments in marketing, processing and crop R&D. Unless vast shared rice and wheat crop areas, new cultivable land and/or marginal lands are brought under pulses cultivation, which is highly unlikely, self-sufficiency can only remain a distant dream.

Even now, pulses are regarded as marginal crops in India and do not enjoy the main crop status equal to rice, wheat or soybean. Only about a sixth of the total cultivated land under pulses has irrigation facilities and the Kharif pulse crop is mostly rainfed. Further, average yields of many pulses including lentils in India are only half of the most popular producing regions like Canada or Australia.

Even if a farmer gets irrigation facilities, he will naturally choose a crop that he can be sure of disposing (selling to procurement agencies) because on-farm storage is virtually non-existent for the majority of smallholders in India. They cannot store their produce and sell when prices rise. This perhaps partly answers the question why, despite consistent higher market prices, domestic production of pulses has not improved greatly over the years. Also there are several schemes and missions introduced lately to boost pulses production but once the funding or support seizes, farmers will eventually go back to rice or wheat or their preferred crop. This is because of lack of consistency in support, particularly in terms of marketing. So the safe bets for an average farmer would be rice and wheat in India.

What can farmers do by themselves to improve the situation?

It is a difficult question to address. It remains a great mystery why farmers don’t unite and cooperate to achieve more than what they can achieve individually. However upon careful introspection, it becomes evident that they are divided, or I would say kept divided, possibly due to their differences in political affiliations, entrenched cultural, religious and social (caste) systems etc. But the FPOs (Farmer Producer Organizations) are one of the several means that these small farmers can consider to not only gain bargaining power in the market but to make the sector resilient and profitable by investing in the sector, similar to what similar organizations do in Canada, Australia or USA.

How about the input supply side for pulses crops?

Since most pulses are essentially self-pollinated crops except pigeon pea with limited scope for hybridization and opportunities for trait differentiation and protection, research is mostly in the purview of public sector and there is virtually no presence of the private sector in either genetic or agronomic research.

However, given the slow adoption of research output, one cannot but wonder if public investment in R&D is making any real impact on the ground despite having several initiatives such as the National Food Security Mission and Pulses Villages etc. It is important to ensure research priorities are aligned with realities on the ground and what farmers can practically adopt to increase yields. Also, the output of research efforts should ensure demonstrable value to the consumers in terms of improved nutritional content. Availability of quality seeds at the right time ahead of the season for the farmers to cultivate pulses always remains a big issue.

Utilization of genetic engineering in pulses still has a long way to go (except soybean) as public acceptance and perception are not so conducive when it comes to staple foods. Commercial crops have a greater likelihood of being accepted than staple crops.

What are the other major issues that affect the pulses sector in India?

Firstly, one of the foremost challenges for Indian agriculture is the lack of reliable statistical data on production, acreage and/or consumption. Estimates from different sources tend to vary greatly, and it is not just the question of pulses but all crops in general. Reports claim India’s demand for pulses is nearly 20 to 22 million MT and production is usually around 16-18 million MT. So the gap needs to be filled with imports. Net availability has come down from 22.1kg/capita/year in 1951 to 15kg/capita/year in 2012.

However, I would take these numbers with a grain of salt. Insiders will always know how reliable acreage estimates are, those given by different sources including the government, traders and academics. It is obvious what will happen when policies are made without reliable data on these parameters.

Also there are no ways to cross check the official data on acreage and the official production figures will be arrived at simply by extrapolation or multiplying historical average yields with ‘guestimates’ of acreage of each crop in each state that are aggregated at the national level. Further, the poorest section of the society may not consume even half of the official per capita consumption figure. The household level surveys are not able to indicate the specific demand for each type of pulses.

What are the issues in the marketing of pulses domestically?

Evidently, there are no reliable marketing opportunities for the farmers to sell the crop to. So if I were a farmer, unless I had no options at all, I wouldn’t grow something that I cannot sell. There is no proper marketing channel or procurement system like rice and wheat. Further, archaic laws such as APMC (Agricultural Produce Marketing Committee) regulations prevent a farmer from entering into direct supply contracts with a processor and/or a retailer. So for an average farmer, the safest crops to grow would be rice or wheat, which have minimum support prices that are increased every year and also have established procurement systems.

Higher prices are not necessarily bad but they are important to ensure decent returns for farmers. If prices of pulses come down to certain levels, it is a no-brainer to expect a resulting increase in consumption. At some stage, the increased demand will translate into signals that will encourage farmers to grow more pulses, maybe replacing rice and wheat in some areas. But in order to make markets work for pulse farmers, the above mentioned factors need to be addressed with a holistic and long term vision along with investments in promoting R&D, processing and value addition. Essentially, a greater share of the retail prices must flow back to the farmers.

What about the situation in processing and value addition of pulses?

Looking further at the food chain, it is clear that there is very little value addition done for pulses. Mostly, pulses are consumed whole or split. Desi chickpea is usually consumed in the flour form, and there is growing demand for gram flour.

Research on creating novel innovative products using pulses as ingredients is still in its nascent stages, and nothing has yet become commercially successful. I would say pulses are rather neglected by the food processing sector despite their richness in terms of fiber and protein content.

In countries like Canada, research is already being undertaken at advanced levels to explore opportunities in blending pulses protein with other flour such as wheat flour. Research on novel and innovative food products including granola bars and breakfast cereals are being pursued studiously. Some companies are already selling niche products that cater to, for example, athletes and body-builders who need more protein in their diets.

But in India, R&D, at the moment, in public or private sector is not sufficient at all to explore these opportunities and others such as fortification and/or blending pulses with other ingredients that may ignite consumer demand, which may in turn be matched by increased production.

Will the move to allow exports of pulses out of India help revitalize the sector?

There are significant implications for different value chain intermediaries. Allowing exports of pulses may help the processing (dal mill) industry to optimize its capacities, reduce overall operating costs and boost profits. This will help support jobs for millions involved in the sector, improve milling technologies and reduce waste. But whether it will benefit the farmers to encourage domestic production is a difficult question to answer.

How does the fertilizer pricing policy affect the pulses sector in India?

As I mentioned earlier, this is a perfect example of policy making in silos. But this may be a less obvious yet interesting causal factor. Nitrogen fertilizer is the cheapest available nutrient for crops, while all other essential nutrients have become relatively expensive. Hence, an average farmer does not care about soil health, skewed NPK ratio and organic content etc., but tends to simply dump more urea expecting a good harvest. This is evident in states like Punjab and Haryana.

So as long as nitrogenous fertilizer is available cheaply, as it is subsidized to the extent of two-thirds of its selling price, there won’t be any motivation for a farmer to consider pulses as a stand-alone crop or even include them in crop rotation or as intercrop. However, if the pricing policy is revisited and rationalized, farmers may think of using pulse crops as an important means to save on fertilizer costs while at the same time realize high profits if marketing opportunities are suitably matched. Farmers in the U.S. and Canada make huge savings in fertilizer costs with any crop that follows pulses. This has many advantages at both ends of the food chain, as farmers will save on input costs, enhance their soil health and get good profits, while consumers are benefited due to increased availability which may bring down the prices of pulses.

What are the recent trends on the pulses import front in India?

There are significant and interesting developments not only in India but happening elsewhere in the world. Huge parcels of land in many African countries like Ethiopia, Malawi, Mozambique and Tanzania are being bought mainly by Indian entrepreneurs with the main aim of growing pulses and importing into India since pulses continue to have zero import duty. There are logistical advantages to exporting from these countries as their landing prices are lower than the traditional pulses exporters such as Canada or Australia.

So what is the best way to move forward?

As mentioned above, the situation calls for a holistic understanding of the issues affecting the pulses value chain, and major reforms in certain Ag-Food policies are critical needs of the hour. Also there is an increased need for more R&D particularly in the public sector on the input side as well as food processing innovations where the goals are aligned with on-the-ground realities. Some may suggest allowing future trading and also export of pulses from India can be good for the sector, subject to sufficient safe guards to be put in place to prevent domestic prices from rising beyond affordable levels. These efforts may not only promote production but also create jobs in terms of encouraging the food processing sector to utilize more pulses in India.

About the Author
Raghavan Sampathkumar, currently based in Singapore, is an agribusiness professional with a 360-degree understanding of the complex political, socio-economic, environmental and cultural perspectives of the Ag-food value chain.
He has more than 11 years of experience working in different subsectors of food & agribusiness including agro commodities, agri-inputs, GM/biotech, and animal health & nutrition sectors across Asia-Pacific. He graduated with High Distinctions in his Master of Agribusiness degree from University of Adelaide, Australia and is also an alumnus of TNAU, Coimbatore, India.
During his career, he worked in several roles including as a Consultant – International Marketing with a Canadian Pulse Growers association and also as a freelancer with companies such as Promar Consulting, Japan. He also founded “SMARTAgBiz”, a boutique firm that focuses exclusively on market research for agribusiness sector.
Raghavan takes keen interest in analyzing key trends in the global food & agriculture sector and regularly writes commentaries/columns related to food prices, food crisis, sustainability, hunger and poverty. He actively participates in discussions on various online social media and networking platforms on the above issues. He can be contacted via his email vnsraghav (at) gmail.com.

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