‘Can't Have A Knee-Jerk Policy': IPGA Chairman Bimal Kothari On Import of Pulses & Rice Export Ban

At the recently concluded G20 Summit in New Delhi, the New Delhi Leaders’ Declaration outlines the commitment to support developing countries’ efforts to address their food security challenges. It also speaks about facilitating open, fair, predictable and rules-based agriculture trade, and not imposing export prohibitions or restrictions, following relevant World Trade Organisation rules. 

However, it isn’t easy to keep export restrictions at bay when food inflation rates are hitting double digits in the country. The inflation rate for cereals was 13.04% in July, prompting an export ban on non-basmati rice varieties. The inflation rate for pulses was also 13.27% in July, driven by high costs of tur dal (over 34% in July), moong dal (9.1%) and urad (8%). 

There was a shortfall in the production of tur and urad in the last kharif season, which led to rising prices. Domestic sowing this year has also been less compared to last year – total sown area of pulses is down 8.5% as of September 9, year-on-year (YoY). To add to this, anticipation that the crop could be poor this season is driving up prices. 

To keep prices in check, India has upped imports of pulses this year. Pulses are largely imported into the country from Myanmar and East African countries including Mozambique, Tanzania, Malawi and Sudan. 

Mozambique, which provides a large chunk of the country’s tur dal imports, has imposed a floor price on the exports of the lentil, which might keep prices high. “This decision by the Mozambique government is not called for,” Bimal Kothari, chairman of the Mumbai-based India Pulses and Grains Association (IPGA) told The Core. “They saw that our prices are very high domestically, we do not have much tur and our prices are ruling high, so looking at our prices, they have done their calculation and fixed the higher minimum export price… this is why we cannot see much of tur prices coming down,” he said. 

Speaking of India’s own export ban on rice varieties, Kothari said that the government has taken the decision keeping local supply in mind. “If commodities like wheat or rice or sugar are not available and the prices go up, then the situation gets out of control,” he said. 

Kothari further pointed to the need for a long-term policy to address food insecurities and shortages, given that erratic weather conditions are recurring. “Global warming and global climate change [also means] that we need to have a long-term policy on all this…we cannot have a knee-jerk policy,” he said. 

Kothari spoke to The Core’s Govindraj Ethiraj on rising inflation, the imports of pulses, and what long-term policies we need in place. 

Here are edited excerpts from the interview with Bimal Kothari: 

We are obviously looking at very high inflation levels for pulses, which is around 13% now for the month of July. Within that we've seen inflation for tur dal at almost 34% percent and 9% for moong and about 8% for urad – so inflation numbers are high. How are we looking at two things: One is overall demand and supply in the country. And secondly, what are we doing to manage our supply both from within the country and from outside? Your broad perspective first.

Looking at the supply and the demand – this year, the supply has been definitely the constraint particularly for tur and urad. Last kharif crop, we didn't have enough production for both tur and urad. We have seen the shortfall in the production of tur and urad and that's why we have seen the prices going up. And both the pulses, if you compare it with the other pulses, most of the other pulses are ruling at the minimum support price or a little bit above the minimum support price. But these pulses definitely are much above the minimum support price particularly tur. Availability (?) of tur has been really down this year due to the last crop.

But you see whenever there is such a shortage in the country of any particular pulse the government has allowed the import so tur import has been allowed till March 2024. We are importing these pulses from Myanmar and from East Africa. Myanmar, this year didn't have a very large crop. It was around 250,000 tons.

The harvest started sometime in the month of January and we have been importing these tur from Myanmar and East African crop has just been harvested in the month of August. And now the sequence started.

We'll see the supply around the third-fourth week of September. And I think there will be a good supply in the month of September, October, November from East Africa countries. Last year, we imported about 700,000 tons from East Africa, from mainly Mozambique, Tanzania, Malawi and Sudan. 

This year, during this financial year, we are looking at a similar quantity and since they harvest their crop in August, most of the arrivals come in the months of September, October, November and December.

Though the local supply at the moment is really, I mean, very tight. But I think the import from East African countries will ease the supply. And I think the demand during the festival period would be made from the imports of tur from East Africa.

Regarding the urad of course, we again had a similar situation. The crop was badly damaged due to the heavy showers during the harvest last year, our crop got reduced. So there has been pressure on the prices. Minimum support price is around ₹70 per kg. And we have seen in the last few months, the price has been ruling around 80 to ₹85.

I don't think the prices are very high above the – if you look at the minimum support price, this is around 15 to 20%. We always know that 15 to 20% prices could always vary if you look at the minimum support price. 

This year because of the El Nino effect, we have seen very good rains in July but August was completely dry. The rainfall was not at all there in the month of August in the sowing area in the planting areas.

I think the production of urad and moong will be hit but we do not know what will be the damage, but definitely the production will be down. Again, we will have to depend on the imports of urad from Myanmar because Myanmar is the only country which produces urad besides India.

And then if we have good rainfalls during the month of September, then I think rabi, we can see some good crop in urad because the prices have been very good and the farmers will be encouraged to grow urad during the rabi season.

Can I come back to the imports from East Africa? You mentioned, for example, the imports from countries like Mozambique. I understand that some of these countries are also increasing export tariffs. Is that likely to affect the cost of landing or landed prices?

Definitely. What happened is that a few years back, the government of India restricted the import of tur because we had good production. Then we signed an MoU when our honourable Prime Minister visited Mozambique – to buy 200,000 tons annually from Mozambique and that time they badly needed us.

In fact, the government of India – we have favoured their farmers and their government and encouraged them to produce tur. Because let me tell you one thing – tur is one product which is only consumed in India, 95% of the production wherever – it comes to the Indian market only. So the countries who are producing tur, the only market is India. The government of India has given a guarantee that we will allow the import of at least 200,000 metric tons despite the restrictions.

But now, since the last two years, we have faced a problem in the production. This year, what they have done, we understand that some people have influenced the government and they have put up these prices of $900 per metric ton. 

This is the minimum export price - which they have done in accordance with the Indian market, that was not expected. And this decision by the Mozambique government is not called for… because the government of India supported [them] when they needed us and when we are in dire need of the tur, they have fixed this minimum export price looking at our prices. Otherwise we would have seen the prices would have come down in the Indian market also. 

You're saying that they're not honouring the price fixed earlier and matching it to Indian market prices, is it? 

No, it is not like this. The government of India has fixed the quantity – price discovery was depending on the demand and supply. That was a fair and reasonable real price discovery, which was totally dependent on the demand and supply.

But this time they have fixed the minimum export price looking at the Indian market. They saw that our prices are very high domestically, we do not have much tur and our prices are ruling high, so looking at our prices, back to back, they have done their calculation and fixed the higher minimum export price.

And that is why, you know, we cannot see much of the tur prices coming down. Otherwise for the last 2-3 years, we have been regularly importing tur from East Africa, the prices were coming down and this year of course, the situation is a little different.

Anyway, you will be seeing a lot of arrivals in the coming months. And I think during festival season, our demand will be made through imports. Once the arrival starts, I think prices may come down by a few rupees a kilo.

And could other East African countries also increase their export tariffs you feel or their prices?

No, they have not done the prices in accordance with the market conditions. They have not fixed any prices like Tanzania or Malawi or Sudan, they have not fixed and we are regularly importing from these countries. But their production is not so large – out of the 700,000 tons that I said, 4 lakhs 60,000 tons have come from Mozambique only last year. 

This is a bit of a googly of a question. But you know India banned exports of non-basmati rice and also lower variations of basmati rice. How does this affect prices overall? I mean, how do other countries see this when we, for example, are obviously not exporting, in this case, non basmati rice.

I really don't think that that has an impact on the import. Yes, definitely because India was the largest exporter of non basmati rice and many countries are depending on the import from India. So suddenly with this export ban of non-basmati rice…they have been very uncomfortable, they didn't expect this move from the government of India.

But you see, we have to also look at our population. It's a 1.4 billion population of the country. Because of the El Nino effect, in the eastern sector we cannot see much rain, which is one of the important rice bowls of our country. Because of the drought condition in the eastern sector of our country, the government has taken the precautionary step and they have imposed this restriction.

I think the government of India is looking first at the local supply because as you're talking about the food inflation already, it is 13%, if commodities like wheat or rice or sugar are not available and the price goes high, then the situation becomes out of control. I think this decision has been taken by the government of India looking at the present weather conditions and the present monsoon situation.

Global warming and global climate change [also means] that we need to have a long term policy on all this. We cannot have a knee-jerk policy. Banning non-basmati rice exports [for example], these are all knee-jerk decisions. You need to have a long term policy because we all know that we have to feed a very large population.

For that, you require a long term policy. And I think we need a lot of irrigation facilities to be built in our country. Like the government is focusing on national highways, which is a very good move by the government of India… I think the situation presently demands that we should have more and more irrigation facilities.

This situation of El Nino can rise again because of the global warming situation, we can see this situation happening time and again. It is important that we have more and more irrigation facilities so that these kinds of eventualities can be met.