October 24, 2022
Despite relatively low production levels and strong global supply as well as the extension of the zero import duty, Indian lentil demand is lagging behind. Gaurav Jain reports.
India’s domestic production of lentils has been above the 1 MMT mark for more than a decade. Imports typical fill the remainder of demand, which is slowly increasing along with the growth both in population and demand for protein.
The lentil import volume tends to decrease whenever domestic production tops 1.2 MMT and 2022 was the second season in a row in which this occured. Given that lentils are trading higher than the MSP while chickpeas are trading below, an acreage increase is expected for the 2023 lentil crop, for which planting is underway.
In the fourth advance estimate, the Ministry of Agriculture projected lentil production in MY 2022/23 at 1.28 MMT, which is 14% lower than the previous year. The AgPulse Yield Model suggests a production figure of 1.3 MMT, not far from the official number.
At a production level of 1.3 MMT, we expect the import requirement for MY 2022/23 to be 590 KMT, which is the lowest in four years.
India has typically been one of the largest lentil importers over the past decade and, even with a smaller Canadian supply last year, the Indian import volume was 725 KMT in 2021.
With domestic production in 2022 at only 1.28 MMT and global supplies returning to normal levels, India’s import demand was expected to be higher this season. Likewise, the zero-import duty, which has been extended until March 2023, was also an encouraging step by the Government of India to incentivise imports.
Even with all these contributing factors, demand for lentils has been lacklustre so far in the season and only 339 KMT have entered the country in the first eight months of the year; the smallest volume in four years.
Although India does tend to import the bulk of its requirements in the second half of the marketing year, the parity nonetheless remains negative this year, which will keep the trade volume lower than previous years.
The Indian Government also increased the Minimum Support Price for the rabi season and the maximum increase came for lentils, rising from from Rs.55/kg to Rs.60/kg. Of all the major crops, lentil prices showed the sharpest increase this year, which will incentivize farmers to increase acreages.
We expect lentil acreages to increase by 5%, reaching a new record level of 1.865 million hectares. If weather conditions remain normal, we can expect a larger crop of more than 1.7 MMT in MY 23/24, which will further reduce the import requirement.
Disclaimer: The opinions or views expressed in this publication are those of the authors or quoted persons. They do not purport to reflect the opinions or views of the Global Pulse Confederation or its members.
