Vivek Agrawal/
JLV Agro’s director reflects on 2020 and looks ahead to 2021

by Rahul Chauhan, IGrain India

What are your views on 2020 in terms of the pulses business?

Vivek: Last year was a mixed year for pulses. The market was slow during the lockdown period. In October, the market improved and most prices rose above MSP. But this surge was short lived because of sudden changes in import policies, like the relaxation of the duty on lentil imports and the opening of the market to mung, pigeon pea and urad imports. Now almost all pulse prices are below MSP. Limited buying and reduced demand are also not helping.

What import volumes do you see for pulses through March 31, 2021?

Vivek: I think that by the end of the fiscal year, imports may hit 9.5 lakh MT for lentils, 5 lakh MT for pigeon peas, 70,000 MT for mung beans and 3.5 lakh MT for urad. That is assuming the same import policies prevailing presently. 

How have markets responded to the large influx of Imports? If they reacted poorly, how can this be improved for 2021?

Vivek: The government needs to revamp or reconsider import policies and these need to be stable over the long term. Any changes to policies, timeframes or quota volumes should be considered taking into account all the pros and cons, and should be implemented at the proper time. In 2020, the sudden drop in the import duty on lentils occurred when markets were improving. The extension of import timeframes also hurt the market. Because of the large volumes of imports, lentil prices are now on life support. New crop is entering the market and this will first impact the income of farmers and then that of traders and small importers. Import quotas for pigeon peas, black matpe and urad opened very late. It took a long time for government agencies to issue import licenses.

There were other factors, like NCDEX, court cases, DGFT issuing orders, etc. that directly impacted the market and hit the confidence of small traders and importers.

The government needs to fix a duty structure that can keep prices near MSP. Cheap imports should not be allowed to come in and hammer the local market. For example, after fixing the rate at Rs 200/kg on pea imports, the market is steady at a good level. Another example is chickpea imports.

In 2020, the market had huge ups and downs. There were many controversies around imports, future markets, NAFED selling, which hit farmers and small traders. What are your views on this?

Vivek: The government is promoting pulses under the banner of achieving self-sufficiency. If the government really wants farmers to grow more pulses, they will need to exert control over many agencies, like NCDEX and NAFED.

NCDEX was inaugurated to increase farmer incomes but everyone knows how much farmers are trading. Very few traders manipulate positions, which affects the physical market. MSP should be considered the base price for trading.

The government initially asked NAFED to purchase a limited volume of crops as a goodwill gesture for certain areas, but the purchasing trend increases every year and now NAFED is selling below MSP to reduce its stocks and make room for new crops. After many years of struggle, this is the first time NAFED made a profit selling oilseeds, especially mustard, at higher rates.

The government should give NAFED strict directions not to sell below MSP. NAFED plays a critical role in price fixing. Buying at MSP and selling below MSP makes the market fall. Small traders and processors who purchase directly from farmers are the most affected.

Imports should be more dynamic, and policies should be made considering the impact on farmers, small traders, processors, importers and end users.

What is the impact of the ongoing farmer protests on the pulse industry? What will the impact be on the industry if MSP is made legal?

Vivek: These are my personal views. First, it is very disturbing to have any kind of protest in any part of the country. I am hopeful that very soon the government and farmers will be able to find a solution and move forward with their contributions to the nation.

MSP plays an important role and provides farmers with a guaranteed price for their crop. But ensuring MSP is not a solution. India’s export prices will become too high for the industry. For example, India was once an exporter or corn, but due to continuous MSP increases, we are now an importer. The government must revamp its policies with the aim of strengthening our farmers.

The pulses industry may not be affected by this issue.

Who had the better year in 2020? Was it international pulse farmers and exporters, or Indian farmers and exporters?

Vivek: It was mixed, but simply put it was more beneficial for international farmers. Indian traders had a reduced scope for trade.

NAFED buffer stocks helped people during the pandemic. It was a huge achievement to distribute 1 kg of free chana. That was the first genuine direct benefit people received.

Overall, Indian farmers and small traders were the most affected in 2020, and international farmers, traders and exporters saw large margins. 

What should think tanks and government agencies keep in mind to develop policies to create a win-win situation

Vivek: The government has to make sure that cheap imports do not harm the interests of our farmers. WTO norms must be followed to make for smooth exports. When import duties are implemented, several factors should be considered, the big one is making sure they are aligned with the interests of farmers and the industry. Whenever the government announces imports, the process, including the issuance of quotas and licenses, should be done in a timely manner. The government should prepare an SOP and make it publicly available. Phytosanitary and fumigation requirements, third country billing and other norms need to be clear and transparent so that there are no unpleasant surprises at ports.

Policies should be implemented on a yearly basis.

How will the industry behave in 2021 under current policies?

Vivek: The market may remain stable and good production can bee seen, so the supply side will be better. Black matpe and pigeon pea prices are better this year and the chana crop looks good. The market depends on government policies as before.