It’s an integral part of Indian cuisine, particularly in north India. While India is the biggest producer of chickpeas in the world, it is also its biggest importer. And with government policies still focused on just basic cereals, importing chickpeas is not only a lasting but also a lucrative business proposition
Neha Dewan | October 2015 Issue | The Dollar Business
Maybe you too are one of those who fancies the taste of deep fried ‘pakodas’ once the rain pays you a flying visit or when raindrops kiss your window panes ever so softly. Perhaps, it is what makes the rain all the more welcoming, at least in India! Though you may think it to be just another humble and hot snack, chances are that the chickpeas used for preparing the besan – the main ingredient of the very Indian pakodas – have their origin in Australia or Russia. A quick check on the facts and you would be surprised to know that besides being the largest producer and consumer of chickpeas in the world, India is also the largest importer of Desi chickpeas, or kala chana, sourced from countries like Australia and Russia.
Ubiquitous!
It’s the versatility of these beans that makes them ubiquitous in a wide variety of foods and cuisines. Finding its origin, as far back as 7,500 years, in the Mediterranean and the Middle East, chickpea – also known as Garbanzo bean, Bengal gram, Chi-chi beans or Egyptian pea – has spread its culinary influence throughout the world. Today, it is a prominent feature in Greek, Italian, Middle Eastern, Spanish, Portuguese and Indian cuisines. In fact, some of the more popular Arabic recipes, consumed across the world including India, have dishes (such as hummus, falafels and curries) that make use of this ingredient lavishly. The importance and popularity of this legume can be gauged from the fact that every year, May 13 is celebrated the world over as International Hummus Day. Hummus – a popular Middle Eastern dip which essentially has an appearance of a thick gooey creamy paste and serves up as a healthy delight for the taste buds – has chickpeas as its main ingredient.
Desi Versus Videshi
Chickpeas can be broadly categorised into two distinct types – Kabuli and Desi. While the Kabuli variety is lighter in colour, smoother in coating and larger in size, the Desi variety, also known as ‘kala chana’, has a rough coat and are smaller and darker seeds. As far as consumption is concerned, Desi chickpeas are the largest produced and consumed pulses in India. [As per Directorate of Economics and Statistics (DES) data, in FY2014-15, chickpeas accounted for 44.92% of the total pulses production in India.] “India’s annual requirement for Desi chickpeas is around 8-9 million metric tonnes (MMT), whereas the production is around 7 MMT. And this demand-supply gap is fulfilled through imports,” says Bimal Kothari, Vice Chairman of India Pulses & Grains Association (IPGA).
Kabuli chickpeas, on the other hand, is not as widely consumed as Desi chickpeas and its consumption is restricted mostly to northern India, and that too within certain sections of the population. Interestingly, India produces around 6 lakh tonne of Kabuli chickpeas every year against an annual demand of 3 lakh tonne – a reason enough for it being the only pulses allowed to be exported out of India.
One reason why the demand for Desi chickpeas is far higher than Kabuli is that the Desi variety is used for production of besan (chickpea flour), a product that has multiple uses in Indian households as against the Kabuli chana, which is mostly consumed as whole seed or combined with other dishes.
Too Good To Ignore
Even in terms of nutritious value, chickpeas, or what is more colloquially referred to as chana, boast of offering a wide range of benefits such as aiding digestion and regulating blood sugar levels among others. Besides being a gluten-free source of protein and fiber, they also contain high levels of iron, vitamin B-6, vitamin C, potassium and magnesium. Further, it also stands out as a food that is moderate in terms of calories, for a 100 gram serving of cooked chickpeas offer about 160 kilocalories. It's because of this reason chickpeas are now increasingly being consumed as a healthy food item across Indian households, particularly among vegetarians. “Chana dal is consumed quite regularly in our house and it is tasty as well. It has some wonderful properties as a bean that makes my husband’s diet rich in fibre and at the same time healthy too,” avers a Delhi-based housewife Rachna Seth. She makes it a point to include desi chana in her household budget every month as her husband is a diabetic.
This trend is also reflected in more importers sourcing Desi varieties into India. “Indian consumers are increasingly moving towards healthier food options. Chickpeas have a lot of fibre and are good for vegetarians as they are rich in protein. It keeps one's weight in check and boosts iron levels as well. We started importing chickpeas last year and the demand for the product has been better than the green peas so far. We are now trying to increase our supplies to meet this demand,” an importer, who did not wish to be named, tells the magazine.
Demand-Supply Gap
If this is what the situation is, then why is it that India, despite being a major producer of Desi chickpeas, continues to depend on imports? Why not increase the domestic yield? Dr. J. S. Sandhu, Deputy Director General (Crop Science), Indian Council of Agricultural Research (ICAR) offers an insight. He says that in FY2014, India’s total pulses production was about 19.25 MMT, of which, chickpeas’ share was about 50% i.e. around 10 MMT. “Chickpeas harvest was so good that their prices in the open market fell to about Rs.2,400-2,500 per quintal, while the MSP set by the government was Rs.3,100 per quintal! If prices fall below the MSP, there remains little incentive for the farmer to cultivate it. Hence they are getting discouraged and reducing the total area under cultivation,” says Dr. Sandhu.
Further, the harvesting season for chana differs from country to country, based on the climatic conditions. While in India the harvesting period is March-April, in Australia it is October-November. So while chana in India is mostly grown in Rabi season (winter), its consumption is spread throughout the year. Typically, during the festive season, the usage of besan is also higher as the product is used extensively for making different varieties of sweets. “Desi chickpeas have a pan-India demand and is a staple food all through the year. Imports from Australia are to bridge the supply-demand gap and help maintain a steady supply of Desi chickpeas to Indian consumers,” adds Kothari of IPGA.
‘Floury’ Gains!
Desi chickpeas are mostly consumed in split form or in the form of flour in India. And if one goes by the government data, its consumption is only increasing by each day, while its domestic production remains stagnant. This presents an excellent opportunity for entrepreneurs to explore imports of chickpeas as a viable business option and capitalise on it in the years to come. What’s more? Industry experts are of the view that the scarce monsoons will further affect its production in India in the near future, and the country will have to rely on imports to meet the ever-rising demand for Desi chickpeas. Canada based AGT, one of the biggest suppliers of pulses in the world, had stated a few months back that India’s imports of the crop is expected to remain high in the coming year due to deficient monsoons. “Indian chickpeas production in particular may fall by as much as 20%, likely resulting in continued strong import volumes,” stated a report from AGT. This too makes a strong case for chickpeas imports and indicates prosperous times for those importing it! Are you one of them?
“Importers Of Chickpeas Are Forced To Operate At Wafer-Thin Margins” -Bimal Kothari, Vice Chairman, India Pulses and Grains Association (IPGA)
TDB: Tell us why Kabuli chickpea is the only pulse that is allowed to be exported from India. Is it safe to assume that its production is enough to cater to local demand? Why then is desi chickpeas’ production so low that we are forced to import them in large quantities?
Bimal Kothari (BK): Kabuli chickpea is not widely consumed in the whole of the country but mostly in northern India within certain sections of population. Since the demand is limited and the production enough to meet the domestic requirement, the surplus stock is exported. The Desi variety of chickpea is the most widely grown and consumed across all sections of the society throughout the country. This year the production of Desi chickpeas is expected to be around 7 million tonnes against the demand of 9 million tonnes. Hence, the demand-supply gap is met through imports, largely from Australia.
TDB: Give us a brief idea about the domestic production and demand of Desi chickpeas vis-à-vis the Kabuli variety.
BK: Kabuli and Desi chickpeas are two different varieties of pulses and their consumption also differs. Northern India is primarily the market for Kabuli chickpeas and India produces around 6 lakh tonne against the demand of 3 lakh tonne. The Desi chickpeas, on the other hand have a pan-India market. India’s annual requirement for Desi chickpeas is around 8.5 to 9 MMT whereas, the production is around 7 MMT.
TDB: Is the MSP, which the government fixes for gram, relevant to Desi chickpeas? Isn’t a separate MSP for desi chickpeas a major turnoff for farmers? Has chana futures trading on commodity exchanges been of any help to the sector?
BK: For the crop year 2014-15, the Government of India (GoI) fixed MSP for Desi chickpea at Rs.3,175 per quintal. However, when the price in the market falls below the MSP, it is critical that the government steps in and procures produce at the MSP so that there is an appropriate price realisation for the farmers. Unfortunately, over the last few years whenever prices have gone below the MSP, the government has not procured the produce and the losses have discouraged the farmers. If the farmers are assured of their return, they will consistently cultivate pulses which, in turn, will help stabilising the supply. In my personal view, the chana futures has not helped the sector at all. The Centre should rather ban chana futures in all commodity exchanges, and procure them at MSP which will genuinely help the farmers.
TDB: Since India mostly imports chickpeas from Russia and Australia, tell us how the imported varieties differ in quality and price from those produced locally?
BK: Desi chickpea imported from Australia is similar to what we are producing in India. And the chickpea produced in Russia is Kabuli chickpea which is of lower quality. The latter is mostly used for flour (besan) making.
TDB: What kind of margins are available to Desi chickpeas importers? How volatile are these margins?
BK: Pulses trade has been very volatile in the past few years and many a times the importers have lost a lot of money due to this high volatility. However, there are no fixed margins and importers are forced to operate at wafer-thin margins.
TDB: What are the main challenges in the import business of Desi chickpeas? Does India have enough warehousing and other facilities to reduce wastage?
BK: The imported chickpeas are mainly delivered at Mumbai, Kolkata and Chennai ports where the private warehousing facilities are available. However, IPGA has approached respective state governments to allot land in the close vicinity of various ports so that state-of-the-art warehousing facilities can be developed.
TDB: Do you expect more land to come under chickpeas cultivation in India or their yield to rise in the near future? Or do you expect import volumes to keep rising?
BK: We need to realise that India is the largest producer, consumer and importer of pulses. The irony is, the country also has the largest area under pulses cultivation i.e. close to 26 million hectares. However, our yield per hectare is just about 750 kg vis-à-vis the global average of around 1,200 kg per hectare. The demand for the pulses has been steadily increasing in the country over the last few years. It is critical that the government gives pulses cultivation the attention as is being given to crops like rice and wheat which helped the country become self-sufficient in these crops. Pulses are primarily cultivated in rainfed regions and the monsoon deficit over the last couple of years have just pulled down the production leading to increased imports. It is important that the government gives high priority to ensure that farmers are provided the necessary incentives and support to be able to adopt newer techniques and high-yielding seeds, etc. so that they are able to bring more land under cultivation.
“Every Year We Develop One Or Two New Varieties Of Chickpeas” -Dr. J. S. Sandhu, Deputy Director General (Crop Science), Indian Council of Agri. Research (ICAR)
TDB: Despite being a major producer of chickpeas, India continues to be dependent on imports. Is it due to low domestic yield?
Dr. J. S. Sandhu (JSS): In FY2014, India’s total pulses production was about 19.25 million metric tonnes (MMT), of which chickpeas’ share was about 50%, i.e. around 10 MMT. In fact, chickpeas harvest was so good that their prices in the open market fell to about Rs.2,400-2,500 per quintal, while their MSP was Rs.3,100 per quintal! If prices fall even below the MSP, what incentive does a farmer get in cultivating it? Hence, they are getting discouraged and reducing the total area under chickpeas cultivation. At present, chickpeas imports are meagre. We import more of yellow peas, which are used as a substitute to chickpeas.
TDB: How important is the seed size? Has ICAR managed to supply farmers the bigger chickpea seeds?
JSS: There are two distinct types of chickpeas grown in India – Desi and Kabuli. India, which once imported Kabuli chickpeas, today exports the said variety. Typically, Kabuli seeds weigh 30-35 gm/100 seeds and are quite bold. ICAR has developed a number of large chickpeas seed varieties, one of which is known as Dollar Chana in Madhya Pradesh. I would say both ICAR and agricultural universities across India have greatly contributed to the development of new indigenous varieties of chickpeas. The yield too is increasing due to the adoption of new farming techniques.
TDB: Reports suggest that ICAR is working towards developing chickpeas varieties that are more drought and heat-tolerant and resistant to ascochyta blight. Tell us a bit about the developments so far.
JSS: Our scientists are working on a number of objectives, depending on their agro-ecology zone. For instance, in Central Zone, which comprises Madhya Pradesh, Gujarat and Maharashtra, the primary objective of our research is to develop new varieties that can withstand drought conditions. Every year we develop one or two new varieties of chickpeas and it is a continuous process.
TDB: How prone are chickpeas to pests and other biotic stresses? Do farmers have access to pest control tools?
JSS: There are a number of pests like pot borer, which cause heavy damage to the crop and affect the production considerably. Today, these pests are being controlled chemically, but scientists are constantly looking at more environmentally sustainable options.
TDB: Reports suggest that Andhra Pradesh has the highest chickpeas yield in the country. Is it because of weather and soil conditions there or are there other factors involved? What is ICAR doing to improve yield in other chickpeas producing states?
JSS: There are a couple of reasons for Andhra Pradesh having the highest yield. Firstly, the farmers there are quite aware of the new technology. Also, ICRISAT – International Crops Research Institute for the Semi-Arid Tropics – along with the state’s agricultural university has developed better chickpeas varieties.
“Futures Trading In Chickpeas Is Helping Both The Farmers And The End Users” -Veeresh Hiremath, Research Head – Commodities, Karvy Comtrade
TDB: Since Kabuli chickpeas are the only pulses that are allowed to be exported from India, is it safe to assume that their production is enough to cater to the domestic demand? Why then is the production of Desi chickpeas so low that we are forced to import them in large quantities?
Veeresh Hiremath (VH): In India, the consumption of Kabuli chickpeas is restricted for direct consumption and not in the form of gram flour (besan) while Desi chickpea is used for making besan, a versatile ingredient extensively used in Indian cuisine. Hence, restricting exports of Kabuli chickpeas won’t have any major impact on the prices. Although the acreage under Desi chickpeas has increased over the years, lower yield has resulted in drop in production. Moreover, the increasing population and the limited land availability has created demand-supply mismatch.
TDB: Is there a lot of seasonality involved in the demand for Desi chickpeas in the country? Do you think the fact that their domestic harvesting season is different from that in Australia also facilitates imports?
VH: It is true that the harvesting season differs from one country to another because of climatic conditions. In India, chickpea is grown during Rabi season but its consumption is spread across the year. Despite being the largest producer of chickpeas, India is still dependent on imports because its production is not sufficient to meet the demand.
TDB: How has chana futures trading on commodity exchanges helped the sector? How much of the trading in chana futures do you think is by hedgers and how much by speculators?
VH: Futures trading in chickpeas is helping both the farmers and the end users to hedge their price risk during off season. During peak harvesting season, prices are subject to sharp decline which can be taken care by farmers by taking hedge position in the futures. According to our understanding, both speculators and hedgers are contributing equally to the chana futures trading.
TDB: Do you expect more land to come under chickpeas cultivation in India or their yield to rise in the near future? Or do you expect import volumes to keep rising at the rate (12.2% CAGR) they have risen at in the last 10 years? What’s your outlook on chana futures prices in the mid to long term?
VH: As of now, chickpeas cultivation is confined to Madhya Pradesh, Uttar Pradesh, Rajasthan, Maharashtra and Andhra Pradesh. However, initiatives are being taken by the government to bring more area under cultivation, especially in North Eastern states. Further, research institutes should focus on developing high-yielding varieties to increase the output. With respect to futures prices, the new sowing season is about to start from October and the progress will have a major impact on the price movement. Moreover, chickpea being one of the essential commodities, comes under the lens of the Central government. Any major deviation in the prices will attract government intervention. Hence, the short to medium term chana futures prices are likely to trade in a broad range of Rs.4,200 to Rs.5,100 per quintal.
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