Andres M. Molier | July 2016 Issue | The Dollar Business
You may find it hard to believe, but unlike many grains, vegetables and fruits we consume every day, pigeon pea is native to India. Also known as red gram, arhar dal, tur dal or toor dal, the history of pigeon peas goes back to 3,500 years (Neolithic Age) and reveals an extraordinary journey of how they were popularised and migrated from India to east and west Africa, south-east Asia, Europe, and America. Today, pigeon peas are cultivated in 25 subtropical and tropical countries, but India is by far its largest producer and consumer in the world.
As per The National Bank for Agriculture and Rural Development (NABARD), pulses account for about 20% of the area under foodgrains and constitute about 7-10% of the total foodgrains production in the country. What's more? India is the largest producer (25% of global production), consumer (27% of world consumption) and importer (14%) of pulses in the world. And pigeon pea is no exception, with India producing about 75% of the world's total produce. While India is the largest producer of the crop, it is also its largest importer. The reason is simple – domestic demand exceeds production, and by a big margin.
In FY1951, the total area under pulses cultivation in India was 19 million hectare, which increased to 25 million hectare in FY2014. But then, the demand for pulses has also shot through the roof. “It must be noted that over 60 crore people in north India alone depend on pulses for protein every day. Yield and land under cultivation have increased, but we still cannot meet market demand. At present, we are facing a shortfall of 20%,” says T. Sudhakar, Deputy General Manager, Agricultural and Processed Food Products Export Development Authority (APEDA).
S. P. Goenka, Director of U. Goenka Sons Pvt. Ltd., a Mumbai based importer of pigeon peas and other pulses, shares a similar view when it comes to production of pigeon peas in particular. “When it comes to pigeon peas, we produce about 2.8 million tonne of pigeon peas, but our domestic consumption is around 3.2 million tonne. So, we have been importing pigeon peas from countries like Tanzania, Sudan, Kenya, Uganda, Vietnam, Myanmar, Australia, and in large quantities” he tells The Dollar Business. When quizzed on the reasons for the decline in production of pigeon peas in recent years, he replies, “Erratic rainfall has been the main culprit.”
Further, according to the Food and Agriculture Organisation (FAO) United Nations, “India's pulses productivity is only 600 kg per hectare; whereas productivity, even in countries like Myanmar is 1,200 kg per hectare.” As per a NABARD paper titled, Economics of pulses production and processing in India, India's current per hectare yield of pulses is 622 kg. Interestingly, this was Canada's yield in the year 1908! Well, this clears all doubts as to why India relies on imports of pulses, including pigeon peas.
Pigeon pea is cultivated for its sweet tasting legumes, which is consumed as a popular staple diet in many states in India. Maharashtra, Madhya Pradesh, Karnataka, Uttar Pradesh, Gujarat and Andhra Pradesh are the largest producers of pigeon peas in the country.
There are several factors that impact the production of pigeon peas in India. However, most experts look at the absence of an effective marketing arrangement and a few policy constraints as glaring concerns. These issues affect production, which in turn creates a huge gap between demand and supply. And the country has to rely on imports to bridge this gap. Result: India’s imports of pigeon peas reached $457.05 million in FY2016 from $291.10 in million FY2014. It is a massive jump of about 57%, in a matter of just three years. So, what is it that is impacting its production in India?
The government, in order to protect farmers, fixes a minimum support price (MSP) every year – MSP in the last three years was Rs.4,300 per quintal (FY2014), Rs.4,350 per quintal (FY2015) and Rs.4,425 per quintal (FY2016). However, these prices are not being offered to farmers in reality. Findings of a High Level Committee (HCL) on restructuring of Food Corporation of India (FCI), headed by Shanta Kumar, Chairman of the Committee to the Prime Minister, too points towards this malpractice. "Government needs to revisit its MSP policy. Currently, MSPs are announced for 23 commodities, but effectively, price support operates primarily in wheat and rice and that too in selected states. This creates highly skewed incentive structures in favour of wheat and rice. While our country is short of pulses and oilseeds (edible oils), their prices often go below MSP without any effective price support. Further, trade policy works independently of MSP policy, and many-a-time, imports of pulses come at prices much below their MSP. This hampers diversification," states the report submitted by the Committe.
Further, Sudhakar of APEDA feels that the government also needs to introduce more varieties of pigeon peas and distribute them across the country. The right technology for sowing and harvesting, crop-saving irrigation, and harvesting and processing losses can also bring changes. “In my opinion, farmers have the ultimate choice to cultivate a crop that fetches them the maximum revenue, so maybe pigeon peas aren’t the best for them,” Sudhakar adds.
The Indian Institute of Pulses Research (IIPR) recently submitted a report, which states, India will need around 32 million metric tonne of pulses to meet its domestic demand by 2030. It means India needs to increase the production of pulses at an average annual rate of 4.2% if it's really serious about meeting this humongous demand. So, there is clearly no scope for exporters. Concurring to it, the Foreign Trade (Development and Regulation) Act 1992 imposes an export ban on all types and grades of pulses, except on kabuli chana. Today, only APEDA certified organic pulses and lentils, but not exceeding 10,000 MT and one-kilo packets of roasted gram (whole/split), are allowed to be exported. The disequilibrium of demand and supply in India is pretty huge, resulting in the fact that the largest pulses producing country in the world has a shortfall of 20% in its domestic market. But then, this is certainly good news for importers of pulses, including pigeon peas.
So far so good. But, why has the price of pigeon peas been so volatile? Goenka answers, “For example, to meet a 20,000 tonne shortfall, the government imports 20,000 tonne of raw material. However, after processing, the final product will be around 14,000 tonne. This means, we still need another 6,000 tonne. Obviously, such situation will trigger fluctuation.”
Then there are many like Vishal Narchal, Head – Commodities, StarAgri, who opine that landing price of pigeon peas will differ from region to region because of freight rates, and it’s very difficult to give an exact figure because there are many factors that decide the price, which goes up and down throughout the day. "But at the moment, I am afraid, the market isn’t doing very good," he tells The Dollar Business. Hardik Patel, a pigeon pea importer from Ahmadabad, holds a similar opinion. Our domestic market is very unreliable and it swings back and forth. Besides, pigeon peas are available only after Diwali, somewhere till the end of March," says Patel.
Further, if industry insiders are to be believed, speculators are behind the price fluctuation; they purchase pulses and stock them in countries of origin or at ports. “Most importers that I know of make huge losses because they live under constant fear. We cannot import large quantities because the market is unstable, and as a result our landed cost goes up. However, some importers with deep pockets are importing huge quantities and hoarding the product. As a result, prices go up for a while and then suddenly crash. Last year, in October, the government wiped out a lot of hoarders, and brought the price down. But things are yet to stabilise,” reveals Goenka.
According to him, the margin in pigeon peas import is about 3-5%. And when quizzed on high retail prices, Goenka says, "The problem lies in the wholesaler-retailer link. The millers, after processing, sell pigeon peas in the wholesale market for about Rs.120-125 per kg, depending on the quality. But when pigeon peas reach retail stores, the minimum price is about Rs.180 per kg. This is the gap we need to sort out. We have already informed the government because they didn’t know about it. And we hope something comes up soon.”
It was 1980s, when pigeon pea was introduced in countries such as Tanzania, Mozambique, Malawi, Sudan, Kenya and Uganda. Sensing exports potential and to tackle regular droughts, the governments in these countries encouraged farmers to grow pigeon peas, instead of corn. 
And since then there have been some great success stories. For instance, Kenya Agriculture & Livestock Research Organisation (KALRO), with help from International Atomic Energy Agency (IAEA), has been able to substantially increase the yield of pigeon peas in their country. “Farmers can now yield 3,000-3,500 kg per hectare, and pigeon peas make the soil rich through the nitrogen-fixing properties that it contains,” reports KALRO. The Tea Research of Tanzania (TRT) also reported that after introducing new technologies, pigeon peas yield has increased by 17 times.
The story of Myanmar, India’s biggest source of pigeon peas, is similar. In the late 1980s, when the Burmese government introduced several incentive schemes, the agricultural sector went through a revolution. As a result, the total area under pigeon peas grew by four folds, making it the second largest producer of pigeon peas in the world. So, it is no surprise that Myanmar is the largest exporter of pigeon peas to India – India’s total imports of beans and pulses from Myanmar is about 11 lakh metric tonne, out of which 2 lakh metric tonne is pigeon peas.
Pigeon peas contain high levels of protein and amino acids, and as
such are used in a variety of dishes and cuisines across the world.
A Good day to ImportImproving productivity, introducing better seeds, educating farmers, post-harvest handling and storing, packing and preservation, marketing and selling…the needs for self-sufficiency in pigeon peas are numerous. However, one must keep in mind that these are long-term visions, not something that can be solved immediately. Also, it must not be forgotten that we are in a phase where we don’t even have concrete numbers and figures of pigeon peas in the country. So, a gap of 20% is a significant number and our dependency on imports will only increase for a while.
Besides, large-scale farmers are quickly leaning away from growing pulses, leaving small and medium scale farmers to experiment with various farming methods. There is a lot left to be done and importers sure will play a vital role throughout! It may be that importers are not making profits presently, but hold on for a couple of months and profits should be inevitable. And this lead time should be good for you to prepare your list of foreign exporters to buy from.
Dr. Rachit K. Saxena, Scientist, ICRISAT Dr. S. K. Verma, senior scientist, Department of Genetics & Plant Breeding, G. B. Pant University of Agriculture and Technology
TDB: Arhar, toor, pigeon peas and red gram – what’s the difference?
Dr. S. K. Verma (SKV): The scientific name is Cajanus cajan, and it has two botanical types, Cajanus cajan var. bicolor (known as arhar and mainly grown in north and western India) and Cajanus cajan var. flavus (known as toor and mainly grown in central and south India). The former plant is bigger and bears larger peas, whereas the latter plant is smaller and gives smaller peas, but both are dark brown or blackish (stripes) in colour.
Dr. Rachit K. Saxena (RKS): They are all the same. Broadly speaking, pigeon peas are differentiated on the basis of their cultivation period or duration – medium duration (accounting for 80% of the total production), early duration (15%) & long duration (5%).
TDB: Why is the yield per hectare of pigeon peas low in India?
SKV: In north India, blue bulls are a menace as they eat the crop. The pod borer pest is another problem – these larvae alone are responsible for about 30% to 70% production loss, as they eat the developing seeds present inside the pod. Also, fusarium wilt and phytophthora stem blight in north India, and wilt and sterility mosaic in central and south India are some common diseases that affect production.
RKS: A few years ago, farmers were not interested in growing pigeon peas because of low price realisation (Rs.40-45 per kg). But with an increase in its price in recent years (Rs.80-110 per kg), more farmers are showing interest. However, the main problem is to supply pure and improved/hybrids seeds to farmers. And of course, as a rainfed crop, pigeon peas face several diseases.
TDB: How much area is currently under pigeon peas cultivation in India?
SKV: About 3.9 million hectares of land is under pigeon peas cultivation in India, with a total annual output of about 3.17 million tonne.
RKS: India produces 3.2 million tonne of pigeon peas every year from about 4.6 million hectares of land. In fact, we can increase acreage by another 2 to 3 million hectares by introducing pigeon peas in new niches. This has been proved in case of Rajasthan and Uttarakhand.
TDB: Is it very difficult to boost pigeon pea production?
SKV: No it isn’t. Pigeon peas are best grown in light soils like loam and sandy loam. It can be grown almost everywhere, where there is no water stagnation; this is almost a waterless plant. Besides, this is a native plant and we produce more than 90% of the world’s total pigeon peas.
TDB: What are the different varieties of pigeon peas grown in India?
SKV: In north India, we have varieties like UPAS 120, Pant Arhar 291 and Pusa 992 and they mature in less than 150 days. But in central and south India, peas that mature in 240 days are grown. This is because right after the harvest, wheat is sown in north India.
TDB: What about genetically modified varieties? Are we not promoting them?
RKS: Well, recent introduction of hybrids, by using the male sterile source from wild relatives, has increased productivity by 40-50%. In 2012, the genome sequence of pigeon peas was decoded, which is playing a critical role in strengthening the pigeon peas breeding by providing new lines with enhanced disease resistance and higher yields.
TDB: What can the government do to enhance pigeon pea production?
SKV: Supplying high-yielding seeds that are disease and insect resistant to farmers at subsidised rates, educating farmers about new farming methods and techniques, building warehouses to reduce post-harvest loss, and introducing modern technologies are some initiatives that can help boost production.
RKS: Providing financial assistance to farmers, promoting research to develop new resistant and high yielding varieties and hybrids of pigeon pea, and improving crop management practices can help us produce more.
Veeresh Hiremath, Head – Research, Karvy Comtrade Ltd.
TDB: Despite being the world's largest producer of pigeon peas, what makes India import it in large quantities?
Veeresh Hiremath (VH): The production of pigeon peas in the country is not sufficient to satisfy the domestic demand and hence it has to rely on imports to bridge the supply-demand gap. While consumption of pigeon peas has been growing at an exponential level and is currently at about 2.75 million tonne per annum, its production has remained more or less stagnant (at about 2 million tonne). The production is mainly hit by lesser acreage compared to other crops, varying yield levels due to unfavourable weather condition, etc. Hence, we import pigeon peas to meet the market demand.
TDB: Tur prices have been trending on the higher side since April last year. What needs to be done to stabilise tur prices in the domestic market? Can an increase in import of tur help?
VH: In 2015, when the crop was at peak harvesting stage, tur prices rallied to historical high levels. The major reason was drastic fall in production of the crop due to failed monsoon for the second consecutive year. Importing a commodity to meet rising demand is a temporary solution. It also increases the country’s burden in forex terms and disturbs the trade balance. Hence, the need of the hour is to develop a long-term approach. Since tur is grown in select parts of India with major contribution coming from Maharashtra, Karnataka, Andhra Pradesh and Madhya Pradesh, there is need to expand area under tur cultivation. Non-traditional areas should also be brought under tur cultivation apart from practicing shifting cultivation. We also need to develop high-yield or genetically modified varieties to boost tur production in
the country.
TDB: Critics say, speculators are behind the price rise; they purchase pulses and stock them in countries of origin or at ports. Do you agree?
VH: It is true that few companies purchase and stock pulses in countries of origin in order to improve profitability from the trade. With that said, futures trading in tur was banned in 2007 after allegations of speculative activity in tur futures trade. However, this allegation was proved wrong by a committee set up by the central government to study the effect of futures trading in price rise. For instance, in 2015, tur prices rallied to all time high in absence of futures trading, which indicates the price rise is because of supply-demand disequilibrium.
TDB: Should government consider re-launching of futures trading in tur?
VH: The commodity regulatory body has been changed from Forward Markets Commission (FMC) to Securities & Exchange Board of India (SEBI) with effect from September 28, 2015, and all regulatory controls are now with SEBI. In absence of a platform for better price discovery and a rally in price of tur due to supply-demand imbalance, the industry is looking forward to futures trading in tur. However, SEBI will only take a decision after consulting all stakeholders. Our opinion is SEBI will not re-launch futures trading in tur in near future.
TDB: What kind of profit margins are available for importers of pigeon peas?
VH: Thanks to heavy competition among traders in local market, importers are operating on a thin margin, sometimes even at break even or loss.
TDB: Do you expect more land to come under tur cultivation in India or their yield to rise in the near future? Or do you expect import volumes to keep rising at the rate they have risen over the last few years? What’s your outlook on tur prices in the mid to long term??
VH: A rally in the price of tur to historic high level has been a cause of concern for policymakers and the central government is planning to bring more area under pulses cultivation, especially in the north east. Efforts are also made by state governments to increase acreage under tur, even by shifting some area from other crops to achieve higher production and reduce import dependency. But this is a long-term process. As a temporary solution, India needs to develop friendly relations with pulses producing nations and ease trade norms with them.
Keeping the supply-demand factor for current season as imbalance, we are expecting a positive trend for tur in medium term. We are hoping for an increase in area under tur cultivation this year as farmers are attracted towards this crop because of a higher price realisation last season. The government is also likely to increase minimum support price of tur by Rs.200 per quintal. Once we start getting numbers of sowing and likely weather performance, prices of tur may cool down in domestic market.
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