Why dal imports have hit a seven-year high

Why dal imports have hit a seven-year high

Sub: Geography

Sec: Eco geography

Tag: dal imports

Context:

• In April 2024, the consumer price index for cereals rose by 8.63% compared to April 2023.

Details:

• Despite this, the price increase for roti has not significantly impacted the majority of poor and lower middle-class Indians due to the government’s food security scheme, which provides 5 kg of rice or wheat monthly to approximately 813.5 million people for free.

Pulse Inflation:

• However, the inflation in pulses, which recorded an annual retail inflation of 16.84% in April 2024, has severely affected consumers.
• Unlike cereals, pulses are not widely distributed through the public distribution system, forcing low-income households to rely heavily on open-market purchases.
• The price of chana (chickpea), the cheapest dal, rose from Rs 70 to Rs 85 per kg, while arhar/tur (pigeon pea) increased from Rs 120 to Rs 160 per kg.
• Prices for urad (black gram) and moong (green gram) also saw rises, whereas masoor (red lentil) prices slightly decreased.

Causes of this inflation:

• The primary cause for the surge in dal prices is the El Niño-induced irregular monsoon and winter rains, which led to a drop in domestic pulses production from 27.30 million tonnes in 2021-22 to 23.44 million tonnes in 2023-24.
• Significant production declines were observed in chana and arhar/tur, with chana production dropping from 13.54 million tonnes in 2021-22 to an estimated less than 10 million tonnes in 2023-24, and arhar/tur from 4.22 million tonnes to below 3 million tonnes.
• These poor harvests, particularly in Karnataka, Maharashtra, Andhra Pradesh, and Telangana, have driven chana and arhar/tur prices well above their minimum support prices (MSP) (Rs 5,440 for chana dal and Rs 7,000 per quintal for tur/arhar dal).

Import of pulses:

• As a result, India’s pulses imports surged, reaching $3.75 billion in 2023-24, the highest since 2016-17, with major pulse imports totalling 4.54 million tonnes, up from the preceding two fiscal years.

*Look out for the trends of imports from the chart.

Reversal of improved pulse production:

• The resurgence in imports marks a reversal of the relative self-sufficiency achieved by the country, with domestic pulses production increasing from 16.32 mt to 27.30 mt between 2015-16 and 2021-22.
• That was enabled by government policy measures incentivising farmers to grow pulses.
• These included MSP-based procurement and levying of duties leading to a near stoppage of imports, particularly of yellow/white peas (matar) and chana, by 2022-23.
• Domestic production got a further boost with the breeding of short-duration chana and moong varieties, making it possible to cultivate these with little or no irrigation, using the residual soil moisture left by the previous crops.
• The 50-75 day varieties of moong now allow planting of as many as four crops a year: kharif (post-monsoon), rabi (winter), spring and summer.

Government policy to reduce food inflation:

• Government policy responses to tackle food inflation included lifting tariffs and quantitative restrictions on pulse imports. 
• These measures were partly due to El Niño and electoral pressures to control dal prices.
• For instance, restrictions on yellow/white pea imports and tariffs on chana were removed, boosting imports from countries like Canada, Australia, Russia, and Africa.

Future prospects:

• The future of dal prices depends on the upcoming southwest monsoon.
• Climate models suggest a possible transition from El Niño to La Niña, which could bring good rainfall.
• However, given the low domestic supply and monsoon uncertainties, higher imports are expected to continue.
• The government has allowed duty-free imports of several pulses until March 31, 2025, and may need to extend this for yellow/white peas beyond October 31, 2024.
• Imports of these cheaper pulses are likely to increase, substituting more expensive varieties in the market.

Source: IE