Sensing the discontent among growers across the country and alarmed by the gathering storm in the form of protests, the Government recently announced a series of measures to boost domestic oilseeds and pulses prices that have dropped below the Minimum Support Price (MSP).

But not all of these trade and tariff measures are likely to deliver the intended results.

A 50 per cent ad valorem import duty has been imposed on yellow peas, following up on curbs on imported tur/arhar, urad and moong in August.

The fiscal impost is under an utterly misplaced belief that large-scale import of low-priced yellow pea depressed domestic pulses prices, in general, and pigeon pea’s, in particular. The fact is yellow pea acts as a substitute for chana (gram or chickpea) and is largely consumed in northern and north-eastern regions.

Importantly, chana prices have been ruling well above the MSP of ₹4,000 a quintal for 2016-17 and even above the MSP of ₹4,400 for the 2017-18 season, planting for which is apace.

Pulses and policies

By making yellow pea expensive, the Government is actually hurting consumers in the North even while allowing stockists to enjoy windfall gains.

At the same time, the fiscal impost has hardly had any impact on the chana market. Across the board, pulses continue to rule well below their MSP levels.

A sensible policy decision by the Centre related to foreign trade is that pulses export has been liberalised, lifting a decade-old ban that was clearly anti-farmer. This initiative should have come at least six months ago, as suggested in these columns previously.

Lifting the export ban on pulses is more of a psychological prop for the market rather than an opportunity to ship out large quantities and earn handsome foreign exchange.

Most Indian pulses are clearly outpriced in the world market. Kabuli chickpea (whose export was seldom restricted) and masoor (lentils) will, of course, find some buying interest in the world market.

Ten years ago, before the embargo on export, Indian masoor was quite popular abroad.

Negative tactics

So let us not be under the mistaken belief that export liberalisation will immediately push domestic prices up and bring some relief to growers. It takes time to cultivate export markets. Legitimate they might be, but changes in trade policy and tariff rates from time to time are at best negative tactics.

What this market needs is affirmative action in the form of a strong signal to pulses growers, not through changes in policies, but by defending the MSP through robust procurement.

The Centre, of course, has exercised a facile option. Also, a sharp hike in the rate of customs duty on various edible oils has been announced taking the tariff to multi-year highs.

Again, this tariff hike is sure to enrich large stockists with huge inventories, but may have only a limited impact on oilseed prices. In other words, the intended objective is not likely to be met fully.

The author is a global agri-business and commodities market specialist. Views are personal.

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