Make in Mozambique: The real reason Modi visited

Abhishek Waghmare/IANS/IndiaSpend.org

It has as many people as Punjab, and its people are three times poorer. But Narendra Modi became the first prime minister to visit Mozambique in 34 years because the impoverished South African country has something every Indian wants.

Dal. Or Pulses.

India -- the world’s leading producer of pulses, with 22 per cent of global output --signed a contract to import 100,000 tonnes of pulses from Mozambique in 2016-17, doubling to two lakh tonnes by 2020-21. That would still be no more than two per cent of 2015-16 imports and 0.5 per cent of what Indian farms grow.

But every tonne counts, as imports pouring from 60 countries indicate, from some as little as 1,000 kg, the amount your neighbourhood grocery store might sell in a week.

An important staple food and source of nutrition, pulses available for every Indian have fallen by three kg over half a century. With two years of failed monsoons, insufficient irrigation and flawed, over-regulated marketing -- prices rise 50 per cent between the farmer and consumer -- India’s pulses output is at a six-year low, sparking shortages and spiraling prices.

For the first time, imports of pulses in 2015-16 touched $4 billion, a quarter of demand and more than one per cent of India’s import bill.

India imported a record 5.8 million tonnes of pulses in 2015-16, 80 per cent more than two years before.

But why have imports risen over the last two years, when they were fairly constant (between 2.5 to 3 million tonnes ever year) over the last decade ending in 2010?

The answer: The output of pulses for the decade ending 2010 rose, stabilising imports, but two years of drought (2014 and 2015) changed all that.

As Indians eat more pulses and production drops, prices keep rising.

Indians want more pulses, but yield is among world’s lowest

Pulses are also known as grain legumes, a set of 12 crops -- from lentils to chickpeas -- high in nutrition, particularly important to developing countries like India with rising incomes.

But the prices of pulses are rising in concert with growing demand and falling production. Imports fill the gap.

By the end of 2015, the retail price of tur dal (pigeon pea) touched Rs 230 per kg, up 150 per cent from Rs 90/kg; it remains between Rs 160 to Rs 180 per kg today.

A perfect storm of colluding reasons is responsible, IndiaSpend reported in October 2016.

Ten months on, nothing has changed, the most important reason being that India’s pulses productivity is among the emerging world’s lowest. Even poorer Myanmar produces twice as much per hectare, Egypt more than four times as much. Regardless of yield, production is dropping.

The bottom line is a 250 per cent rise (over five years to 2015 in Maharashtra) in the prices of the dal you eat, benefitting the farmer and importer.

Why Sukesh Kode got double the price set by the government

In the arid southeastern Maharashtra district of Latur, Sukesh Kode, 35, is unconcerned that tur output on four acres of his 17-acre unirrigated farm has fallen to 38 quintals (100 kg=1 quintal) this year from 42 quintals in 2015.

After all, he earned twice as much for those 38 quintals, with his return jumping 125 per cent over a year in March 2016, a situation mirrored nationwide.

Kode got Rs 45 per kg of tur over the last three years (2013 to 2015). In March 2016, he sold his tur for Rs 102 per kg in the Latur Agricultural Produce Market.

Ashok Badiya, a wholesale trader of pulses for 50 years in the Vashi Agriculture Produce Market in New Mumbai, said that a record pulses output in 2013 mitigated the effect of a drought in 2014, when most farmers were paid between Rs 32 and Rs 35 per kg, below the government-set minimum support price of Rs 40 per kg.

“In 2016, the tide has turned,” said Badiya. Supply dropped.

Thus, Kode got Rs 102 per kg for tur he sold in March 2016, more than double the minimum price set by the government.

From the farmer to you: A 50 per cent rise in price

This year, in April, Badiya said he paid Rs 102 per kg for pulses from farmers in March 2016. From Badiya, the pulses travelled to retailers like Piyush Vora, who owns a 250-sq-ft grocery shop in central Mumbai’s Lalbaug neighbourhood.

Vora bought pulses this year at Rs 130 per kg and is selling them at Rs 150 per kg (April 2016). He bought tur dal at Rs 205 per kg, and sold it for Rs 230 per kg at the peak in November 2015.

When prices rose last year, the “immediate reaction” of consumers was to buy less dal, said Vora, who explained that such knee-jerk reactions never last.

“In a couple of weeks, they got used to it,” he said. “Neither was there a dip in the sales of dal nor in our profit margins.” Pulses are so central to the Indian diet that middle-class consumers will buy them and cut back on other things. The poor have no option but to eat fewer pulses, as an editorial in The Hindu explained.

A good monsoon, in general, keeps prices steady, and a bad monsoon increases imports and prices.

To encourage farmers to grow more pulses and keep prices in check, the government has increased the minimum support price for pulses to more than Rs 50 per kg for the summer crop of 2016-17, eight per cent more than last year.

The Maharashtra government on July 5, 2016 decided to sell a kg of tur dal per month to poor families at a subsidised rate of Rs 120 per kg (against a retail price around Rs 180 per kg).

But these are temporary measures. With irrigation uncertain and farmers reluctant to grow more pulses, Mozambique will continue to remain of interest to India.