Year-end story- Steady rise in crop output fails to ease import dependence

Year-end story: Steady rise in crop output fails to ease import dependence

While the country has set new records in production of several agricultural commodities in the last decade, the rising consumption has resulted in continued supply constraints, and sustained dependence on imports.

In 2023, because of uneven distribution of monsoon rains and untimely showers prior to harvesting output of several agricultural commodities took a hit, resulting in exports restrictions and easing of imports.

Production of food grains – rice, wheat, pulses and coarse cereals – increased by 31% in the eight years to 2022-23 (crop year) to 330.54 million tonnes (mt).

India, despite being the largest exporter of rice since 2012, banned white rice shipments, imposed 20% export duty on bar boiled rice and minimum export price of basmati rice in the last one year.

“Frequent government intervention in trade of agriculture commodities has ensured cheaper imports especially oilseeds and pulses leading to unremunerative prices for farmers,” Anil Ghanwat, member, Supreme Court’s panel on farm laws and ex-President, Shetkari Sanghatana, told FE.

While mooting the idea that the government should allow unhindered exports and imports of commodities for a few years, Ghanwat said imports of commodities have led to farmers shifting out of oilseeds and pulses.

Currently, about 15% of domestic consumption of pulses especially tur, urad and moong varieties are imported while the country depends on imports for 58% of edible oil consumption annually.

Since 2016, India had signed memorandum of understandings (MoUs) with Mozambique, Malawi and Myanmar for importing pulses varieties, the government has recently approached Argentina and Brazil for deals under which the South American countries will undertake to grow tur and urad varieties with an obligation to export the products to India.

“Surge in edible oil and pulse imports is of concern and productivity of oilseed production has to increase to reduce imports,” CSC Sekhar, professor, Institute of Economic Growth, Delhi university and member, agriculture ministry formed panel on MSP said.

Sekhar said support price enhancements and improvements in procurement of pulses would result in reduction in reduction.

In order to reduce import dependency, the Commission for Agricultural Costs and Prices (CACP) in its price policy for rabi crops for the marketing season (2024-25) has suggested special efforts to increase production of major oilseeds such as rapeseed & mustard, sunflower etc. and tap potential of non-ventional oils such as rice bran oil, corn oil, etc.

“The scope of the National Mission on Edible Oils should be expanded to include major oilseeds such as rapeseed & mustard, sunflower, groundnut and soybean,” CACP stated. During 2023-24 (April-December), India has already imported vegetable oils worth Rs 1.28 trillion, higher by 23% on year.

The commission has suggested a dynamic tariff structure linked to world prices, demand supply situation, domestic prices of edible oils and the Minimum Support Price (MSP) of oilseeds should be introduced.

Trade sources said in order to improve capacity utilization of the domestic refining industry, a duty differential of about 15% between crude and refined oil should be maintained to discourage import of refined oils. Currently the effective import duty on crude and refined edible oils is 5.5% and 13.75% respectively thus effective differential duty of 8.25%.

“In case of pulses, shortages often appear in case of kharif pulses, especially tur and urad. In the medium to long term, we need to invest in their research and development to raise their productivity,” Ashok Gulati, agricultural economist and former chairman, CACP said.

In case of oilseeds, Gulati said, “unless we give a big push to develop our own oil palm area on about 2 million hectares that is suitable for its cultivation, we cannot bridge the yawning gap between demand and supply”.

Pulses and oilseeds are nitrogen-fixing, and consume much less water and power. Experts said that farmers need to be rewarded with carbon credits equivalent to fertilizer and power subsidies for production of these grains. This will help farmers shift from paddy that is water-guzzling and generate greenhouse gas (GHG) emissions.

“Once these crop-neutral incentive structures, the demand and supply gaps in pulses and oilseeds will automatically reduce”, an official said.

Agriculture ministry officials said that the production of pulses – chana, lentil, moong, tur and urad is concentrated in a few states – Rajasthan, Madhya Pradesh, Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Tamil Nadu and is prone to high fluctuations due to biotic and abiotic stresses.

Efforts are needed for expanding area under pulses particularly lentil, tur and urad in more districts and in rice-fallows available in eastern and southern States as well as promoting summer cultivation of urad and moong in areas with assured irrigation facilities.