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Informist, Thursday, Feb. 6, 2025

 

By Shreya Shetty

 

MUMBAI – Prices of chana, which have been on a downtrend since August, could fall below the minimum support price of INR 5,650 per 100 kg due to high imports and the pressure of the upcoming arrivals of the rabi crop, analysts and traders said. Unless the government reimposes duty on free imports of chana and yellow peas, prices could stay in the lower range for the next two months, they said. Yellow pea is used as a cheaper substitute for chana.

 

Prices of chana have been declining after touching a peak of INR 8,000 per 100 kg in August. As of Wednesday, prices of chana in the benchmark market of Indore, Madhya Pradesh, were INR 6,150-INR 6,200 per 100 kg, while in Solapur, Maharashtra, they were INR 5,700-INR 5,900 per 100 kg.

 

ZOOMING IMPORTS

Prices of chana have been weighed down by a sharp increase in imports. Imports of pulses, especially yellow peas, have been skyrocketing ever since the government lifted the import duty on yellow peas, chana and tur. Imports of yellow pea, a cheaper alternative to chana, zoomed to 2.73 million tonnes in the first nine months of 2024 from virtually nothing last year. India lifted the 50% import duty on yellow peas in December 2023.

 

The market price of yellow pea is around INR 3,450-INR 3,650 per 100 kg, making it the cheapest pulse available in the country. "More consumers buy yellow peas as it is cheaper," Deepak Pareek, founder of Global Grains and Pulses Council, said. 

 

Chana imports in the first 11 months of 2004 rose to 231,651 tonnes, almost double from 119,805 tonnes a year ago, according to data from the Ministry of Commerce and Industry.

 

Chana imports in 2024 are estimated to have risen more than four times to 574,000 tonnes, according to Rahul Chauhan, director of IGrain. The jump is due to a bigger crop in Australia, the India Pulses and Grains Association said in a report. Australia accounted for more than 60% of the chana imports in Jan-Nov, according to the ministry data.

"There is pressure (on domestic chana prices) because Australian chana is clean," Pareek said. "It's all very nicely packed, and discounts are provided in case there are any issues with the quality, while in the domestic market, the chana is not that clean, with leftover soil still on the crop," he said.

"Unless the government restricts imports, the downtrend in prices will continue for at least till the end of March," G. Chandrashekhar, a commodity expert and policy commentator, said. The government has been extending duty exemptions on chana and yellow. Currently, the duty exemption on chana is till Mar. 31 and yellow peas is till Feb. 28.

"It is a very bleak situation. Unless the government imposes restrictions on yellow peas, chana prices could fall to the low levels seen in March 2018, when chana was sold at INR 36 per kg (INR 3,600 per 100 kg)," Pareek said.

 

Though the government is considering re-imposing import duties on both chana and yellow peas, the market is still apprehensive. "The government needs to put 60% duty on chana and yellow peas immediately. Every day is a missed opportunity," Pareek said.

 

"Imports should not go unchecked. I am not saying ban it (imports), I'm saying restrict them through tariffs," Chandrashekhar said. Imports could also be regulated by ensuring the landed cost of imports is not lower than the minimum support price, he said.

 

RABI ARRIVALS

The prospect of a higher rabi chana crop has also contributed to the fall in prices. As of Friday, the acreage of rabi chana was 9.86 million hectares, up 2.8% from a year ago, according to data from the Department of Agriculture and Farmers' Welfare.

 

"Production (of chana) could be better than last year as there have not been substantial yield losses or any challenges, unlike last year," Pareek said. Chana output in 2023-24 (Jul-Jun) declined 10% to 11.04 million tonnes, according to agriculture ministry data.

 

However, Chandrashekhar says there could be a weather risk to the crop due to expectations of a warmer February. Minimum temperatures in February are predicted to be above normal in many regions of the country, according to the India Meteorological Department.

 

If the country sees normal weather in February, crop output will be satisfactory, Chandrashekhar said. "It will be a good crop, but not a bumper crop," he said.

 

If the production is lower this year it would send a bullish signal to the market, Chandrashekhar said. "After harvest (of the rabi chana) and because of arrival pressure, prices will remain soft for two months. But after July, you will have the festival season demand coming up. So, prices could rise by then," he said.

 

However, the prospects of a good crop mean nothing if cheaper imports are available, Ankit Kedia, a trader from Akola, Maharashtra, said. "Buyers are not interested in the new rabi chana because they already have good-quality Australian chana in hand," he said. "With arrivals of the rabi crop expected to increase, prices are seen falling by another INR 500 per 100 kg in the next few weeks," he said. 

 

The market participants are also worried about government apathy towards chana. "In the budget speech, the finance minister talked about urad, masur, and tur, but did not mention anything about chana," Paraeek said. "It is a signal that the government is not ready to buy 100% of the chana from farmers," he said.

 

In the Budget, the government said it would launch a six-year mission to promote the production of pulses, with a special focus on tur, urad, and masur, through procurement via central agencies. End

 

Edited by Saji George Titus

 

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