India should try lentil crops

Farmers in Australia and Brazil are reportedly trying out new lentil crops like arhar, urad and tur daal, a staple in Indian diets that domestic production cannot fulfil. India imports the lentils variety from Myanmar and countries in eastern Africa, and the Indian government would prefer a larger production base to keep prices in check. India consumes over half of the global production of lentils and faces price spikes whenever it enters the market as a buyer. Broad-basing production with some form of purchase assurance is one way to bridge the deficit without price flare-ups. Even the projected Indian deficit can act as a price support for Australian and Brazilian lentil farmers. New Delhi has a low tolerance for pulses inflation and imposes stocking restrictions on signs of unusual price movement before placing orders in the international market. Arhar prices are up by a quarter from last year, and imports are set to be a third higher because of a decline in domestic output. This could act as a trigger for its farming to spread in various non-traditional daal-producing (and consuming) parts of the world.

Government price signals to pulses-growers at home tend to be muted because of the lack of warehousing. Rice and wheat take up the bulk of food storage capacity, and they also have historically been favoured by minimum support prices (MSPs). This makes farmers wary of switching to lentils despite their MSP now being better aligned to the market. They are not sure whether government agencies will be able to lift any unsold crop at MSP. The pulses acreage, thus, remains small relative to paddy, and this cycles back into low domestic production and a resultant surge in international prices. Productivity gains at home and seeking out centres of low production cost abroad are ways to break this cycle.

If India fares better in convincing farmers in Queensland in Australia and Mato Grosso in Brazil that it pays to grow lentils, it can get around some of its stockpiling limitations that keep pushing up food prices.