8. Pulses Value Chain- Pigeon Pea and Gram

Pulses form an important part of Indian agriculture given that the country is the largest producer, consumer and importer of pulses. Owing to their natural resilience to extreme weather conditions, low water requirements and being environmentally benign, pulses have been traditionally a smallholder’s crop. However, with poor price realization, farmers have been switching towards other remunerative crops such as sugarcane, soybean, among others. Unlike rice and wheat, pulses are not covered by the regular public procurement system which makes marketing of pulses at fair and remunerative prices, a challenge for the farmers. Pulses are no longer a poor man’s diet given the escalating consumer prices. Nonetheless, it is considered as an important source of protein (given the large vegetarian diet base in India), consumption of which is being promoted to address the protein gap in the diets. Over time, per capita availability of pulses has declined like other traditional cereals. With changing consumption patterns and emerging dietary deficiencies, there is scope for enhancing consumption of pulses through traditional and value-added products.

Pulses account for only 4% of the value of crop agriculture and cover about 11.7% of the gross-cropped area. Since 1950s, area under pulses as a per cent of total area under food grain remained almost unchanged at 20% with some minor annual deviations. The share of pulses as a per cent of total food grain production declined over a period of time and is about 7% average for the five-year period ending 2016–17. About 17% of the area under pulses is irrigated for the five-year period average ending 2013–14. In addition to being less water intensive compared to other crops, pulses can withstand extreme temperatures and also enable natural fixation of nitrogen in the soil due to its leguminous properties. Gram and pigeon pea together account for 52% of pulses area and 61% of production (as estimated for TE 2015–16). Agricultural imports in India largely comprise of pulses, after edible oils. Yellow peas accounted for 49% of pulses import for the period 2010–11 to 2016–17. Factors related to lack of expansion of area under pulses through persistent low yields due to lack of any major technological breakthrough have restricted production expansion. Coupled with this, a weak procurement regime has resulted in inadequate domestic availability of pulses. Owing to these gaps, Government of India (GoI) adopted a focussed policy thrust to augment pulses production and programs such as the National Food Security Mission (NFSM); Integrated Development of Pulses Villages, among others. While these are more supply side policy efforts, enough emphasis on marketing infrastructure and practices has been missing, resulting in poor price realization for the farmers. Responding to situations when market prices fell below minimum support price (MSP), government procured pulses through the public procurement agencies such as National Agricultural Cooperative Marketing Federation of India Limited (NAFED) and Small Farmers Agribusiness Consortium (SFAC) through the Price Stabilization Fund (PSF) and Price Support Scheme (PSS). In 2016–17 and 2017–18, farmers had been under severe distress owing to market prices crashing below MSP resulting in state-wide agitation and demonstration by the farmers. The crisis situation forced several state governments to ease off the pressure by announcing loan waivers and introducing price deficiency payments and direct benefit transfer programs. Notably, Madhya Pradesh introduced the Bhavantar Bhugtan Yojana (BBY) in September 2017, to compensate the farmers, the difference between MSP and average sale price without getting into physical procurement. In the case of loan waivers, there are concerns about the extent to which farmers under distress actually benefit. Loan waivers have been widely debated and are perceived to be more populist in nature and lacked economic rationale.

Pulses are an integral part of the staple vegetarian diet of Indians. Per capita availability of pulses reduced by 38%, to 43.8 g per day in 2015 from a peak of 70.3 g per day in 1956. Pulses contributed to 10.6% of protein intake in rural areas and 12.4% in urban areas in 2011–12 (Government of India 2014a). The increase in protein intake from pulses over the years has been the slowest among all other foods. As per the NSSO estimates for 2011–12, an average Indian consumes 739 g per month or 8.9 kg per annum of pulses in rural areas while and 857 g per month or 10.3 kgs per annum of pulses in urban areas. The share of pulses in per capita consumption expenditure on food has been fluctuating. It decreased from 5.9% in 1993–94 to 5.4% in 2004–05, then increased to 6.8% in 2009–10 and declined to 6.1% in 2011–12 (Government of India 2014a). Prices of pulses have increased significantly, notably in urad, tur and chana. Since April 2006, the highest peak in wholesale price index of pulses was observed in November 2015. Although retail prices of pulses escalated sharply, the same has not resulted in higher prices for farmers.

With 32% of the area and 25% of global production, India cultivates the largest pulses varieties. Pulses production in India increased from about 8.4 million tonnes in 1950–51 to a record level of 25.2 million tonnes in 2017–18 (according to fourth advanced estimates). Between 2015–16 and 2017–18, production increased from 16.4 million tonnes to 24.5 million tonnes, registering a growth of 49.4%. With two consecutive years, 2014–15 and 2015–16, when production fell to 17.2 and 16.4 million tonnes, respectively, farmers were incentivized through increase in MSP to grow more pulses. This together with soaring market prices in 2014–15 and 2015–16, resulted in unprecedented production levels in 2016–17 and 2017–18, with market prices crashing below MSP. The highest yield in pulses was registered at 789 kg per hectare in 2012–13 from a lowest of 377 kg per hectare in 1966–67 (Fig. 8.1). This indicates that pulses are yet to undergo a major technological breakthrough that has a positive impact on yield performance.

Assessing the overall food grain sector, it is observed that cereals and particularly rice, wheat, and more recently, maize have done well in terms of production, in comparison with pulses. While the green revolution and maize revolution propelled production of these crops, similar breakthrough in pulses has not been achieved till date. While the share of pulses in area under food grain remained unchanged at 20% during 1950–51 to 1959–60 and 2010–11 to 2015–16, the share in overall food grain production declined dramatically from 16% to 7% during the above period.

Under these prevailing circumstances, it is important to ensure that goals pertaining to productivity gains should be dovetailed with profitability for farmers, thereby creating a sustainable ecosystem. With increasing importance of technology be it high yielding, climate-resilient seeds or advanced mechanization, cost of production is bound to increase for the farmers. However, the quantity and quality of produce should allow farmers to recover their cost of production and make reasonable profits to be able to sustain pulses farming. Just as millers, wholesalers and retailers are able to play the markets, farmers should be given similar options. Hence, marketing opportunities need to be widened for the farmers to benefit from higher price realization either by streamlining the physical value chain and reducing the margins or providing farmers the option of holding their produce in warehouses and participating in futures market.

The objective of the study is to map the current pulses value chain in the context of competitiveness, inclusiveness, sustainability and scalability and access to finance (CISS-F). This study focusses on gram/chana and pigeon pea/tur/arhar, which together account for nearly half of the pulses production basket.

The study includes pigeon pea/tur and bengal gram/chana value chains given that these account for more than half of pulses production in India. To study these two value chains, Maharashtra and Madhya Pradesh were chosen as these are the largest producers of pigeon pea and chana, respectively. Given the scope of the study, primary research was conducted in these two states. For certain aspects of the study, where information or data specific to these two value chains were not available to the author, the findings have been reported at the aggregate pulses value chain level.

In ascertaining domestic competitiveness of pulses value chain, the analysis includes farmer’s share in end consumer price as well as the extent to which actual price received by the farmer covers his cost of production. Increasing the share of the farmer’s price in the end consumer rupee indicates the efficiency of the value chain. In addition to the real costs incurred in terms of processing, transportation, marketing charges and legitimate fees for intermediation, if supernormal margins do not accrue to the other players in the value chain, then the value chain is more competitive. It is also important to ensure that farmers earn a remunerative price covering their cost of production such that pulses farming is profitable for them. To further assess the domestic competitiveness of the pulses value chain, the spread between wholesale and retail prices has been analyzed.

As observed in pulses marketing season of 2017–18, market price fell below minimum support price (MSP) of pulses, and hence, farmers could not recover their production costs. Under such circumstances, a farmer receiving higher share of the consumer rupee does not make much difference because anyway he is unable to cover the production cost. In pulses value chain, processing and value addition and storage requirements for longer time periods add to the costs and margins in the chain. Since farmers interface the chain only during arrival months, in situations of glut, they suffer from lower prices and so do other stakeholders. However, most often, everyone except the farmer is able to recover their losses or enhance their margins once the arrivals have ended, and the value chain moves on stored pulses. From millers to wholesalers and retailers, everyone is able to sell at a much higher price compared to what the farmer received. Hence, comparing farmer’s price to a prevailing wholesale or retail price months after arrival further brings down his share in the end retail price, significantly.

The fact that 86.1% of farmers are smallholders, i.e. operating on less than 2 hectares of land; by default, farmers cultivating pulses are marginal and small in size. About 65% of gram and 68.8% tur farmers are small and marginal (Agri Census 2015–16, Government of India 2020). Pulses are less water intensive, more climate resilient, require less crop care, making it easier for a resource poor smallholders to cultivate the crop. About 18.1% of the area under pulses was irrigated in TE 2013–14 and about 4% and 35.1% of area under pigeon peas and gram were irrigated, respectively, (Fig. 8.9). Between TE 1952–53 to TE 2013–14, irrigated area under pulses nearly doubled from 9.6% to 18.1%. Irrigated area under pigeon pea increased from 0.5% to 4% and that of gram from 14.1% to 35.1% between the period 1950–51 to 2013–14. Madhya Pradesh has more than 43% of area irrigated under pulses and 60% of the area irrigated under gram. In Maharashtra, 11.9% area under pulses is irrigated, and only 1.6% of pigeon pea and 24.3% of gram areas are irrigated. Pigeon pea is largely unirrigated, making it more amenable for cultivation by small and marginal farmers.

Enhancing irrigation and water use efficiency can increase yield of pulses. Irrigation technologies such as micro irrigation, better access to farm machineries, and crop management practices can enable farmers to improve crop yields. Since majority of pulses growers are small and marginal farmers, ensuring affordable access to such technologies and practices will be important. Farming of pulses can be made inclusive by making technology and resources accessible to the farmers. However, this does not automatically ensure that the small and marginal farmers will benefit from higher incomes, particularly, in the absence of assured pricing and market linkages. Participating in production is the first step of the value chain, and as one goes up the pulses value chain, it is observed that it is not as inclusive and smallholders do not benefit from the way it is structured.

Given that pulses undergo processing, require storage facilities, are extremely price sensitive, and much of the trade happens through traditional channels, all stakeholders (millers, wholesalers and retailers), but farmers are able to play the markets and at times make significant gains. Also, their ability to undertake risks is much higher than the farmers. Over a period of time, they are able to recover losses incurred when prices crash due to huge arrivals as observed during the study period (2016–17 and 2017–18). In pulses value chain, there is no provision for farmers to sell directly to the millers or the traders, and they are caught in the web of intermediation. Pulses value chain operates on bulk milling and trading, and has been thriving on huge investments and trading relations, which for a farmer to break into is extremely difficult, without institutional reforms. Unless there is a farmer aggregation model like the farmer producer companies, whereby they are able to undertake value addition and marketing at their end or transact directly with the miller, ensuring farmers reap a modest return on their produce, is difficult.

In India, sizeable share of food crops is retained for self consumption. Crops which are backed by assured procurement and remunerative price support are largely marketed through regulated markets. In this context, public procurement for pulses is weak compared to that of sugarcane, groundnut, soyabean, among others. Also, in typical marketing channels, it is observed that small and marginal farmers with low marketable surplus are less likely to have direct interface with the wholesale markets, and usually trade through village-level aggregators, transporters and other intermediaries. Hence, economic gains to farmers are limited where marketable surplus is low, and farmers have limited direct interface with the market channels. At an aggregate level, (32–53)% of different types of pulses produced are marketed (Fig. 8.10).

For most of the food crops including pulses, the most popular agency is local private trader except for sugarcane, where co-operative and government agency are most active. In pulses, about 79% of moong; 63% of urad; 50% of lentils (masur); and 44% of tur are marketed through the local private trader which restricts farmers’ direct interface with the wholesale market and hence, chances for higher price realization (Government of India 2014b). It is observed that general awareness about MSP and procurement agency is quite low among households reporting sale of crops—about 40% in the case of sugarcane, more than 30% in paddy; and only (5–18)% in pulses.

Unlike wheat and paddy, public procurement system is not functional in the case of pulses, except during crisis, when due to price crash, farmers are unable to sell their produce at MSP or high retail price inflation, when the procuring agencies buy directly from farmers and sell at affordable prices to the consumers. Time and again, both central and state governments have tried to bail out farmers by adding bonus on MSP, stepping up public procurement, but it is not clear whether such crisis management has really benefitted the farmers. Often, in such government initiatives, the monetary benefits accrue to the farmers after a significant lag of time, or they are unable to fulfil the paperwork and prove their entitlement, causing a lot of resentment among the farmers. Needless to say, marginal and small farmers are the worse off, because in most cases, they are either unaware of the such initiatives or even if they know, getting across various hurdles is difficult for them.

Majority of the farmers lack any access to formal risk mitigation tools and are unable to hedge against the risks of either crop failure or price crash, and the situation is worse for tenant and sharecropper who do not have any land title. The flagship agricultural insurance program, Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in 2016 replaced the National Agricultural Insurance Scheme (NAIS) and the Modified National Agricultural Insurance Scheme (MNAIS). The Weather-Based Crop Insurance Scheme (WBCIS) continues to exists with premium rates made at par with those of PMFBY, and a particular state can decide whether it wants PMFBY or WBCIS or both. In the design of the program, it is inclusive to some extent as the premium rates are lower compared to erstwhile schemes—2% for kharif crops and 1.5% for rabi crops that include pulses and 5% for horticulture and other commercial crops. However, given that the scheme is compulsory for loanee farmers and voluntary for non-loanee farmers to a large extent, excludes the latter from benefitting from the scheme. CSE (2017) reports that less than 5% of non-loanee farmers availed the scheme in 2015 and 2016 kharif season. There have been reports about the reluctance of farmers to avail the insurance scheme because of the automatic linking of their loan account with insurance. Issues related to delays in settling claims due to red tapism, slack attitude of states in providing data from crop cutting experiments on time, determining the threshold yield, low indemnity, etc., have not resulted in PMFBY to work in the interest of farmers and more so, the marginal and small farmers. Gulati and Hussain (2018) point out that the target of bringing 50% of the gross cropped area under insurance coverage by 2018–19 remained a distant dream considering significant inter-state variations and existing coverage of 30%. Other estimates show that gross cropped area covered under insurance declined from 30% in 2016–17 to 24% in 2017–18 against a target of 40% for 2017–18 (Business Standard 2018).

Despite the negotiable warehouse receipt system being available, it has not reached the farmers who could make better use of it to avoid distress sale by availing pledge finance and marketing credit. Also, this gives farmers the freedom to hold onto legitimate stocks in the event of bumper market arrivals. The integrated scheme for agricultural marketing includes warehousing as an integral component, and efforts have been made to augment warehouse capacity as well as upgrade and modernize existing facilities. Further, under the Agricultural Produce and Livestock (Promote and Facilitate) Marketing Act, 2017, warehouses by notification can be declared as a market sub-yard. With e-NAM being the future of agricultural marketing in India, electronic negotiable warehouse receipt system has immense scope. It is aimed at avoiding high cost of intermediation by facilitating electronic transactions and delivery of products at the final destination of the purchaser. In addition to strengthening marketing infrastructure for greater value realization, policy efforts must be made to ensure that the provisions are accessible to the farmers for their benefit. In pulses, most of the storage and warehousing is operational at the millers’ and wholesalers’ end. Hence, they are able to benefit from appropriate stocking and offloading during the course of time.

Pulses are environmentally more benign, less water intensive and more climate resilient, compared to many other crops. Hence, increasing production of pulses in an environmentally sustainable manner is feasible. Considering the low yield levels, it is possible to push the production frontier in pulses through technology breakthrough. Pulses accounted for 15.3% of the gross cropped area in 1950s which declined to 12% in 2000–01 to 2010–11 and 12.3% during 2011–12 to 2013–14. Area irrigated under pulses increased from 8.9% in 1950s to 14.7% during 2000–01 to 2010–11 and 18.1% during 2011–12 to 2013–14 (Fig. 8.11).

In Madhya Pradesh, about 44% of the area under pulses is irrigated followed by Uttar Pradesh (27%) and Haryana (23%), according to 2013–14 data. Rajasthan and Maharashtra being the second and third largest producer of pulses have 18% and 12% of the area irrigated, respectively (Fig. 8.12).

Irrigated area under gram increased from 14.1% in TE 1952–53 to 35.1% in TE 2014–15. Tur being a largely rainfed crop suited for semi-arid climatic conditions, per cent irrigated area increased from a meagre 0.5% to 4% during the same period. There is enough potential to increase the irrigated area under tur to augment production through productivity breakthrough. ICRISAT has been successful in developing climate smart cultivars that are high yielding, drought tolerant, disease resistant, short duration (75–80 days) lines and hybrids. These cultivars are customized to suit the needs and preferences for farmers and consumers across the world. Various on-farm practices like intercropping of pulses with cereals, crop rotation, ridge planting, among others are being tested on farmers’ fields to improve water and soil health as well as enhance yield levels. In pigeon pea cultivation, ratooning to support zero tillage has been developed in order to minimize soil erosion particularly in cases of intense rainfall (ICRISAT, no date). There are proven successes of adopting innovative methods of pulses cultivation both in India and beyond. For instance, 80% expansion of area under chickpeas in rice fallows of Prakasam district in Andhra Pradesh benefited smallholder farmers. Pigeon pea used as land cover to manage soil and water in China helped reverse soil erosion, land degradation as well as provided quality fodder for cattle. Pulses intercropping with other crops have helped farmers diversify their production basket as well as income opportunities (ibid).

Seeds play an important role in realizing the productivity potential of the crops. The organized sector comprising of private sector players and public sector agencies accounts for (30–35)% of the total seeds distributed in the country, while the remaining comprises of farm-saved seeds which comes under the unorganized sector. The Sub-Mission on Seeds and Planting Material (SMSPM) under the National Mission on Agricultural Extension and Technology (NMAET) was launched during the 12th five-year plan with an objective to strengthen the seed supply chain in India. Focus was put on increasing seed replacement ratio from 25% to 33% in self-pollinated crops, 33% to 50% in cross-pollinated crops and 100% in hybrids. Between 2007–08 and 2014–15, distribution of certified and quality seeds grew substantially for pulses, followed by cereals and fibres at 97%, 64% and 47%, respectively. In the case of open-pollinated crops, improvement in seed quality can be attributed to a larger participation of the public sector. Hence, there is a scope and need to enhance the participation of the private sector in further strengthening the seed supply for this crop sector. Also, it is important to develop varieties that are high yielding, drought and pest-tolerant.

Common types of pulses grown in India are pigeon pea (tur); bengal gram (chana); lentil (masoor); black gram (urad); green gram (moong), among others. In TE 2015–16, gram accounted for 36% of the area and 45% of the production of pulses. While tur (pigeon pea) accounted for 16% of the area and production, respectively. Moong and urad accounted for 14% of the area each and 11% of the production each (Fig. 8.17).

While the all India average yield of pulses for TE 2015–16 was 713 kg per hectare, that of Madhya Pradesh was 875 kg per hectare, Rajasthan was 559 kg per hectare, and Maharashtra was 608 kg per hectare. Three of the top five states producing pulses had yield levels lower than the all India average (Fig. 8.18).

In TE 2015–16, the top five pulses growing states were Madhya Pradesh, Maharashtra, Rajasthan, Karnataka and Uttar Pradesh accounting for nearly 69% of production (17 million tonnes) and 72% of total area (27.4 million hectares) (Fig. 8.19).

Pulses account for 23% of the gross cropped area in Madhya Pradesh, followed by Karnataka and Odisha at 21% and 19%, respectively. Maharashtra, Rajasthan and Uttar Pradesh being among the top five states producing pulses account for 15% each and 8% of the gross cropped area in the respective states (Fig. 8.20).

Among the top five states producing pulses, gram is the major pulse. It accounts for 65% of the total pulses grown in Madhya Pradesh; 52% in Rajasthan, Maharashtra and Karnataka and 24% in Andhra Pradesh. The next big pulse crop is tur (pigeon pea) which accounts for 34% of the pulses grown in Maharashtra, 30% of pulses grown in Karnataka and 14% in Uttar Pradesh. Of the pulses grown in Uttar Pradesh, urad accounts for 18% of the total production. Moong is an important pulse crop for Rajasthan which accounts for 23% of the total pulses grown in the state.

Nearly 60% of tur is produced by Maharashtra, Madhya Pradesh and Karnataka. Maharashtra is the largest tur producing state accounting for 26% of the total production in India followed by Madhya Pradesh at 17% and Karnataka at 16%. Gram is predominantly produced in Madhya Pradesh, with 40% of the all India production. Maharashtra and Rajasthan produce 14% each. Madhya Pradesh is a leading producer of urad as well, contributing to 21% of the total production. Andhra Pradesh and Tamil Nadu produce 16% each, followed by Uttar Pradesh at 14%. Moong which accounts for less than 10% of the total pulses production in India is largely grown in Rajasthan which accounts for 31% of the production. Tamil Nadu and Andhra Pradesh account for 10% each and Maharashtra and Madhya Pradesh at 8% each (Fig. 8.21). While bulk of the production of tur and urad is spread over three states of Maharashtra, Madhya Pradesh and Karnataka; and Madhya Pradesh, Andhra Pradesh, Tamil Nadu and Uttar Pradesh, respectively, production of gram is more concentrated in Madhya Pradesh and moong in Rajasthan. Such geographical spread of pulses could be used for developing pulse-specific storage, marketing and milling infrastructure to reduce the cost of transaction. The same can be used to plan any crop diversification interventions as well.

Considering the top six states in order of their contribution to the production of the major pulses types, a wide disparity in yields is observed (Fig. 8.22). Maharashtra with only 12% of the pulses area under irrigation has the lowest yields of nearly all the major pulses such as tur, urad, gram and moong. Maharashtra which is the leading producer of tur has the lowest yield of 600 kg per hectare compared to other states. Gujarat has the highest yield of 1098 kg per hectare. In the case of bengal gram, Madhya Pradesh which is a leading producer has a yield of 1039 kg per hectare compared to 1143 kg per hectare in Andhra Pradesh, which is the fifth-largest producer of gram. In the case of urad, yield levels in Madhya Pradesh (499 kg per hectare) are nearly half of that in Andhra Pradesh (946 kg per hectare) and Tamil Nadu (960 kg per hectare), the second and third largest producer of urad. Rajasthan, the leading producer of moong recorded a yield of 515 kg per hectare, lower than Tamil Nadu, Andhra Pradesh and Bihar, the second, third and sixth-largest producer of moong.

There is considerable scope for improving existing yield levels of the major pulses grown in India, particularly in states which account for a significant share of all India production. This will improve the per unit land productivity as well as allow multiple cropping, where feasible. Also, for states where the yield levels are already high but account for a smaller share of the all India production, efforts can be made to bring more area under pulses in those states. However, incentivising production through increase in yields should be linked with efficient marketing of the same, failing which the farmers will not be able to benefit from increased production.

Agriculture policies have largely focussed on enhancing production with the objective to sustain food security. Among other flagship programs, National Food Security Mission (NFSM) was launched with a focus on augmenting production of paddy, wheat and pulses. Considering the increasing demand supply mismatch, pulses have been a focus crop with nearly 50% of the funds being allocated towards promoting pulses cultivation. In 2014–15, NFSM was extended to include 623 districts in 27 states as well as all the districts in north-eastern and hilly states. In 2015–16, pulses were brought under the initiative of Bringing Green Revolution in Eastern India for demonstrations under the cropping systems-based approach to target rice fallow areas (GoI 2016). Emphasis was also placed on area expansion through intercropping of pulses with commercial crops, oilseeds, cereals, etc., and productivity enhancement through frontline demonstrations, integrated nutrient and pest management, popularization and promotion of high yielding varieties or hybrids.

In 2010–11, under Rashtriya Krishi Vikas Yojana with an outlay of INR 300 crore, government initiated a special program for Pulses and Oilseeds in Dryland Areas by organizing 60,000 pulses and oilseeds villages in rainfed areas. The sub-scheme was under implementation in seven major oilseeds and pulses growing states including Karnataka. The states were focusing on developing farm mechanization hubs to extend the services through custom hiring centres to pulses and oil seeds growers. Inputs available under NFSM—pulses program were being used to supplement the efforts for enhancing productivity in identified villages and fields (GoI 2010).