Improving the profitability & sustainability of Esperance port zone grain growers

India and Pakistan tour - 2018

Seven members of the Pulse Association of the South East (PASE) and two Esperance Quality Grains personnel attended Pulse Conclaves in Pakistan and India during February 2018. Whilst these conferences are important, it’s really the face-to-face meetings that break down built up perceptions that are the real highlights of a visit. This visit was no exception.

Pakistan pulse visit

Three pulse conferences were held in Pakistan, two in Karachi and one in Lahore. These were organised by Austrade for the Pakistan industry to have a more co-ordinated approach to buying pulses. Much of the conferences were taking up with discussing supply demand and expected price issues for the forthcoming season. The Pakistani traders have been hard-hit by ex-colleagues in their industry, and they’ve walked away from contracts when it was revealed that ABARE had underestimated the chickpea crop by one million tonnes. This drastically reduced the price of chickpeas and, given the family buying system that operates in Pakistan, these traders felt they had no option but to walk away from their contracts to save face within their family. Despite some obvious security concerns in Pakistan, we felt it would have been good to have spent more time building relationships and understanding more about their country. The group made a number of excellent contacts which will be useful in the years ahead.

Indian pulse visit

The Indian government’s decision to impose a 30 per cent duty on imported lentil and chickpeas along with a 50 per cent duty on peas at the end of 2017 made for a robust Pulse Conclave – or it would have been if the Indian Agriculture Minister had not been a last-minute cancellation. There were a number of foreign country officials that had him clearly in their sights. Austrade did an excellent job of putting together a series of meetings and visits that helped us gain an understanding of why the Indian government has embarked on a protectionist policy and what were the triggers that led them to implement the duty.

The big driver is the government facing a general election in May 2019. Twenty five per cent of the workforce are farmers who were promised increased prices along with better conditions in the 2014 election. The Indian farmers are an important voting group as only 66 per cent of the eligible population vote. With good seasons and falling world prices they took this action to protect farmers’ incomes.

The government is trying to improve the traditional Indian grain marketing process that is centred around the local money lender/ grain trader “calling in” the farmers’ crop establishment debt at the peak time of the harvest. They are encouraging farmers not to deal with them but to use specialist warehouses that work with banks and have on-line auctions that are visible to everybody. One such group was agribazaar.com. This is a relatively new concept for the Indian farmer, and as a result, most of the grain is still traded and handled in the traditional way.
Another similar company that we met with was NCML, part of the FAIRFAX Group that many of you will know as a John Deer distributor. They were offering a similar warehouse and marketing service to farmers and ourselves if we want to sell containers of grain direct into the Indian market place. This is concept is worth considering in the future.

At present the farmers have a reasonable life, albeit that their farms are small at around five acres. They pay no tax, have free power, subsidised fertiliser and no water restrictions.

India faces some serious issues apart from the obvious ones (a massive population, underperforming infrastructure, toxic pollution etc). They are:

  • The disappearing water table used to irrigate 25 per cent of India’s crops.
  • China’s aggressive approach to damming rivers that flow into India.
  • China diverting rivers that flow into India.
  • The growing alliance between China and Pakistan.
  • The massive build up of troops on the border between China and India.

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