India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

Yellow peas can serve as a low-cost substitute for desi chickpeas <strong>and</strong> other pulses. 22
Green peas, which normally cost more than yellow peas, are used in daal <strong>and</strong> for snack
foods. 23
Although income <strong>and</strong> pulse dem<strong>and</strong> are generally positively correlated, per capita pulse
consumption fell over the period 1970–2001 despite rising incomes. 24 This decline
occurred because <strong>of</strong> reduced production <strong>and</strong> import levels <strong>and</strong> price increases that may
have outpaced income growth. 25 This dynamic reflects the high level <strong>of</strong> <strong>India</strong>n food price
sensitivity. 26 In response to rising pulse prices, it appears that middle- <strong>and</strong> low-income
<strong>India</strong>ns have replaced pulses with lower-priced grains <strong>and</strong> vegetables, not with other
proteins. 27 The shift from pulses by higher-income <strong>India</strong>ns, however, is possibly because
<strong>of</strong> preference changes in favor <strong>of</strong> previously less-consumed items, such as meat,
vegetables, fruit, or dairy. 28
Oilseeds
Production
<strong>India</strong> is a major global producer <strong>of</strong> oilseeds. The most important oilseed crops in <strong>India</strong> in
terms <strong>of</strong> production are soybeans, peanuts, <strong>and</strong> rapeseed/mustard. Approximately
80 percent <strong>of</strong> total oilseed production is processed into oil. With only 24 percent <strong>of</strong>
oilseed production in <strong>India</strong> irrigated, the majority <strong>of</strong> oilseed farmers are dependent on
monsoon rainfall. As a result, oilseed yields are well below world averages. Major
oilseed production—28.1 mmt on 26.5 million ha in MY 2007/08—increased by nearly
20 percent between MY 2003/04 <strong>and</strong> MY 2007/08. The increase in oilseed area was
driven by increases for soybeans, which alone during the same period increased by
35 percent. High domestic market prices for soybean, peanut, <strong>and</strong> rapeseed toward the
end <strong>of</strong> the period encouraged production <strong>and</strong> increased plantings. 29 Rising feed dem<strong>and</strong>,
mainly for poultry production, in the <strong>India</strong>n domestic <strong>and</strong> international markets kept
soybean meal prices high. 30 Other oil meals, including peanut <strong>and</strong> rapeseed meals, are
also used in feed formulations, although to a lesser extent, <strong>and</strong> experienced similar
increased dem<strong>and</strong> <strong>and</strong> firm prices in MY 2007/08.
For soybeans, meal is the most important processed product, <strong>and</strong> it is used for poultry
feed. Of total soybean production, approximately 85 percent is converted into meal. The
<strong>India</strong>n poultry industry consumes about one-third <strong>of</strong> domestic soy meal production while
most <strong>of</strong> the rest is exported. 31 Approximately 70 percent <strong>of</strong> domestic soybean production
22 USDA, ERS, <strong>India</strong>’s Pulse Sector, May 2003, 7 (table 1); industry <strong>of</strong>ficial, interview by Commission
staff, New Delhi, <strong>India</strong>, May 26, 2009.
23 USDA, ERS, <strong>India</strong>’s Pulse Sector, May 2003, 7 (table 1); industry <strong>of</strong>ficial, interview by Commission
staff, Mumbai, <strong>India</strong>, May 28, 2009; <strong>and</strong> industry <strong>of</strong>ficial, interview by Commission staff, New Delhi, <strong>India</strong>,
May 26, 2009.
24 USDA, ERS, <strong>India</strong>’s Pulse Sector, May 2003, 6, 22.
25 Ibid., 22.
26 Industry <strong>of</strong>ficial, interview by Commission staff, New Delhi, <strong>India</strong>, May 26, 2009; industry <strong>of</strong>ficial,
interview by Commission staff, Mumbai, <strong>India</strong>, May 28, 2009.
27 USDA, ERS, <strong>India</strong>’s Pulse Sector, May 2003, 6, 8.
28 Ibid., 8.
29 <strong>India</strong>n government minimum support prices for oilseeds are typically set too low to influence market
prices. Aradhey, <strong>India</strong>: Oilseeds; Annual, April 16, 2009, 3.
30 Aradhey, <strong>India</strong>: Oilseeds; Annual, May 19, 2008, 6.
31 Industry representative, interview by Commission staff, Mumbai, <strong>India</strong>, May 28, 2009.
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