Devesh Roy, IFPRI

1. By
Akshay Bhatnagar, Raj Chandra and Devesh Roy
International Food Policy Research Institute
New Delhi-June 1, 2016

2. Background
 India is the largest producer and consumer of pulses in the world.
-25% of global production
-33% of world total area under production.
-27% of global consumption
(FAO,2008)
 Rising per capita income, urbanization and diversification in food
supply is shifting the dietary pattern towards high value food products.
 Stagnant production with rising population affecting the per capita net
availability adversely.
 𝐼𝑚𝑝𝑜𝑟𝑡 = 𝐶 + 𝑌 − ∆𝑠𝑡𝑜𝑐𝑘
 Trade has significant implication on production as well as consumption
 Competition with bigger players like Australia, Canada and Myanmar.

3. Intensive and extensive margin of
trade
 intensive margin (more imports of established pulses
from traditional partners) or through the extensive
margin (new trade flows in new products and/or from
new partners)?
 Yellow pea is a perfect example of expansion on the
extensive margin first later expansion on the intensive
margin
 Emergence of African partners that is still evolving
another basis for extensive margin
 Deepening of markets with Myanmar for example a
case of intensive margin

4. Extensive and intensive margin and
gains from trade
 Trade enables the exploitation of comparative
advantage
 Producers can thus reduce costs, increase scale of
production, improve productivity and increase
producer surplus.
 On the import side, welfare in enhanced through
consumption of lower priced goods and through the
availability of a larger variety of goods (OECD 2012).

5. Research questions addressed
 Dynamic behavior of India’s pulse imports
 Has the source of growth been the intensive margin of
trade or extensive margin
 Has the relative roles of margins vary across pulses?
 Did the period of 2008 food price crisis bring about
change in the margins in trade?
 In gravity model estimation which country fixed
effects are associated with extensive margin and
intensive margin respectively?

6. About Data Set
 Study is based on a highly disaggregated 8 digit
customs data – Novel part of the study
 Several details disaggregated variety, landing ports,
trading partners, entry timing
 Data contains information on both volume and value
of pulses export and import, destination as well as
source country.

7. Pulses Aggregate Import
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Quantityinmilliontons

8. Pulses Imports- Some Stylized
Facts
 India imports many pulses -mainly peas, chick peas, tur, black matpe and
lentils.
 There has been significant variation in the share of different varieties in
total imports.
 Peas which had only 17.7% share in total imports in 2001 has increased to
50% in 2010.
 Chick Peas with the highest share covering the one fourth of total import in
2001 (24.29%) has decreased to 3.73% in 2010.
 Share of tur, black matpe and moong has also declined over the period of
time but that of lentils and beans has increased by very small amount.

9. Chick Peas
0
0.05
0.1
0.15
0.2
0.25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
QuantityinMillionTons
Year
Quantity Imported from Different Countries
AU
CA
TR
TZ

10. Black Matpe Imports
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
QuantityImportinMillionTons
Year
MM
MY

11. Pigeon Pea
0
0.01
0.02
0.03
0.04
0.05
0.06
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
QuantityinMillionTons
Year
Quantity Imported from Different Countries
MM
MOZ
MW
TZ

12. Evolution of Trade across Variety
over Time
0.00
10.00
20.00
30.00
40.00
50.00
60.00
Percentage
Percentage share of different variety in total
import
Peas
Pigeon Pea
Black Matpe
Chick Peas

13. Major Trading Partners for
different Varieties
Peas Canada
Pigeon Pea Myanmar
Chick Pea Australia
Black Matpe Myanmar
Green Gram Myanmar
Lentils Canada

14. Evolution of Trading Partners
Year 2001 Year 2005
Australia
3%
Canada
40%
Myanma
r
36%
Tanzania
4%
United
States
3%
Others
14%
Australia
3%
Canada
21%
Iran
10%
Myanma
r
41%
Singapor
e
5%
Others
20%

15. Evolution of Trading Partners
year 2012
Australia
10%
Canada
28%
Myanmar
17%
Russia
13%
United States
3%
Tanzania
2%
France
3%
Ukarine
1%
Others
23%

16. Measurement of extensive and
intensive margin
 ∆𝑀𝑡 = 𝑗∈𝐴 𝑚𝑗,𝑡 − 𝑗∈𝐷 𝑚𝑗,𝑡 + 𝑗∈𝐶 ∆𝑚𝑗,𝑡
 ∆𝑀𝑡 -change in the total imports of pulses. 𝑗 𝑖ndexes the
pulse exporter trade relationship.
 A -set of pulse exporter relationship added and
 D-set of pulse exporter relationship dropped.
 C is the set of pulse exporter relationship that is common
between the two time periods. The last term captures the
intensive margin.
 Here it is important what time we use. We can generate for
high, medium and low frequency.
 This is the first step.

17. Behavior of margins over time
-7.00
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
January February March April May June July August September October November December
Change in Blackmatpe Import, Year 2002-03
Change in Import Changes at Extensive Margin Changes at Intensive Margin

18. Extensive and intensive margin
during shocks
-40.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
January February March April May June July August September October November December
Change in Blackmatpe import, Year 2007-08
Change in Import Changes at Extensive Margin Changes at Intensive Margin
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
Change in Blackmatpe Import, Year 2008-09
Chane in Import Changes at Extensive Margin Changes at Intensive margin
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
Changes in Blackmatpe Import, Year 20011-12

19. Extensive margin during shocks
changes - case of chick peas with
more diverse set of producers
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
January February March April May June July August September October November December
Change in Chickpea Import, Year 2007-2008
Change in Import Changes at Extensive Margin Changs at Intensive Margin
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Change in Chickpea Import, Year 2008-2009
Changes in Import Changes at Extensive margin Changes at Intensive Margin

20. Margins in pigeon pea
-14.00
-12.00
-10.00
-8.00
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
January February March April May June July August September October November December
Change in Pigeonpea Import, Year 2002-2003
Change in Import Changes at Extensive Margin Changes at Intensive Margin

21. Is Lentils different? Lentils is the
most highly traded pulse in the
world
-0.50
0.00
0.50
1.00
1.50
Change in Lentils Import, Year 2002-2003
Change in import Changes at Extensive Margin Changes at Intensive Margin
-10.00
-8.00
-6.00
-4.00
-2.00
0.00
2.00
January February March April May June July August September October November December
Change in Lentils Import, Year 2007-2008
Change in Import Changes at Extensive Margin Changes at Intensive Margin

22. Margins in Lentils trade
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Change in Lentils Import, Year 2008-2009
Change in Import Changes at Extensive Margin Changes at Intensive Margin
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Change in Lentils Import, Year 2011-2012
Change in import Changes at Extensive Margin Changes at Intensive Margin

23. Yellow pea- the start up of EM
across varieties
-1E+01
-5E+00
0E+00
5E+00
1E+01
2E+01
January February March April May June July August September October November December
Change in Yellowpea Import, Year 2002-2003
Change in Import Changes at Extensive Margin Changes at Intensive Margin

24. Has the intensive margin been
driven by increase in prices?
-1500
-1000
-500
0
500
1000
1500
2000
2500
3000
January February March April May June July August September October November December
Change in Black Matpe Unit Value, Year 2008-2009
Change in unit Value Changes at Extensive Margin Changes at Intensive Margin

25. Intensive margin in terms of unit
values
-3000
-2500
-2000
-1500
-1000
-500
0
500
1000
January February March April May June July August September October November December
Change in Black Matpe Unit Value, year 2011-2012
Chane in Unit Value Changes at Extensive Margin Changes at Intensive Margin

26. Simple gravity model estimates of
extensive and intensive margins
 Estimation of equation whether there is trade or not
for extensive margin
 Level of trade for intensive margin

27. Gravity model estimates for pigeon
pea
 Our interest –country fixed effects
 They account for multilateral resistance but also
indicate likelihood of country joining in or dropping
out
 Level equation captures the contribution of the
country higher or lower relative to the benchmark

28. Results
 Global production share a strong determinant of both
extensive and intensive margins
 Canada, China, Kenya, Malaysia, Mozambique,
Myanmar, Tanzania have contributed positively to the
extensive margin with a significant likelihood of
trading
 Ethiopia, Ukraine, Thailand, Nigeria,Mexico
significant negative likelihood of joining in

29. Results for intensive margin
 China, Ethiopia, Mozambique, Thailand, Ethiopia,
Tanzania contributed significantly to the expansion
along the intensive margin

30. Conclusions and policy implications
 Margins are important for trade policy
 Bigger expansion in trade has happened from intensive
margin
 Significant increase in prices contributing to intensive
margin
 Yellow pea presents the case where low elasticity of
substitution leads to greater extensive margin
 There are pulses where extensive margin is picking up or
has been significant
 Reliance on trade less fraught with risks there
 Based on the interplay of margins the trade policy stance
has to be at more granular level