ifpri extensive and intensive margins of india’s pulses trade, devesh roy, ifpri

By

Akshay Bhatnagar, Raj Chandra and Devesh Roy

International Food Policy Research Institute

New Delhi-June 1, 2016

Background

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

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).

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?

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.

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

Qu

an

tity

in

mil

lio

n t

on

s

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.

Chick Peas

0

0.05

0.1

0.15

0.2

0.25

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Qu

an

tity

in

Mil

lio

n T

on

s

Year

Quantity Imported from Different Countries

AU

CA

TR

TZ

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

Qu

an

tity

Im

po

rt i

n M

illi

on

To

ns

Year

MM

MY

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

Qu

an

tity

in

Mil

lio

n T

on

s

Year

Quantity Imported from Different Countries

MM

MOZ

MW

TZ

Evolution of Trade across Variety

over Time

0.00

10.00

20.00

30.00

40.00

50.00

60.00

Pe

rce

nta

ge

Percentage share of different variety in total import

Peas

Pigeon Pea

Black Matpe

Chick Peas

Major Trading Partners for

different Varieties Peas Canada

Pigeon Pea Myanmar

Chick Pea Australia

Black Matpe Myanmar

Green Gram Myanmar

Lentils Canada

Evolution of Trading Partners Year 2001 Year 2005

Australia 3%

Canada 40%

Myanmar

36%

Tanzania 4%

United States

3% Others

14%

Australia 3%

Canada 21%

Iran 10%

Myanmar

41%

Singapore

5%

Others 20%

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%

Measurement of extensive and intensive margin

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

Extensive and intensive margin during shocks

-40.00

-30.00

-20.00

-10.00

0.00

10.00

20.00


Change in Blackmatpe import, Year 2007-08


-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

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


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

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


Change in Pigeonpea Import, Year 2002-2003


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




Margins in Lentils trade

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00



-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00


Change in import Changes at Extensive Margin Changes at Intensive Margin

Yellow pea- the start up of EM across varieties

-1E+01

-5E+00

0E+00

5E+00

1E+01

2E+01


Change in Yellowpea Import, Year 2002-2003


Has the intensive margin been driven by increase in prices?

-1500

-1000

-500

0

500

1000

1500

2000

2500

3000


Change in Black Matpe Unit Value, Year 2008-2009

Change in unit Value Changes at Extensive Margin Changes at Intensive Margin

Intensive margin in terms of unit values

-3000

-2500

-2000

-1500

-1000

-500

0

500

1000


Change in Black Matpe Unit Value, year 2011-2012

Chane in Unit Value Changes at Extensive Margin Changes at Intensive Margin

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

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

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

Results for intensive margin China, Ethiopia, Mozambique, Thailand, Ethiopia,

Tanzania contributed significantly to the expansion along the intensive margin

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

ifpri extensive and intensive margins of india’s pulses trade, devesh roy, ifpri

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