While there were some distractions to Prime Minister Trudeau’s recent visit to India, we have to agree that it did open up some issues on pulses.
Specifically, on the agenda for Pulse Canada was:
1. An easing of fumigation rules;
2. More predictability with import tariffs; and
3. Exemptions for ships en route when tariffs are changed.
The hope is that with these changes, Canadain exports of pulses crops can increase with lessening restrictions.
As we mentioned a few days ago, a working commitment to resolution was established with Prime Minister Modi in regards to fumigation rules, with the intention of finding a solution within 2018.
I don’t know about you but I am bit skeptical of promises made the Indian government to farmers / an agricultural industry who is not based in India.
That being said, we have to give kudos to Gord Bacon and Pulse Canada for presenting research and giving acknowledgment of India’s pests concerns, but also how Canada’s control methods have made significant progress.
Although we continue to believe that India’s import tariffs will be relaxed in the next 9-15 months, , increased predictability would be the next best outcome (after better fumigation rules).
However, the import tariffs issue was not brought up in the meeting between the Canadian and Indian prime ministers.
Further, the issue of ships already en route to not be held to increased import levies was also left unresolved after this meeting.
What’s certain is that India’s Modi knows his/India’s position of power in the pulses trade game, something that we talked about 1.5 months ago.
All things being equal, international diplomacy can a tough nut to crack.
Regardless of whether or not these priorities were resolved, the conversation and acknowledgment of the issues is, as it’s considered by the political science textbook, an important step in increasing an working trade relationship with India.
As such, the NEW status quo prevails for the prices of pulses. The old status quo of higher prices that we enjoyed for the past 2-3 years has passed.
That being said, we’re seeing some pretty decent new crop action on the FarmLead Marketplace. We’ve recently moved to 15% so go ahead and post your chickpeas.
Progress made on pulse priorities during PM’s trip to India, says Pulse Canada CEO
When assessing whether there was progress made on removing restrictions on Canadian pulse crops during Prime Minister Justin Trudeau’s controversy-filled trip to India last week, it’s a matter of defining what the expectations were, says the CEO of Pulse Canada.
If the expectation was to simply have pulses on the agenda, it could be described as a success, as the trade issues with Canada’s largest pulse export market were discussed in a meeting on Friday between Trudeau and India’s Prime Minister Modi, with India’s leader committing to work toward easing fumigation requirements for Canadian pulses by the end of 2018.
“I think it was the number one priority for the Canadian political delegation that went over,” says Gordon Bacon in the interview below, speaking with RealAgriculture hours after returning home early Monday.
Based on what he says, Pulse Canada had three priority issues it wanted addressed during the visit to India:
- Easing of the methyl bromide fumigation requirement on Canadian pulse shipments, after India ended its exemption for Canada last fall;
- More predictability in India’s import tariff policies, after India imposed 30 to 50 percent duties on imports of lentils, peas and chickpeas in late 2017;
- Exemptions for ships already en route to India when import levies are increased.
Easing of fumigation rules
Bacon believes there was progress made on the fumigation requirements, an the issue that dates back to 2003, and escalated last year when India ended a string of repeated exemptions for Canadian imports.
“I think having (Prime Minister Modi) agree to having it at least resolved in 2018 is far better than where we were, so that to me is progress,” he says. “At least now we have a timeline and recognition that it will be based on Canada’s exposure of risk relative to Indian perspective on plant quarantine pests.”
The focus will now shift to developing a work plan for how to reach a resolution on the fumigation issue. Canada has presented India with a paper that explains how Canada’s systems approach addresses India’s concerns about pests, referring to specific pests, levels of occurrence, and control measures that are in place.
“We have done a lot research over the last six or seven years in terms of nematode identification to know with certainty that pea shipments from Canada have never contained the nematode of concern to India,” notes Bacon.
Improved predictability with import tariffs
As for the tariff issue, India remains within the World Trade Organization’s rules with its 33 percent tariff on lentils, 44 percent tariff on chickpeas and 50 percent tariff on peas. In fact, the WTO would allow India to raise its lentil and chickpea import levies up to 100 percent, says Bacon.
Speaking of expectations, while the entire Canadian pulse industry would welcome the removal of the tariffs, improved predictability in when India will raise or lower tariffs is probably the next best scenario. That’s why Pulse Canada was pleased to see Trudeau and Modi acknowledge the importance of “predictable and transparent market access conditions” in their joint statement.
“No one from Pulse Canada expected that we would go back to where we were with duty- and levy-free access to the Indian market. Indian politics has really shifted in terms of what sort of support prices they want to have, so it becomes something about the predictability and transparency, and that’s what we see in the communique,” says Bacon.
The statement from Trudeau and Modi did not refer to the tariffs, or any timeframe for when they might be reduced, however Bacon agrees there are two primary factors that will determine when India’s government will begin removing the levies. The first is domestic pulse prices.
“The Indian government has to find the balance between a support price for farmers and a pulse price for consumers that is neither too low from the farmers’ side or too high from the consumers’ side,” says Bacon. “What we’re asking for is predictability to understand so if you’re a trading company and want to put a position on, you have some idea by looking at market supply and demand estimates.”
The (related) second factor is domestic politics. India has state elections later this year and a national election scheduled for early 2019.
“Even in my ten days in India, there were front page stories on market support prices for farmers and how well they’re working,” he says. “The politics of farm policy in India is huge because it still represents the majority of votes. That’s really what is driving India’s policy approach.”
Exemptions for ships en route
As for the third priority for the trip, the request to have cargoes that are already on their way to India be exempt from import levy increases remains unresolved, creating uncertainty for any company potentially loading a boat destined for India.
“If you want to talk about success or failure, it’s relative to the expectations of what could be achievable. We can only go so far from a Canadian interest perspective as the Indian government is prepared to go,” says Bacon.