MarketsFarm — Lentil suppliers in Canada have received a bit of a boost from a surprise policy decision overseas.
India’s government on Feb. 12 suspended all tariffs on most lentil imports, which will reduce costs for its two largest exporters, Canada and Australia, to ship the crop to the country.
The tariff removal is not permanent, as India can re-evaluate the policy after Sept. 30. Lentils from the U.S. still have a 22 per cent levy due to an ongoing trade dispute.
Mac Ross, director of market access and trade policy for Pulse Canada, said the suspension of tariffs was unexpected and in line with India’s recurring lack of transparency in its trade decisions.
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“We’ve seen (tariffs) move up and down for Canada over the past two years between 11 and 33 per cent. As far as rationale is concerned, even though Indian lentil prices are well above their minimum support price, the announcement was a bit of a surprise as there haven’t been any meaningful gains in lentil prices for a couple of months,” Ross said. “It’s likely that it’s meant to address food price inflation concerns.”
Lentils saw record prices in India last year, selling wholesale at 80 rupees per kilogram (61 Canadian cents per pound) and 100 rupees/kg (73 cents/lb.) at retail. Last September, in an attempt to counter rising prices, India allowed lentil imports from Russia for the first time. They were previously prohibited due to phytosanitory issues.
No tariffs is good news for Canadian lentil suppliers, especially after domestic production of the crop is forecast to decline 44 per cent to 1.606 million tonnes with carryout stocks down to 75,000 tonnes in 2021-22, according to Statistics Canada.
However, India’s agricultural ministry estimates this month’s lentil harvest to be 1.58 million tonnes, a near bumper crop. India’s lentil imports are expected to drop to 500,000 tonnes, compared to 724,000 in 2021-22.
“It’s always positive to see a tariff reduction. But the broader issues that we see are around the lack of predictability and the lack of transparency in India’s policy decisions,” said Ross. “Canadian farmers and exporters need predictability.”
While Canada’s pulse export program was smaller in 2021-22 due to reduced production from last year’s drought, international demand remains strong, he added. And while prices for Canadian pulses are higher compared to last year, Ross thinks there may be the same amount of Canadian pulse acres this year.
“I don’t think analysts are predicting a really big bump in pea and lentil acres,” he said. “But I think we’re hoping for conditions that allow us to at least have a good crop again and refill stocks.”
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man. Includes files from Sean Pratt of the Western Producer.
