India urged to better explain import duties to its suppliers

Pulse Canada says exporters need more information from India so they have an idea how to plan for the upcoming year

It is time for the global pulse industry to move beyond expressing concern about India’s actions and to focus on ideas and solutions, says the head of Pulse Canada.

India’s recently announced duties and fumigation fees have brought trade to a “near halt” with the world’s top buyer of peas, lentils and other pulses.

Gord Bacon, chief executive officer of Pulse Canada, said India is within its World Trade Organization rights to be charging import duties of 50 percent on peas and 30 percent on lentils.

India is using the duties to restrict imports and bolster domestic prices that have plummeted in the wake of bountiful domestic pulse production.

However, Bacon said the country needs to have better transparency on when duties will be assessed and at what levels or seeded acreage will drop and it will find itself facing a global shortage of one of its staple food ingredients.

“Remember, it was only 18 months ago that there was all these allegations of hoarding and price fixing and people rioting because pulse prices were through the roof,” he said.

Stat Publishing is forecasting a one million acre decline in Canadian lentil plantings this spring and another one million acre drop in peas.

India needs to explain to processors and traders in exporting nations such as Canada what triggers lead to duties being established and then raised or lowered.

Is the trigger when the market price for lentils falls a certain level below the government’s minimum support price for the crop, or is there something else behind it?

If there was some transparency in how duties are established, then processors could at least have an idea how to plan for the upcoming year.

“That’s really where we need to start and the sooner the better,” said Bacon.

He said there needs to be transparency for planning purposes because predicting Indian duties is currently a guessing game.

The Indian government applied the maximum WTO allowable duty of 50 percent on peas, but the lentil duty was well below the 100 percent maximum. He has no idea why that is the case or whether there is a risk of it heading higher.

India’s stockpile of pulses is behind the current duties, but what happens when it disappears?

“It could take six to eight months to work through some of the stocks,” Bacon said.

“OK, well, that puts us into October, right about the time when new harvest in Canada is ready.”

The trade needs to know what level the duties will be at that time so it can have adequate supplies available.

Bacon also takes issue with the country’s plant protection policies, such as its insistence on fumigating shipments with methyl bromide even when there is no sign of the named pest in the country of origin.

He said there needs to be science-based rationale behind any such policies.

“Our position is still the same: there is no science-based reason why Canada should be fumigating,” said Bacon.

India recently announced it was extending a derogation to the fumigation policy that allows countries to either fumigate or pay five times the normal fumigation fee upon arrival in India. The derogation expires June 30.

The fees amount to about $750 on a 24-tonne container and $740,000 on a 50,000 tonne vessel.

He said the policy means small shippers will pay about $31 per tonne or double what the big shippers are paying.

But it’s all a moot point right now because the duties are what is preventing any trade with India.

“That’s where you start getting into some serious cash,” said Bacon.

Canada isn’t the only exporting nation that is complaining about India’s actions. Articles published in a recent edition of a newsletter produced by the India Pulses and Grains Association indicate there is unrest in places like Myanmar and Africa.

Shyam Narsaria, chief executive officer of Arvee International Pte Ltd., said India’s import quota restrictions on pigeon peas and beans have sent Myanmar’s pulse markets into “disarray.”

“Concerns among local traders over the potential collapse of the local pulses and bean market are mounting,” he wrote.

Bharat Kulkarni, director of Stalwart Consultancy Services, said India has long been aggressively encouraging African governments to grow more pulses and then “stunned everyone” by imposing quantitative restrictions on pigeon peas, black matpe, or gram, and green moong.

“The market in East Africa has hit rock bottom in terms of pulses with hundreds of farmers and their governments clueless on how to find a market for pulses,” he said.

About the author

Sean Pratt's recent articles

Comments

Copyright © 2016. All market data is provided by Barchart Market Data Solutions. Futures: at least 10 minute delayed except as noted. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.
CME groupICE

explore

Stories from our other publications