India’s pulse duties could be permanent

One of the world’s largest pulse processing firms believes India’s duties on pea, lentil and chickpea imports are here to stay in one form or another.

Murad Al-Katib, president of AGT Food and Ingredients, said India’s tariffs will remain in place and will be adjusted up or down as the government sees fit.

“I think they will move more to a market like Turkey where you’ve got a more permanent duty structure but you relax the duties in periods that suit your domestic agricultural policy,” he said.

Turkey has a duty on lentils that is in place from May 1 through Sept. 30 every year and then disappears once the country’s domestic lentil production has been used up.

With the prospect of Indian farmers harvesting a second consecutive record crop of pulses and a federal election on the horizon, India’s government has taken steps to drastically limit imports.

It has placed tariffs of 33 percent on lentils, 50 percent on peas and 66 percent on chickpeas.

One analyst believes India has overestimated its pulse production and could be rethinking those tariffs in short order.

G. Chandrashekhar, global agribusiness and commodities market specialist, believes the estimate of 11.2 million tonnes of rabi crop chickpeas is “highly optimistic” and should be closer to nine million tonnes.

He also doubts the forecast calling for nine million tonnes of kharif pulses, which are currently being planted.

“If kharif pulse production falls to around eight million tonnes, there will emerge the possibility of a rollback of some of the restrictions placed on pulse imports,” he said in an article he wrote for the June edition of the Saskatchewan Pulse Growers’ Pulse Market Report.

AGT in its latest quarterly report said the oversupply scenario in India will improve as stocks drop due to the import duties and what it believes will be a smaller-than-anticipated rabi lentil crop.

The Indian government is forecasting 1.51 million tonnes of lentil production, up from the record 1.22 million tonnes last year. AGT believes that is wrong.

“Management estimates that the local crop of lentils is materially below the 2017 harvest and local stocks (that) the Government of India MMTC Ltd. agency accumulated in 2016-17 have been sold out to the trade for consumption,” stated the report.

AGT believes India will reduce but not eliminate the tariffs completely even if the kharif crop is disappointing.

“India is not going to give up on this domestic policy, so we’re going to have to look at how we do business in India long-term,” said Al-Katib.

“It may require us to have a stronger presence in India.”

In the meantime, he said Canada needs to find new markets for its pulses including the domestic milling industry.

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