If Canada had a poor run exporting some pulses to India last year, 2018 seems to be the start of a worse nightmare after New Delhi suddenly raised duties in its bid to safeguard its farmers at a time of rising surpluses and falling prices in the domestic market.
India is the largest producer and consumer of pulses in the world, but a skewed demand-supply scenario in the past three years has meant that exporters have had to face an uncertain policy environment, pushing them to take up issue with the Indian government.
Canadian Prime Minister Justin Trudeau, who is due to visit India later this month, is expected to raise the issue with his Indian counterpart.
Canada, for which India is the biggest market, is battling with what it sees as a two-pronged hit, one on account of fumigation charges and other a sudden duty on lentils, with immediate effect and no time to take counter measures.
During the fall of 2017, the Indian government had placed a 50 percent duty on peas as well as a 30 percent duty on lentils after domestic supplies improved thanks to a higher-than-expected crop after a better monsoon.
Also, an exemption for a requirement to fumigate pulses, done as part of an effort to stop the spread of tropical pests, wasn’t renewed for Canadian imports.
India accounts for 30 to 40 percent of Canada’s pulse exports, making India its number one market for yellow peas, red lentils and green lentils, a “significant market” according to Pulse Canada Chief Operation officer Greg Cherewyk.
While Cherewyk is aware that Indian government is trying to boost domestic production of pulses, he is concerned about the consistent unpredictability when it comes to policy and tariffs.
“Right now, these duties can move from zero per cent to 50 per cent overnight. That’s not going to provide a lot of confidence to the Canadian pulse industry over time, when you see that type of thing in place with your single largest market in the world,” Cherewyk said.
Indecision over fumigation exemption continues to bother the Canadians.
India extended its fumigation exemption last June, saying exports leaving Canada on or before September 30 would not require fumigation. However, a June 29 announcement sparked concerns over possible added fees that exporters might incur because it had said pulses that were shipped under the exemption but not fumigated would be charged five times the usual fee for fumigation at Indian ports.
India requires methyl bromide fumigation to guard against nematode pests from gaining a foothold in the country. However, Canada has been trying to phase out the use of methyl bromide because it is classified as an ozone-depleting substance and the treatment prescribed doesn’t work in cold temperatures. Also, nematode pests that India is concerned about don’t exist in Canada and thankfully, other pests are controlled by cold weather, leaving no room for fumigation at all.