India reduces tariffs on Canadian lentils

So, just in summary, eleven per cent all-in for Canadian duties, down from 33. The U.S. dropped from 55-per cent down to 33.

Bacon explained the difference with the U.S.

“India imposed higher duties on U.S. product, when the U.S. removed India from a ‘favoured nation status’, as part of a trade retaliation against the Americans by the Indian government.

While the tariff reduction is positive news, Bacon noted what it will mean for producers.

“Because the shipment period is relatively tight and because we’re down to really low carry-out levels for lentils, and because it doesn’t apply for new crop product, I think it probably is a signal that India will adjust these levies when they see domestic prices getting too high.”

“They’ve not changed anything on peas and I think that’s a clear signal that they’re not looking for more peas into the market. I think we’ll ask the Canadian government to work with the government of India on clarity, regarding the fumigation issue, which has been on-going for many years but, also to work with India and other countries, and we’ll do this through the global pulse confederation, to try to have more predictability and clarity around these policy changes.

“There’s going to be a better signal for farmers when they are making decisions about planting, and we’re past that now.” But it also brings some stability, if we understand more about what’s going to trigger India’s decision to lower levies or to increase them.”

The reduction in the tariff is just for three months and Bacon says the possibility of an extension will depend on what’s going on with prices in India at that time, because India’s government is very clear that they want to provide higher levels of support, by supporting prices for (their) farmers but, at that same time, they can’t allow prices to go too high that consumers start facing added problems with food security.

Bacon says it’s possible that India could extend the tariff reduction but, the driver of the decision is going to be ‘what is the domestic price of pulses, what does food price inflation in India look like, as you get closer to the end of August.”

“We can’t read more into it than a time frame that expires on August 31, but it does show that India will adjust their policies when food prices get too high in India. What we don’t know, the lack of clarity we have, is that we don’t know at what point this is triggered – and that’s what we would like to see, in terms of government intervention.”

In terms of how lentil exports have been, even with that 30-per-cent-plus tariff, Bacon has details.

“We’ve seen an uptick in our lentil exports to India and this is in part to fill the demand that’s there and with the 33 per cent duty, we were seeing prices at the market, from the consumer-side in India going up. I think the India government is trying to find what is a really challenging balance between what consumers in India are able to afford to pay for products like lentils and how they an maintain strong price support through import control.”

by Dori Modney with files from Alice McFarlane

India reduces tariffs on Canadian lentils

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