India’s decision to impose a steep tariff on pea imports could jeopardize $1-billion (U.S.) value of heartbeat trading with Canada, which might cause farmers there to trim their pea acreage by almost one-third.
Earlier this month, India imposed a 50-per-cent import tax on peas, as heartbeat prices dropped below their government-set support amounts due to record output.
The obligation is expected to lift domestic pulse prices and spur farmers in India, the world’s largest buyer of blockages, to increase heartbeat plantings, reducing import requirements in 2018.
Pulses, a inexpensive source of protein, are a staple part of the Indian diet. Canada is the world’s top pulse crop exporter. The short-term move to raise Indian market prices could impact India’s long-term food safety requirements, Canada’s International Trade Minister François Champagne stated in an interview last week.
The tariff on legumes and worries that India may impose a similar increase on red lentils could suppress spring plantings in Canada of plants by 30 per cent and 35 per cent respectively, said Marlene Boersch, a partner at Mercantile Consulting Venture.
The seeded area for dry peas in Canada for its 2016/2017 harvest year, from August to July, is predicted to be 4.3 million acres, according to information released by the Department of Agriculture and Agri-Food.
Canadian yellow pea prices have slumped since India’s tariff statement to between $5.50 (Canadian) and $6 a bushel from between $7.50 and $8, based on LeftField Commodity Research.
Canada needs the import duty eliminated, but New Delhi is committed to doubling Indian farmers’ incomes and decreasing imports, a senior official with India’s Ministry of Commerce and Industry said.
“Imports aren’t viable after adding the responsibility. Shipments will drop significantly in coming months,” said Pravin Dongre, chairman of the India Pulses and Grains Association.
Much of the property that Canadian farmers formerly planted with peas is very likely to be sown this spring with wheat, canola and soybeans, said Chris Beckman, oilseed analyst in Canada’s Agriculture Department.
The tariff is not likely to halt all pea trade with India, but it is going to sharply reduce imports, said Anurag Tulshan, managing director of Indian harvest brokerage Esarco Exim Pvt. Ltd., including it will stay in place at least until the magnitude of India’s winter harvest is understood.
AGT Food and Ingredients, Canada’s biggest pulse crop processor and exporter, posted its worst quarter in five years this month as a result of Indian oversupply, according to the Bank of Montreal. Its stock fell to a greater than averaging low two days after India’s tariff statement.