UNWELCOME GIFT: The Indian Government sent pulse crop farmers, like Trentham Cliffs’ Daniel Linklater, an unwanted Christmas gift in the form of a massive 30 percent tariff on the imports of chickpeas and lentils.
JUST a few days before Christmas, the highly protectionist Indian Government announced a massive 30 percent tariff on imports of chickpeas and lentils, effective immediately.
The unwelcome gift, which didn’t come as a total surprise, will hit Australia’s two most important pulse crops hard, and comes right in the middle of harvest, when much of the export trade is getting under way for the year.
The action follows an equally damaging 50 percent tariff imposed on field peas, announced about a month ago.
India is a key market for Australian pulses, accounting for approximately 80 percent of Australian chickpea exports.
Trentham Cliffs grain grower and Mallee Sustainable Farming board member, Daniel Linklater, said the decision taken by the Indian Government was disappointing.
“We would hope that the Australian Government will make strong representation to the Indian officials, we are supposed to be operating in an environment of fewer trade barriers,” he said. “These sort of actions create a lot of uncertainty and knock our farm-gate prices around, and given we’ve had a tricky season, it just compounds the situation.”
The Australian pulse industry has worked extremely hard over a period of 25 years to become a more reliable and sustainable producer of pulses, a key protein supply for the world’s population.
This has proven a stunning Australian success story, with pulses currently sitting at number two to three in value of Australian broadacre cropping exports, as well as contributing to farm sustainability.
Pulse Australia chairman, Ron Storey, said that there are two impacts associated with the Indian tariffs.
“Firstly, there is the product ‘on-the-water’, for which Pulse Australia believes the Indian Government ought to provide a tariff exemption,” he said. “Initial indications are that some 200,000 tonnes (valued at $150million) of Australian chickpeas and lentils are in transit to India and may be affected.”
Mr Storey said the Indian Government should provide an exemption for Indian importers for product contracted and shipped prior to the new tariff being announced.
“Indian buyers and Australia sellers have contracted in good faith and the prior conditions should apply to permit smooth execution of those contracts,” he said.
Pulse Australia has already made this request via Australian Government channels in India, and is also working with Canada, whose position will be similar to Australia, to clarify the matter.
“Secondly, there is the longer term issue of the impact of tariffs on food security,” Mr Storey said.
“While India strives for self-sufficiency in pulse production, most projections are that India’s reliance on imports for the foreseeable future must continue to guarantee the security of this vital protein source for the Indian population.”
Market interventions, such as those seen over recent months in India, create uncertainty and commercial risk for countries such as Australia, which strives to be a reliable food exporter. The strong, trusted trading relationship that Australia has with India, helps underpin their food security.
Pulse Australia and the wider grains industry will work with Australian Government agencies to address these issues of international trade with India.
Australia’s Free Trade Agreement negotiations with India have also stalled, in part because neither party could reach an agreement on agricultural protection.
Victorian Farmers Federation (VFF) Grains is calling on the Australian Government to build on the country’s positive relationship with India and continue negotiations on agriculture trade barriers.
VFF Grains president, Ross Johns, said Australian producers compete in an international market without any government support.
“Ensuring positive trade protocols with our trading partners therefore is essential,” he said.
However, the news isn’t all bad. Australian growers can take heart from signs of stronger demand for Australian chickpeas and lentils from markets such as Bangladesh and Pakistan.