Steep tariffs on peas and lentils caused Canadian exports of the agri-goods to India to plummet. An Indian pesticide requirement is also giving Canadian farmers headaches, but some relief could be on the way soon
OTTAWA—Canadian pulse farmers are pondering if it is even worth planting peas and lentils this spring, as steep tariffs from their No. 1 customer cut deep into their profit margins.
However Gordon Bacon, CEO of Pulse Canada, hopes that if Canada can persuade India to stop requiring Canadian producers to douse their pulses in pesticides that are unnecessary on Canadian crops, it may improve the economics of the exports, even if the tariffs aren’t lifted.
Import tariffs of 50 per cent on yellow peas and 33 per cent on lentils had an immediate effect on Canadian exports to India, which fell 92 per cent in the last two months of 2017, compared with the same time period a year earlier. India is the biggest foreign buyer of Canadian peas and lentils.
The drop has left many farmers with excess stock from last year they haven’t already sold and makes it increasingly less attractive to plant more peas and lentils this year, said Bacon.
Bacon doesn’t expect Canada to be exempted from the tariffs, but he says Canada needs to ensure India provides predictability and transparency in its decisions. He was also buoyed when Prime Minister Justin Trudeau raised the pesticide issue directly with Indian Prime Minister Narendra Modi in New Delhi last month.
Bacon says though the pesticide rule has been in place since 2003, and has been brought up at the diplomatic and ministerial level before, this was the first time it was raised at the highest level of the Indian government.
“It was important that this was addressed by the prime minister,” said Bacon. “Because of the political importance of pulses in India, it was recognized this would need to go to the highest political office.”
He says the joint statement also mentions that the two countries agreed within 2018 to finalize an agreement that will allow Canadians to export pulses to India free from pesticides using mutually acceptable technology. Bacon says the methyl bromide India forces all countries to fumigate their pulses with is an ozone-depleting chemical and that Canada either doesn’t have the pests India is worried about or already has other systems in place to get rid of them.
“Canada does not pose any risk,” he said.
He estimated on a 50,000 tonne shipment of pulses, the fumigation adds an additional $700,000 in costs.
He noted India’s current policy expires in June and will be replaced, so the clock is ticking if Canada wants an exemption.
A spokesman for Agriculture Canada says the goal is to get an arrangement in place this year but doesn’t specify a specific deadline, nor did he outline exactly what steps are being taken.
Luc Berthold, the Conservative agriculture critic, said the Indian issue is a “significant problem for Canadian pulse producers” and said Trudeau’s recent allegations that the Indian government was somehow involved in embarrassing him by getting a convicted attempted murderer invited to a reception in India, is not going to help.
“Justin Trudeau needs to make securing new markets for Canadian pulse producers a priority rather than jeopardizing our existing relationship with India with reckless accusations,” said Berthold.