Market Access to India Remains at Pulse Industry’s Forefront - PulsePoint
April 16, 2019
A look at the access challenges facing Canadian pulse exports to India, and what the industry is doing about it
by Delaney Seiferling
Saskatchewan pulse growers have had to deal with a lot of difficult news regarding tariffs and fumigation regulations affecting exports of Canadian pulses to India in the past year.
There is a silver lining, says Mac Ross, Pulse Canada’s Manager of Market Access and Trade Policy, as these issues have reinforced, and put into gear, priorities for expanding global markets for pulses.
“Our big focus moving forward is diversification,” he says.
For example, Pulse Canada has set the goal to have 25 per cent of Canadian pulse production going into new uses by 2025, and the organization is working hard with partners now to fulfill this mandate.
Some changes to markets are already apparent, Ross says. Last year Canada shipped a record two million tonnes of pea exports to China.
“That really helped to pick up a lot of the slack from India. It is a good story as we move ahead of the loss of the Indian market.”
Market analyst Greg Kostal of Kostal Ag Consulting is also optimistic about the changes that have and will come about as a result of the Indian market access issues.
“India politics are still here, but should in retrospect increase the food/fraction story at a faster rate than otherwise would be the case,” he says.
He says that the Canadian flax industry faced similar market access issues a decade ago, when it lost access to European markets when trace amounts of Triffid, a genetically modified form of flax, was found in some exported shipments. The Canadian flax industry was devastated by the loss of its biggest export market, but in the aftermath flax markets slowly began to diversify.
“To replace what was a regular 400,000-500,000 tonnes a year to the European markets, exports to China increased from less than 100,000 tonnes to around 300,000 tonnes now,” Kostal says.
He says another positive sign is that the Canadian export system is also improving its capacity to handle more outgoing crops.
“We are seeing modest West Coast port export capacity growth right now, which follows a better understanding of how to navigate in the open market, post the Canadian Wheat Board era, with anticipation that improved yield genetic growth will regularly result in more grain
Farmers should also be reassured by a general agreement from the trade that the India market will rebound at some point, likely not until a few more milestones are met.
Pulse Canada has been at the forefront of efforts to try to remove trade barriers to India for years now, and although the Government of Canada and the Canadian pulse industry have thoroughly addressed all the alleged concerns over crop safety, it is not likely changes will be made until after the upcoming general election in India this spring, Ross says.
With a voter base of approximately 120 million farmers in India, agricultural issues tend to dominate political campaigns.
“Issues involving the protection of farmers and improving their welfare are top priority, so anything seen to be a concession against the welfare of farmers — including removing a trade barrier — would not go over well from political standpoint,” says Ross.
There is also speculation by analysts that trade barriers to India might be relaxed once the country can no longer satisfy its demand for pulses through domestic production, Ross says.
“Pulses still remain the most affordable source of protein for India’s growing population and many market analysts consider India yet to have achieved long-term self-sufficiency, even though they have more or less achieved this the last two years.”
“I think there is general consensus that no other country can meet India’s needs for pulses like we can.”
A Timeline of India Market Access Challenges
Since the implementation of India’s Plant Quarantine Order 2003, India has required that all pulse imports be fumigated with methyl-bromide in the country of export/origin. Since 2004, Canada had been receiving a series of six-month exemptions (called derogations) to this regulation, which allowed pulses to be fumigated upon arrival in India.
Throughout this time, the Canadian pulse industry has also been working on getting the fumigation requirement removed for Canadian pulses. The Canadian Food Inspection Agency (CFIA) has conducted a science-based risk assessment of India’s pest concerns which showed that Canadian pulse exports to India pose no risk, as the pests of concern are not present in Canadian product. This information has been communicated to Indian officials many times, on an ongoing basis.
In early 2018, Prime Minister Trudeau and India’s Prime Minister Modi agreed to finalize “an arrangement within 2018 to enable the export of Canadian pulses to India free from pests of quarantine importance with mutually acceptable technological protocols.”
In fall 2018, a delegation of Indian government officials did a cross-country tour of Canada to see for themselves the Canadian value chain and the many layers of safety and security that make up the Canadian export system. They met with CFIA officials, who again presented them with scientific evidence reinforcing how the Canadian production, processing, and handling systems comply with India’s import requirements, and mitigate the risk of introducing regulated pests to India without mandatory fumigation.
After the trip, Indian government officials sent several requests for more information on the Canadian export system. Each time, Pulse Canada and CFIA officials responded to these requests immediately after receiving them, in an effort to not derail the deadline for an end-of-the-year resolution to the issue.
In late 2018 the Canadian High Commission in India met with the Indian Agriculture Secretary regarding the fumigation issue. Pulse Canada staff met with staff from the Prime Minister’s Office and Agriculture and Trade minister’s offices around the same time to stress the importance of resolving this issue.
Throughout December 2018, the Canadian High Commission met with all involved high-level Government of India ministers and department officials several times (one of the meetings took place December 31, 2018). However, no permanent resolution was issued by the end of last year.
Instead, the Indian Ministry of Agriculture requested additional time to complete their evaluation of Canada’s systems approach to pest management.
In late December 2018, the Government of India issued an extension of its general fumigation derogation that applies to all origins without a country-specific derogation until June 30, 2019. This general derogation requires all incoming pulse shipments to be fumigated with methyl-bromide. Otherwise, shippers must pay a highly marked up inspection fee on top of the cost of fumigation in India.
In November 2017 India applied duties on pulse imports, which currently sit at 33 per cent for lentils, 50 per cent for peas, and 66 per cent for chickpeas. In March 2019, India revised the previously issued quantitative restriction of 150,000 tonnes on pea imports to between April 1, 2019 and March 31, 2020.
Canada is working with other pulse exporting nations to address the challenge of dealing with pulse import tariffs that have impeded access for pulses into the India market. In early 2019 a counternotification was submitted to the World Trade Organization (WTO) Committee on Agriculture, co-sponsored by Canada and Australia, outlining how India’s domestic agriculture support exceeds the limits set out by the WTO. The purpose of this notification is to increase discussion and transparency around trade restrictions and encourage India to justify its actions at an international level.
Import duties in India are a direct result of an abundance of domestically produced and imported pulses in the Indian market, which has resulted in low prices to Indian farmers for some pulses they produce there. Import duties are likely to stay in place at least until after India’s domestic election, and until the supply situation in India changes and prices for those products rise. India is the largest producer and consumer of pulses, and the expectation is that they will need to re-enter the market at some point.