Markets

India cuts lentil tariff to zero

Liz Wells, February 14, 2022

Lentils harvested in the Mallee region last year. Photo: Matt Witney, Dodgshun Medlin

THE Indian Government has cut its tariff on lentils from some origins including Australia to zero, effective from yesterday to September 30, 2022.

The news has been welcomed by organisations including Australia’s peak organisation for the pulse industry, Pulse Australia, and Grain Producers Australia (GPA).

“This is very positive news for Australia, with certainty that this reduction will be in place until September 30,” Pulse Australia CEO Nick Goddard said.

“This enables our lentil exporters to have more confidence on securing trade into the future, despite the shipping challenges they are experiencing.

“On the back of another strong lentil harvest, this move by the Indian Government also helps minimise or perhaps even eliminate the need for prolonged storage of lentils this year, freeing up silo space for other crops.”

Mr Goddard said Australia shipped 189,000 tonnes of lentils in bulk in November, December and January, well up on the norm, and close to 100,000t is already booked for February-March.

“That is an effective work-around to the container shortages currently being experienced.

“The increase in bulk shipment also benefits growers, as large volumes can be committed, and invariably aggregators are chasing those last thousand or so tonnes to complete the load, making it very much a sellers’ market.”

Grain Producers Australia chair Barry Large also said the tariff reduction was good news for Australian grain growers, and would help capture increased export value.

“We welcome this latest move to reduce trade barriers on Australian lentils exported to India and the opportunity this brings for Australian growers,” Mr Large said.

Australian Bureau of Statistics data shows Australia exported 107,734 tonnes of lentils to India in July-December 2021, which accounts for 30pc of the total shipped over the period.

India has traditionally been Australia’s biggest lentil market.

It imposed a tariff of 30pc in late 2017 to support domestic pricing.

However, the tariff was lowered to 10pc in two windows in 2020, and the 10pc tariff again came into effect again in the second half of last year.

“The reduction of this tariff now is a welcome, positive step towards rebuilding trust and confidence in this important export market to help optimise this high-value crop’s potential. “

Mr Large said Australian grain producers understand fluctuations exist with import barriers shifting up and down in this market historically, and the reasons why it happens.

However, he said GPA was urging the Australian Government to keep working towards a future free trade deal between Australia and India.

“We respect the sensitivities of the Indian government around these agricultural imports and their domestic reasoning and local demands, but delivering certainty for Australian grain producers is also vitally important,” he said.

In his article published today on Thomas Elder Markets, AgPulse Analytica CEO Gaurav Jain said India imported 725,000t of lentils in 2021, with 563,000t coming from Canada, and 143,000t from Australia.

“The timing of the current policy change is shocking for Indian farmers, given that India is expecting a record crop of lentils this season, and harvest is only a few weeks away,” Mr Jain said.

“This could be a big blow to Indian farmers as lentil is the only rabi pulse currently trading above minimum support price, and farmers were expecting better realisation of their produce.”

Mr Jain said at current indicative values, the zero-duty structure has made it profitable for India to start buying, although he does not see India as being “a huge buyer for immediate shipment”.

“Regardless of buying by Indian importers, the international prices will go higher after the news.”

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