Speculation of Indian ban on Australian pulse imports ‘unproven’

Movement was sparked last Thursday after an unidentified grain trader’s post on social media - that previously predicted the recent round of tariff spikes - suggested the Indian government was about to impose the market suspension within two days.

While the federal government has talked up increased prices in recent years due to free trade for products like chickpeas, with a ten-fold increase touted for exports to India, a 30pc shock tariff was imposed late last year which hurt prices and then increased by 10pc in February and 20pc in March, representing an overall increase of 60pc.

GPA Chair Andrew Weidemann said the local grains industry was aware of last week’s speculation about the Indian government potentially placing further market restrictions on Australia with a total ban on pulses.

But Mr Weidemann said at the moment it was “unproven” and efforts were being made to clarify the actual situation, with ongoing talks held between government and industry officials which included the office of federal Agriculture and Water Resources Minister David Littleproud.

However, he said if the speculation was accurate, Australian grain farmers would be disappointed with that outcome and its impact on market stability and prices.

But the GPA boss said there was currently no trade between the two countries due to the recent tariffs making India an unviable market destination for selling local crops.

Mr Weidemann said currently it was “purely a political situation” in India with the tariffs imposed on Australia due to politics aimed at agriculture, and winning votes, around Indian elections and a national election next year.

“There’s a very tense political situation in India right now and half the population is in agriculture so there are votes in agriculture and so that’s what’s happening with the pulse market,” he said.

Mr Weidemann said a delegation was potentially being assembled, comprising Indian agricultural officials and representatives, to visit Australia to gain a greater understanding and appreciation of the short-term and long-term impacts on local producers and other industry segments, of market disruptions like excess tariffs or snap closures.

He said the delegation would also share information about the impact of such market disruptions on India’s food security and farm production challenges, like drought.

Mr Littleproud visited India shortly after his appointment in mid-December to address the tariff situation and gained an agreement from that government that notice would be provided of any changes to the market, in future.

Today, he said that the speculation of the pulse ban was “unproven” but there had been some changes in the market.

“We haven’t had any confirmation and we’ve sough confirmation from Indian officials,” he said of the reported move to a full pulse ban.

“But what we understand is they’ve approved some sort of 7pc subsidy towards Indian chick peas to try to clear their stockpile.

“They’ve had a couple of good seasons hence that’s why they’ve imposed those tariffs so we’re waiting for confirmation from Indian officials on that.

“The important thing is there are no chick peas on any boats at the moment and we were fortunate enough to clear most of those boats into other markets and having market access into other markets throughout the world was important in us being able to achieve that and not putting all our eggs in the one basket – even though we’ve seen such a significant increase in the market in India – a 990pc increase in the price and volume.

“We’ve taken it from a $100m market to $1.1b and we’re keen to continue to work with the Indians.

“But we have to respect their sovereignty as we continue to try to work towards the gold standard that (federal Trade Minister Steve Ciobo) is in terms of expanding talks on a formal free trade agreement, but that’s some ways off.”

Mr Littleproud said speculation would always occur “when we have a situation that’s as fluid as this”.

“We have to respect India’s sovereignty and in making these decisions they have, within World Trade Organisation guidelines, they a right to take that tariff up to 100pc,” he said.

“We’re just waiting to see and we have to respect that because megaphone diplomacy doesn’t work in these circumstances.

“We want to build a relationship with India that gives us the best market address and hopefully the end goal of a free trade agreement that would sort these tariffs out once and for all.”

Assistant Trade Minister Mark Coulton says little can be done about India’s 60pc tariff apart from sounding a warning to producers about revising this season’s planting and marketing programs.

Rabobank’s March agribusiness update said the 60pc Indian tariff on chickpeas made imports “unviable”.

“But if that doesn’t stem the flow, we can expect further increases to the chick pea tariff, plus there is still room to move on the Indian wheat, field pea and lentil tariffs,” it said.

“A well supplied Indian market with low prices and upcoming elections support desi chick pea prices staying in the low $500AUD/tonne range over the coming nine to 12 months.

“Lentils and field peas can expect similar ongoing pressure over the year.”