It’s not pretty but it’s not a disaster yet, says top pulse official

India’s pea tariff has roiled markets, but Gordon Bacon urges farmers to wait and see how things play out

Pulse samples at a wholesale market in southern India — the nation’s government stunned market watchers by imposing a 50 per cent tariff on peas last month in a bid to boost prices for its farmers.
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Canada’s top pulse official says predictions that India’s bolt-out-of-the-blue tariff could slash Prairie pea acreage by a third are premature.

Gordon Bacon. photo: Supplied

“Things are changing very rapidly right now,” said Gordon Bacon, CEO of Pulse Canada. “India is under a lot of pressure to do something that both provides some price support to their farmers — but acknowledges (it) will still be a market that needs pulse imports.

“My personal view is that it’s too early to be finalizing your planting decisions.”

India imposed a 50 per cent import tax last month after pulse prices fell below their government-set support levels because of record output. The move caught market observers off guard and sent pea prices in Prairie markets into a sharp decline — to between $5.50 and $6 per bushel (from between $7.50 and $8 previously), according to LeftField Commodity Research.

That has some predicting that Prairie farmers will dramatically reduce acreage next year.

The tariff on peas and fears that India may impose a similar hike on red lentils could curb spring plantings of both crops by 30 per cent and 35 per cent respectively, said Marlene Boersch, a partner at Mercantile Consulting Venture.

Prairie farmers seeded 1.63 million hectares to peas this year and harvested 3.8 million tonnes (versus 1.70 million hectares and 4.8 million tonnes in 2016), according to StatsCan’s October estimates. In Alberta, seeded acreage was 728,000 million hectares and 1.9 million tonnes were harvested (versus 747,000 hectares and 2.3 million tonnes a year earlier), according to StatsCan.

For lentils, the figures for the Prairies were 1.78 million hectares and 2.4 million tonnes this year (versus 2.37 million acres and 3.2 million tonnes in 2016). Alberta has a smaller share of the lentil crop — 196,000 hectares and 251,000 tonnes this year (compared to 233,000 hectares and 506,000 tonnes in 2016).

And while Canadian government and industry officials are lobbying to have the import duty removed or greatly reduced, the Indian government is committed to doubling their farmers’ incomes and reducing imports, a senior official with the Ministry of Commerce and Industry told the Reuters news agency.

“Imports are not viable after adding the duty. Shipments will fall significantly in coming months,” said Pravin Dongre, chairman of the India Pulses and Grains Association.

The tariff is unlikely to halt all pea trade with India, but it will sharply reduce imports, said Anurag Tulshan, managing director of Indian crop brokerage Esarco Exim Pvt, adding that it will remain in place at least until the size of India’s winter harvest is known.

“Clearly pulse growers or potential pulse growers want to be watching carefully over the next couple of months in terms of what is going on,” said Bacon. “This has unsettled the market, perhaps even destabilized the market. But underlying all of this, there is still going to be some longer-term demand.”

And while the Canadian pulse sector still has some carry-over stocks after several years of high production, “stocks have a way of disappearing” and prices can change quickly, he said.

“As they come down rapidly, they can go up rapidly,” said Bacon. “You don’t need to make a decision today what you’re going to plant in April and May. You probably need that flexibility to keep pulse acres in play and see how markets unfold over the next couple of months.”

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