India has lowered its tariff on Canadian lentils to 11 per cent, down from the 33 per cent levied against the crop about a year ago.
The new tariff rate applies to all lentils, except those from the U.S., which will face a 22 per cent levy.
Mac Ross, director of market access and trade policy for Pulse Canada, says that lentils, chickpeas, and peas have faced restrictive tariffs since about 2017.
India uses tariffs to combat rising food prices as the government is often trying to strike a balance between high prices for their farmers and affordable prices for their consumers, so lowering the tariffs is a way to combat food price inflation, says Ross.
Ross says that while it’s a positive signal for Canadian pulse movement into the country, India’s market still lacks predictability because of volatility in import policies and that creates uncertainty for all growers, traders, and consumers of pulses. As of right now, there’s no indication as to how long the 11 per cent rate will be in place.
Despite the higher tariffs, India was still Canada’s largest lentil customer last year.
To make the most of the increased demand this lower tariff will spur, lentils must actually get from the Canadian Prairies and across the ocean. “It definitely will be a positive thing for some of the bulk shippers,” Ross says. “As you know, there’s a number of issues we’re experiencing right now on the container side, so it will be a little tough for us to immediately capitalize on this new demand while we don’t have the container capacity here in Canada to meet these needs right away.” (Story continues below)
Stalled, interrupted, and blank container traffic is very concerning for the pulse industry.
“I would say for pulses and special crops, in total probably about a third of our product would move via container. But speaking about lentils specifically it’s probably closer to 50 per cent. What we’ve continued to see is that our marine carriers are systematically refusing bookings ever since last fall, and we’re seeing consistent delays in vessel ladings and blank sailings and overall port congestion and vessel delays, and equipment shortages, so not a lot of containers available. So really, the expectation is that these issues will continue through the coming grain year at a minimum. Definitely very concerning that we don’t have the capacity to meet this demand globally and then get our product to market.”
The situation is serious without immediate solutions. More capacity in the supply chain is needed and Ross says that growers, traders, processors and international consumers of pulses are all at the mercy of inconsistent and often unavailable supply of shipping containers. To that end, Pulse Canada has been calling on the Canadian government to take immediate action to address and resolve these challenges, and more specifically look at opening an investigation into carrier abuse under the Canada Transportation Act to help provide greater transparency and clarity into how our system is functioning within the context of this global container shortage.