About 600,000 tonnes of Canadian red lentils and about 60,000 tonnes of green lentils head to India each year as a daily staple for thousands of India’s citizens.
It’s an incredibly important export destination for Canadian pulses, and one that could be in jeopardy as tensions build between the two countries following Canada’s accusation of India’s involvement in the murder of a Canadian citizen in B.C. in June.
As strained as the relationship is now, Neil Townsend, grain analyst with GrainFox, says that diplomatic relationships don’t necessarily always impact things at the individual level.
Part of that is because of global supply and demand levels. India needs lentils, but alternative markets, such as Australia, aren’t awash in product. (more below)
There’s also the very real spectre of feeding the billions that weighs heavily on India’s government.
Judging by weather patterns, reports, and what trade statistics are available, India isn’t in a very solid position when it comes to food supplies, including rice and pulses. There’s also an election coming up next year. “I don’t know if they want to do something that would raise the domestic price of food. And by limiting the source of red lentils from, it’s like putting Canada over the market and trying to rely on Turkey and Australia and some other countries. I mean, that would raise the price of red lentils in India, which I’m not sure they want to do,” he says.
Where does it end up? Is this an overall bearish signal?
Probably not, says Townsend. “Our strategy right now is don’t chase the market down, like nothing has happened that has impacted that we don’t know… right now, we’ve sort of shifted from being active in the market, trying to advance sales to what we call strategic inertia, meaning that, you know, we’re not going to sell into this environment, we’re going to wait and cool down,” he says.
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