India chick pea tariffs a short-term fix

STRICT tariffs imposed by India on imported chick peas are needed to support its farmers in a struggling grains market but are not permanent, an Indian expert says.

STRICT tariffs imposed by the Indian government on imported chick peas were necessary to support Indian farmers in a struggling grains market, but are “not something that is permanent,” according to a grains market specialist from India.

Speaking at the recent Australian Grains Industry Conference, the Hindu Business Line commodities market specialist Guruswamy Chandrashekhar said an oversupply of chick peas imported into India flooded the local market and depressed domestic prices.

His comments come as recent data from the Australian Bureau of Statistics shows a 70 per cent decline in Australian chick pea exports in June compared with the same time last year.

Mr Chandrashekhar said India had been the focus of the grains industry over recent months.

“What has happened in India over the last year or so … we need to understand countries are under pressure,” Mr Chandrashekhar said.

“The situation of succumbing to domestic pressure is not something which is permanent. This is absolutely transient.”

Mr Chandrashekhar said a significant increase in Indian grain production in 2016-17 coupled with unlimited imports depressed the domestic market.

“There was actually a price collapse in India,” Mr Chandrashekhar said.

“Farmers were distressed, prices were low, there were huge protests across India. That’s why the government of India were forced to intervene.

“Unrestricted imports were far beyond what the Indian market could handle.”

The Indian tariff situation has arguably had an effect on the Australian grains market, with data from the June Australian Bureau of Agricultural and Resource Economics and Sciences report showing a 52 per cent reduction in chick pea plantings nationwide.

Data from the ABS shows Australia exported about 25,000 tonnes of chick peas in June 2018, while in June 2017 exports were almost 90,000 tonnes. But Australian chick pea exports in June 2016 were about 24,000 tonnes, a figure that closer matches the June 2018 figure.

Australian Oilseeds Federation executive officer Nick Goddard said the 2016 figure followed a more typical 2015 season.

“The numbers we’re seeing are pretty much in line with previous years,” Mr Goddard said. “We’re coming into harvest and supplies are dwindling. Regardless of India, traders are trying to empty their stocks.”

Mr Goddard said Australia had been able to direct chick pea exports into other markets, such as Pakistan and Bangladesh, but it was too early in the season to gauge the impact of Indian tariffs on the Australian pulse market.

He said despite the tariffs, Australia could continue to be a back-up generator for Indian pulse supplies in the future.