India’s tariffs on Australian lentils drop to 10 per cent

India has announced a tariff reduction on Australian lentils until August. Here’s why.

Tariffs dropped: India’s tariff reduction will have a short window while the country faces food supply challenges.

INDIA has dropped tariffs on Australian lentils to 10 per cent as the country struggles with food supply amid the coronavirus pandemic.

Pulse Australia last week confirmed India had dropped tariffs on lentils from 30 per cent to just 10 per cent, coming into effect immediately and lasting until August.

India progressively put 30 per cent tariffs on Australian lentils in 2018.

“The reason for the drop is not explicitly outlined but we understand the supply chain has been disrupted following the coronavirus pandemic,” Pulse Australia chief executive Nick Goddard said.

“The reduction will have a short window while the country is facing challenges – this is expected to relieve some challenges until it reverts back to 30 per cent.”

Lower tariffs will not have an immediate effect on pulse farmers or change prices, Mr Goddard said, but an extension on the time frame may be beneficial come harvest.

“It is good news for stock being held at the moment, but it won’t have too much impact for farmers or prices as lentils are already in the ground,” he said.

“It is a temporary move to alleviate current measures.”

According to Mr Goddard, India’s chief health minister has said the country was expected to hit its coronavirus peak in about a month.

“The food supply chain may be disrupted for a long period of time,” Mr Goddard said.

“They will be looking to re-evaluate the window in August to see if the tariff reduction is extended.

“And it could potentially open up to other commodities.”

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Mr Goddard welcomed the opportunity to help India through their tight food supply issues.

“It would be great for Australian to be able to step in and assist India if the window of reduction is extended.”

Wimmera lentil grower Peter Teasdale, who grows about 400 hectares of the crop, is considering cutting back production “significantly” next season following India’s tariffs implemeted in 2018.

“The recent announcement of the drop in tariffs came just after we sent our last load,” Mr Teasdale said.

“We are thinking of cutting our lentil crop back dramatically, and putting some other crops in our rotation.”

However if the 10 per cent tariff window is extended beyond August, Mr Teasdale said this could prompt him to put the area back in.

He said lentils were a risky crop, with tariffs adding extra pressure.

“A 30 per cent tariff drags the highs of a good year down and the low years lower,” he said.