India drops hefty tariffs on Australian lentils in surprise move three years after they came into effect

The world’s biggest lentil market has dropped controversial tariffs on Australian lentils in a huge win for the nation’s farmers. Indian officials this weekend announced the Indian Government had reduced import duty on lentils to zero, with immediate effect. The reduction applies to all countries except the United States, which will be subject to an 11 per cent tariff. The 33 per cent tariffs were introduced in December 2017 and effectively ended the trade with Australia, leaving growers with large stockpiles after a record production year and stopping ships mid-voyage. India reduced the tariff to 11 per cent in July 2021, in a surprise but well-received move that came as Australia’s main competitor for lentil market share into India — Canada — suffered a heat wave that tempered yields. Before the tariffs, India was a big market for Australian lentils, with 248,000t exported in 2016-17. Volumes have been smaller since with other markets emerging. Premium Grain Handlers managing director John Orr said the move to drop tariffs was “terrific news” for WA farmers, but in the short term shipping container constraints would continue to weigh on the market. He said those container constraints should be resolved within a few months, after which there should be increased demand for Australian lentils, with farmers starting to see the benefits flow through. “It’s terrific news and good for our lentil industry,” he said. Mr Orr said the dropping of tariffs meant farmers could plant more lentils this season with confidence -at a time when high fertiliser prices mean farmers are more likely to lookincreasingly to nitrogen fixing pulses. Mark Seymour, senior research scientist at Department of Primary Industries and Regional Development said farmers were, even with the tariffs, achieving good prices of around $800/t at Esperance and $1000/t over east. “There are already good price signals, but with tariffs coming off it may make it better,” he said. “However lentils are a tricky crop to grow and need specific soil types,” he said. “Farmers go in and out of them. What this may do is entice those who have grown them in the past to plant them again.” In WA about 15,000ha were planted at their peak, mostly around Esperance, and about 7000ha last year. Last year there were fourWA farmers planting lentils at a reasonable scale, down from about 25 several years ago. Farmers took to social media to welcome the news on Sunday, with South Australian farmer Matt McDonald — of Port Broughton — taking to Twitter to share his joy by posting “happy f****** Sunday! Yewwwww!!!”. But not every one is pleased. In a Tweet, Indian grain broker Binod Agarwal labelled it a “shocking move” with farmers set to harvest their crop within weeks. “Applicable till the end of September. Shocking step by Govt of India. But Govt must be thinking big,” he wrote. Mr Agarwal’s comments were echoed by AgPulse Analytica analyst Gaurav Jain, who said the move could be a “big blow” to Indian farmers. “The timing of the current policy change is shocking for Indian farmers, given that India is expecting a record crop of lentils this season, and harvest is only a few weeks away,” Mr Jain said. “This could be a big blow to Indian farmers as Lentil is the only Rabi pulse, currently trading above MSP (minimum support price), and farmers were expecting better realisation of their produce. “At current indicative values, the zero-duty structure has made it profitable for India to start buying, though we do not see the country to be a huge buyer for immediate shipment. “Regardless of buying by Indian importers, the international prices will go higher after the news.” Federal Trade Minister Dan Tehan travelled to India this month to continue negotiating the flagged India-Australia Comprehensive Economic Cooperation Agreement. An interim trade, which would pave the way for an FTA, was due to be signed by the two countries at the end of last year after promising talks in October, however a final agreement was not reached. Australia’s two-way agricultural trade with India is worth more than $1 billion, with lentils, greasy wool, almonds, raw cotton and oats some of the key exports to India.