Traders turn to Australia for lentils amid Canada row
Pulses, a volatile group of commodities, are a significant part of Indian diet and the country relies on imports of nearly 17% of its annual requirement.
New Delhi:
India’s import of lentils from key supplier Canada has been steady so far despite deepening diplomatic tensions between the two countries but traders are increasingly turning to Australia to diversify away from the north American producer.
Pulses, a volatile group of commodities, are a significant part of Indian diet and the country relies on imports of nearly 17% of its annual requirement. Canada is a major supplier of lentils (masur) and yellow peas. India spent nearly $4 billion on pulses imports in 2023-24.
Stable supplies are vital to keep a lid on inflation, which continues to be stoked by sticky food prices, especially of pulses. In September, retail inflation rose to a nine-month high of 5.49%, driven by a food inflation rate of 9.24%, which could delay a cut in interest rates by the central bank.
The 2023 El Nino, a weather pattern whose effects ripple around the globe, including a patchy monsoon in India, resulted in a sharp rise in the prices of three widely consumed pulses varieties: pigeon pea (tur), black gram (urad) and chickpea (chana).
Canada has been a traditional source for India for lentils but increasing friction between the two nations has traders worried but currently trade is continuing normally, analysts said. Neither country has put any restriction on trade so far, they added.
“So far, there has been no impact on trade and we continue to import lentils from Canada because there are no curbs from us or their government. In case sanctions or tariffs etc are imposed, then there will be an impact,” said Bimal Kothari, vice-chairman of the India Pulses and Grains Association.
Traders are already shifting away from Canada since tensions began rising after the murder of Canadian pro-Khalistani Sikh leader Hardeep Singh Nijjar in 2023. The Canadian government has blamed India for the killing but the Modi government has rejected the accusation as baseless.
“We are now buying a lot of yellow peas from Russia and lentils from Australia. It is not just a question of hedging but also competitive pricing,” Kothari said.
In 2023, India imported 687,558 tonnes of lentils from Canada, which accounted for 45.41% of total imports of pulses, while Australia’s share exceeded Canada’s for the first time at 51.25% for 775,994 tonnes of import of the item.
This year January to July 2024, Australian lentil exports have risen to 366433 tonnes, or 66.3% of India’s total lentil imports. According to Kothari, Russia has supplied 2.2 million tonne of yellow peas to India so far this year, which will cut down reliance on Canada.
India exports several merchandise goods to Canada, although it is a relatively small market. In 2023-24, India exported merchandise worth $437 billion to Canada.
“The increase in the share of Australia is both due to competitive pricing and it a lot of uncertainty in the future of trade between India and Canada,” said Robin Jalan, the managing director Saraswati Impex Pvt Ltd, a large food-trading firm.
According to the agriculture ministry’s data, a campaign to distribute improved seeds raised pulses productivity by 34.8%, from 727 kg/hectare in 2018-19 to 980 kg/hectare in 2021-22. This led to a fall in imports but extreme weather can still ruin crops and stoke prices.
