Canadian pulse exporters temporarily settled a dispute with India that had threatened to halt shipments valued last year at C$1.1 billion ($820 million).
India, the world’s top consumer of lentils and peas, extended by three months an exemption that allows commodity imports to be fumigated upon arrival, according to the country’s Farm Ministry. A waiver had been scheduled to expire Friday that exempts shippers including Canada and the U.S. from having to fumigate pulses for pests before export.
“We will maintain ongoing trade while officials on both sides continue to work towards a long-term science-based solution,” Canadian Minister of Agriculture Lawrence MacAulay and Minister of International Trade Francois-Philippe Champagne said Thursday in a joint statement.
India had signaled last fall that it may end the fumigation exemption as it seeks to cut its dependence on pulse imports. The move sent North American prices tumbling almost 30 percent since January as temperatures are too cold most of the year to make fumigation effective in the northern U.S. and Canada, the world’s largest pulse exporter.
Large green lentil prices have dropped 27 percent to 48 cents a pound in Canada since January, according to Brian Clancey, president and senior market analyst at Vancouver-based Stat Communications Ltd.
Forty percent of Canada’s pulse crops that include dried peas are shipped to India and farmers harvested a record 3.2 million metric tons of lentils and 4.8 million tons of peas in 2016, government data show. In the U.S., pulse plantings surged last year as farmers sought alternatives to low-priced grain crops. Lentil production more than doubled to an all-time high, and dry edible pea output climbed 52 percent, U.S. Department of Agriculture data show.
India’s extension means shipments in transit won’t be rejected when they arrive, Pete Klaiber, vice president of marketing at the Moscow, Idaho-based USA Dry Pea and Lentil Council, said in an email. The group will continue to work with the USDA to find a long-term solution to maintain market access while protecting India from pests, he said.
The spat will probably be resolved as Canada is the main supplier of pulses to India and the current demand gap is growing by 1 million tons a year, Murad Al-Katib, chief executive officer of Saskatchewan-based AGT Food and Ingredients, the world’s largest exporter of peas and other pulses, said in a March 23 interview.
Lentils and chickpeas are a staple for most of India’s 1.3 billion residents, and demand has been growing. India’s pulses demand was about 23.66 million tons in 2015-16, and domestic output is set to climb to a record 22.1 million tons in 2016-17, the government estimates. India is seeking to increase production to 24 million tons by 2021, according to the Farm Ministry.
“When you look at the availability of pulses, this is not a nice to have, it’s a need to have,” Al-Katib said.