A new tariff imposed by India on Australian chickpeas and lentils will have immediate financial consequences for farmers, especially those who have product already in transit.
The Indian Government’s 30 per cent tariff on the imported pulses is effective immediately.
The Federal Government is seeking talks with India in a bid to resolve the issue.
The tariff comes on the back of a 50 per cent tariff imposed on field peas announced about a month ago. Wheat also faces a 20 per cent tariff.
Pulses have been the big growth crop for grain growers and have been one of the outstanding performers in recent years, raking in good returns and becoming a highly valuable crop.
Significant value in exports
Since 2011/12, the value of Australian chickpeas exported to India has increased 995 per cent.
Lentil export growth has been even greater, with an increased value of 2003 per cent in the past six years.
During the 2016/17, chickpea exports to India were valued at $1.14 billion and lentils were worth $196 million.
Chairman of Grain Producers Australia Andrew Wiedemann said the new tariff would have a “major affect on the continued development of the industry here in Australia”.
“Farmers have been adopting pulses into their crop rotations and we’ve been seeing reasonable money coming from chickpeas and lentils over the past three or four years,” he said.
“The impact of this is, if you were turning up to work tomorrow, that you’d have a 30 per cent pay cut.”
Pulse Australia said initial indications were that some 200,000 tonnes (about $150 million) of Australian chickpeas and lentils are in transit to India and may be affected.
With ‘significant’ shipments already on the water, Mr Wiedemann said cargoes had already been committed and paid for and their value now was not known.
Trade has slowed down
“If you’re looking at chickpeas at $1,000 per tonne, there’s now $300 per tonne that’s going to have to be carried,” Mr Wiedemann said.
Export development officer for AgriSemm Brokerage, Peter Semmler, believed the impact on trade began up to five weeks before the import tariff was announced.
“In the pulse business perception’s reality until proven otherwise, so the rumours that India was going to impose these import duties, that’s really slowed trade down,” Mr Semmler said.
“Trade has been very quiet compared to last year when it was absolutely frenetic.
“The shipping lines say it’s quiet, the packers are not overly busy, and of course now [the tariff has been imposed], the immediate impact is for all those poor people who have got either chickpeas or lentils on the water.”
Mr Semmler said the impact had spread further than exports to India.
Trade Minister Steven Ciobo said the Australian Government had “made representations to the Indian Government explaining the impact on our producers and advocating for a period of transition to avoid disrupting already contracted trade or shipments in transit”.
Mr Ciobo and his Indian counterpart, Suresh Prabhu, will attend the World Economic Forum in Davos next month when Mr Ciobo “will continue to raise the issue with Minister Prabhu, whom I hope to meet with in January”.
Farmers hit hard
The president of the Victorian Farmers Federation, David Jochinke, is a broadacre farmer from western Victoria.
He described the news as “absolutely gut wrenching”, particularly after the season’s destructive frosts caused a lot of damage in parts of the Victorian grain belt.
“I wouldn’t say it was something I wished for at Christmas time but like most things there’s always going to be a challenge.
“The thing we have asked is that the Federal Government use whatever influence it can have to India to try to help us.”
For Queensland grower John Cameron from Bongeen on the Darling Downs, the announcement has given clarity after weeks of speculation.
“At least we know where we stand as farmers trying to sell product, and surely for our marketers it also gives them clarity, they now know what the rules are,” Mr Cameron said.
“It’s certainly disappointing, from a return point of view, that whatever that price level’s going to be will probably be reflected off our bottom line here in Australia.”
Mr Cameron said it is unlikely he would plant pulses next season.
“If the price is going to come back towards a longer term lower price level they’ll probably slide out of my rotation for a little while and may not come back.”