American president Donald Trump returned last month from a trip to India empty-handed in terms of any new trade deal. India and its prime minister, Narendra Modi, did roll out the red carpet for President Trump, which was topped off by a rally at a cricket stadium with over a hundred thousand people reportedly in attendance.
There were high hopes in some sectors of U.S. agriculture leading up to the trip. U.S. dairy farmers were highly optimistic that the president would be able to boost dairy exports to India by $100 million per year. Another group of U.S. farmer were looking for President Trump to put a dent in India’s import tariffs on U.S. pulse products.
Last week, I sent a letter to @realDonaldTrump on behalf of Montana’s pulse crop farmers ahead of his trip to India.
Today, POTUS sent a follow up – he hand delivered the letter to Prime Minister Modi himself.
Thank you for fighting for Montana ag, Mr. President! pic.twitter.com/Xq6vVOvP8I
— Steve Daines (@SteveDaines) February 25, 2020
As the largest exporter of pulse products to India, Canada has had its own tariff and non-tariff barrier challenges in India. Comparatively, Prime Minister Justin Trudeau’s 2018 trip to India was disastrous, and spurred less than complimentary satirical coverage on U.S. late night T.V. programs.
Although Trump’s relationship with Modi is being celebrated, for farmers in the northern U.S. pulse-producing states, the fact the U.S. has the highest tariffs into India are very frustrating. I think it’s a bit of an unknown fact that the U.S. tariffs into India on pulses are higher than Canada.
According to Pulse Canada:
India tariff on U.S.:
– pea 50% (max bound rate)
– lentil 50% + 10% cess = 55%
– chickpea 70% + 10% cess =77%
All others:
– pea 50%
– lentil: 30% + 10% cess = 33%
– chickpea: 60% + 10% cess= 66%
When Jim Wiesemeyer of Pro Farmer stated on Agritalk that a “mini” trade deal was possible with India prior to Trump’s visit, I felt that the focus on dairy was more politically swing-state driven than the opportunities available for U.S. pulse growers. It’s no secret that Montana and North Dakota are not swing states in the 2020 election while Pennsylvania, Wisconsin and Michigan are. While President Trump is focused on US$100 million in dairy exports to India for political gain, Canada is attempting to regain its 2016 pulse exports of $1.1 billion (1.9 million tonnes).
Although it is not clear if the U.S. will have any success in improving its market access issues with India as a more comprehensive trade deal possibly comes to fruition post-2020 election, I think Gord Bacon, CEO of Pulse Canada, is very accurate in describing the realities for Canada and the U.S. when he says, “India will be back in to the market when they need pulses at a level that can’t be supplied domestically.”
From a Canadian pulse export perspective, Bacon notes “In the shorter term we will watch harvest weather in India and what that may do to winter crop quality. Of course, on a daily basis we track logistics system performance, vessel backlog, and have concern about our ability to catch up on backlogs, and consider how we can improve logistics performance in Canada.”
In the U.S./China Phase One deal there are promises made which could benefit Canadian farmers as well. For example, the evaluation on ractopamine (a feed additive) could become a major benefit to beef exporters in both Canada and the U.S., even though Canada is not written into the deal. I think there could be beneficial waves for Canadian farmers regarding pulses in a U.S./India deal as well. A conclusion to the non-tariff barrier tactic of fumigation requirements would be a healthy start.
For Canadian pulse producers, any chance of less protectionism on pulses from India would be welcomed, no matter how it is triggered, while U.S. pulse producers just want equal market access to countries such as Canada.