Posted on October, 2, 2023 at 06:14 am
It seems like Canada is turning the agri-power screw on India. A news report from Reuters suggests that lentil imports from Canada have “slowed down” after Canadian prime minister Justin Trudeau accused Indian intelligence agents of assassinating a Canadian Sikh activist Canadian soil. This has implications for domestic pulse prices as India heads into the elections.
India and Canada have been in a major diplomatic tussle since Trudeau made his allegations public. The Indian government denies these allegations.
But what does this have to do with Canadian lentils exports to India?
Canada apart from its vast mineral wealth, also has a booming agri economy. With surplus of everything from edible oils to lentils to feed cakes, Canada has been the top supplier of masroor lentils, white/yellow pea, and so on. Canadian imports, notably, came in handy in fighting the arhar dal crisis. They have, many times, helped stabilise the prices and also provided for a major source of vegetarian protein. Similarly, when chickpea prices are rising due to short supply, Canadian white/yellow peas were imported. Chickpea was also given as part of the COVID-19 food rations relief which continued until last year.
Overall Canada lentil imports are vital for Indian nutrition.
Canola oil and feed cake both help in the shortage of edible oil supply, and poultry and cattle feed.
So if we look at the entire agri-import scenario it is fair to conclude that Canada has a major influence on the lentil and edible oil security of India.
This is especially true when matched with the Indian agriculture production scenario. For a couple of years, including the ongoing Kharif season, rainfall has been erratic, causing major agrarian disruptions. Floods and droughts have plagued India in one form or the other. North India has reported a drought-like August, and September too is turning out to be dry in too many parts of the country. Lentil and oilseed production have both fallen, and the USDA even estimates there will be 3% drop in our paddy harvests this season. Our strategic food reserves are low too.
Now with the Russia-Ukraine trouble not ending soon, a lot of the world’s grain supply is stuck. India is already reporting low harvests, so Canada happens to be one of the few countries that can supply to the world. It has been watching the Indian food and climate situation very carefully. If we do not get a good Kharif harvest, there will be additional demand for food.
This is when Canada’s importance heightens.
With elections in a few months, India would need to keep food prices low. Without cheap imports this would be near impossible. Canada hopes to use lentils and other food commodities as a bargaining tool.
Exports and a trump card
But the agri-power display doesn’t end here. India’s agri exports to Canada could be next. Canada may have already started a process of limiting or putting extra scrutiny on Indian food exports. Ideally for Canadians, they want to put tariffs on and curtail Indian imports. No doubt India will try to reciprocate, but India may be harming herself more by banning or curtailing Canadian food imports. Victims of these decisions will be the people.
There is still a trump card Canada is hiding under its sleeves. It’s the very important industrial agricultural fertiliser Muriate of Potash (MOP). Canada has the world biggest reserves of potash, about 30%. They are also the top producers of the fertiliser.
Canada was India’s top exporter for MOP, apart from Russia, Belarus, etc. Given that agri-chemical fertiliser prices have been sky rocketing, with Di-ammonium Phosphate or DAP reporting a 25% jump. India has only a few options left to get cheap MOP, and that’s why Indian officials and Indian Potash Limited have been keen to ensure that Canada not stop the potash shipments. This is simply because Indian food security depends on it. Should Canada stop sending potash, it will be disastrous for Rabi sowing and harvests.
With Canada initiating the first agri attack, India policymakers should quickly take stock of lentils and other essential supplies – a step which the government is already taking by imposing stocking limits, banning exports and strictly asking processors and retails to declare stocks.
If India gets a worse Rabi 2023-24 wheat harvest, it may be looking at Canadian wheat too.
If this row escalates, food will potentially be used as choke point. India should focus on building more stocks at home or enter into bilateral agreements for food, before the granaries run out.
Source: The Wire