On the weekend, Matt covered the overview of the Indian free trade agreement. A free trade agreement can be really attractive, especially for an export nation, if it is done correctly and provides mutual benefit. There was a significant omission though – Chickpeas.
Chickpeas are one of, if not the most important cropping commodities which we trade with India.
India has always had an interesting position when it comes to grains. They switch between being an importer and an exported dependent upon seasonal conditions. This year they are taking advantage of a large domestic crop and high global prices to be a major exporter of wheat.
The first chart below shows the exports of our main grains from Australia to India, according to UN Comtrade data. Our biggest exports have been wheat, chickpeas and lentils. The last few years have seen pulses struggle under tariffs, and India has moved back to being a net exporter of wheat.
The lentil tariff was removed in February, but chickpeas remain under a restrictive tariff, and have seemingly not been included in the free trade agreement for now.
Australia is in the hot seat for Chickpeas to India. The second chart below displays who has supplied Chickpeas to India. Australia holds the lion’s share. Over the past decade, we have provided just under 70% of their chickpea imports. The next highest supplier is Myanmar, and they are a minnow compared to us.
Lentils are similar to chickpeas, albeit with Canada as the primary source. Canada, Australia and the USA supply nearly all lentils imported into India.
Since the tariff removal, Lentils have seen stronger pricing levels in recent months, despite logistical challenges. Chickpeas have continued to maintain depressed pricing levels. A free trade agreement with the removal of the chickpea tariff would have been a game-changer for chickpeas.
As it stands, not much is likely to change in the near term for Australian grains and pulses to India.
The farm lobby in India is very strong, and farmers were not happy about the lentil tariff removal. They will be pushing to continue to keep Australian chickpeas out.