Panic stations or a storm in a Darjeeling teacup?
Market slow to react to chickpea tariff increase by India
DESPITE the Government of India’s announcement that the tariffs on imported chickpeas had risen to 44 per cent, there has been little to no movement in the cash chickpea price.
While the Victorian Farmers Federation (VFF) described grain farmers as “reeling from another blow,” to the trade relationship with India, it seems the initial effect has been buffered by alternative markets.
Sitting in a historical decile nine cash price of about $600 per tonne, the indicative desi chickpea cash price from major traders has remained unchanged, though some smaller exporters have moved to price on application.
India is a key market for Australia, taking about 80 per cent of current exports of combined desi and kabuli chickpeas.
Initially affected by the 30 pc hike in December, there is a general expectation another market correction will need to take place.
Predictions on the severity and timing of the correction are mixed, as the market tries to guess both the effect on the continued demand for chickpeas and the potential size of the 2018 crop.
Aus Grain Distributors, chief executive officer, Don Iddamalgoda said he was expecting to see a collapse of the Australian chickpea market once alternative markets were filled.
“Definitely, it is a very big impact on our growers,” he said.
“Currently, Bangladesh and Pakistan are buying the product from us.
“Most of the growers are either selling chickpeas to those markets or holding the stocks to sell later.
“Once the Bangladesh and Pakistan cover their requirements where are we going to sell our products?”
Victorian Farmers Federation, grains president, Ross Johns said from a long-term perspective the tariff increase reduced grower confidence to plant chickpeas.
“This increase flies in the face of previous discussions with the Australian government, in which officials were assured that India would provide notice prior to imposing or increasing any further tariffs,” he said.
“Tariff barriers discourage Australian growers from planting chickpeas and other grains aimed at the Indian market and motivate them to consider alternative crops.
“Fluctuating trade barriers create an unpredictable trade environment, which significantly impact Australian growers’ planting decisions.”