INDIA says it will give advanced notice on any future tariff increases following talks to try to resolve a recent trade dispute over grains.
But concerns remain over about $65 million in stocks left in “limbo” and under contract when the shock 30 per cent tariff was imposed on chickpeas and lentils virtually overnight in late December, threatening the local industry’s profitability.
In a statement last week, new federal Agriculture and Water Resources David Littleproud – who has held urgent talks with Indian officials on the trade dispute – said the result of early negotiations had seen India’s government give a “concession” by agreeing to provide forward notice to the Australian grains industry of future tariff increases.
He said the agreement showed the Indian government “recognises the importance of their relationship with Australia’s grain farmers and was a win for grains, chickpea and pulse farmers going forward”.
“The meetings held with Indian ministers in Delhi have been positive and there is strong support for an enduring and mutually beneficial trade relationship,” he said.
“In two separate meetings I requested India respect contracts entered into prior to the raising of tariffs on December 21, 2017, better transparency of grain stocks, including chickpeas and pulses and a suitable lead-in time for any future tariff impositions.
“I’m pleased to get a commitment our grain, chickpea and pulse farmers will receive advance notice of any tariff changes in future.
“Growers invest when they have certainty and we thank India for providing greater certainty.
“India’s Minister for Commerce and Industry Suresh Prabhu acknowledged concerns raised by Australian grain exporters and has indicated these will be discussed with India’s Central Minister of State for Agriculture and Farmers Welfare, Krishna Raj, to improve reliability for the trade with India in future.”
Mr Littleproud said Ms Raj gave a commitment that India would consider the affects on Australian suppliers in future and if a similar event unfolded, would give forward notice of stocks, before the imposition of tariffs.
He said the outcomes of the trade discussions built on the “positive feeling for the long-term economic relationship between our two countries at the Australia-India Leadership Dialogue, also held in Delhi”.
India’s shock 30pc tariff came into effect immediately, effecting shipments already on the water and catching farmers off guard.
India is a key market for Australian pulses, accounting for about 80pc of Australian chickpea exports.
Ahead of the visit to India, Mr Littleproud – who replaced Barnaby Joyce in the farm portfolio following a cabinet reshuffle in December – said India was within its rights under the WTO to raise its tariffs but “it makes life extremely tough for farmers when the returns change after a crop is planted”.
Grain Producers Australia chairman Andrew Weidemann said Australian growers had noted the outcome of the trade talks but the issue of stocks in transit remained unresolved.
“The proof will be in the pudding on whether the Indians will provide advanced notice on any future tariff changes but our concerns remains that there needs to be more pressure applied on these countries in future trade negotiations,” he said.
“We’re still worried about the financial impact on the grain traders and exporters of any grain stocks left on the water or in transit at the time the 30pc tariff was imposed and we’re still unsure if it will have any detrimental impacts, which we were quite vocal on prior to Mr Littleproud leaving for these talks.
“The Indians, to be honest, don’t have any concern about the impact of such decisions on Australian farmers and in a global market it’s becoming clearer we need to look after ourselves in terms of future export decisions.
“If other markets offer more stability and security, then Australian growers and traders will need to take that into consideration.”
Mr Weidemann said about 100,000 tonnes was estimated by Pulse Australia to be potentially in limbo between contract and delivery at the time the 30pc tariff was imposed and at $650 per tonne, he believed $65m worth of trade was “in limbo”.
“On those numbers it’s about $19.5m that’s potentially at risk,” he said.
“That’s still unresolved so someone is going to have to meet the shortfall unless that grain can be moved to another market.”
National Farmers’ Federation chief executive officer Tony Mahar said his group commended the government and Mr Littleproud for acting swiftly and arranging a trip to India to discuss the new tariffs imposed late last year.
He said the Indian market holds enormous promise for Australian producers but the country’s recent trade decisions “place us at a significant disadvantage”.
“The NFF will continue to call for reduction and where possible, elimination of tariffs and non-tariff barriers in all markets to level the playing field for Australian farmers,” he said.
GrainGrowers welcomed the Australian government’s swift action on India’s decision to raise tariffs from zero to 30pc on Australian chickpeas and lentils and early progress achieved, with Mr Littleproud securing the Indian government’s commitment to provide forward notice to the Australian grains industry of future tariff spikes.
The national grains representative group said the advanced notice would help provide greater certainty for pulse trade into India, where Australia exported $1.1 billion worth of chickpeas, $197m worth of lentils and $29m worth of mung beans in 2016-17.
The Victorian Farmers Federation welcomed Mr Littleproud making “some headway” in his official trade talks with India and was pleased with the concession – but said it was “imperative” the Australian and Indian governments continued free-trade agreement negotiations.
“Australian producers compete in an international market without any government support and therefore ensuring positive trade protocols with our trading partners is essential,” VFF grains president Ross Johns said.
The VFF said India must consider the long-term market distortion the tariff created and that sudden changes, such as the tariff’s introduction, created uncertainty and a disincentive for Australian farmers to choose to plant pulses.
Mr Johns said Australian growers needed a stable trade environment with a reasonable expectation that the market conditions, when they make their planting decisions, would be reflective of the conditions at harvest.
“The increased potential for sudden and unpredictable drops in profitability will dampen the international supply of pulses,” he said.
“When India’s domestic supply has a harder year, it is vital that there is a sufficient international supply to meet the shortfall.
“It is in India’s interest, as well as Australia’s, for our two countries to have an open and unencumbered trade relationship.
“We urge our government to resume free-trade negotiations with renewed vigour.”