Canadian Lentil Exports to India Decelerate Following Trudeau's Murder Suspicions Remark

27 Sep, 2023

Canadian Lentil Exports to India Decelerate Following Trudeau's Murder Suspicions Remark

Canada's lentil exports to India have experienced a noticeable slowdown following Canadian Prime Minister Justin Trudeau's recent statement in which he expressed suspicions of Indian involvement in an assassination on Canadian soil. Industry sources in both countries have reported concerns about potential reprisals from New Delhi that could restrict trade.

Trudeau's remarks centered on Canada's active pursuit of credible allegations linking Indian government agents to the murder of a Sikh separatist leader in British Columbia in June. In response, India's foreign ministry promptly dismissed these allegations as "absurd."

Lentils are a vital protein-rich staple used in India, primarily to prepare daal curry. A reduction in Indian purchases of Canadian lentils could have a dual impact—it may lower the prices received by Canadian farmers during the harvest season, but it could also contribute to inflation in India's domestic food prices, a politically sensitive matter as the country approaches a national election next year.

India's previous actions, such as banning wheat exports last year and imposing a ban on non-basmati white rice exports this year, were taken to preserve essential staple supplies after a drop in crop output.

Nitin Gupta, Senior Vice President of Olam Agri India, a major importer, voiced concerns among industry officials about potential trade restrictions due to the ongoing tensions between the two countries. However, an unnamed senior Indian government official clarified that India currently has no plans to implement such restrictions and has not instructed importers to halt their purchases.

Diplomatic tensions have escalated with both countries suspending visa issuances to each other's citizens and expelling diplomats. Despite these developments, Canada has not taken any direct actions that would impact trade with India, according to an official from the Canadian Global Affairs department, who requested anonymity.

Kevin Price, Senior Export Merchant at Winnipeg-based crop trader Parrish & Heimbecker, noted that Indian buyers had already procured significant quantities of Canadian lentils earlier in the year for delivery after the harvest. While some hesitation has emerged among Indian buyers, global demand for lentils remains robust.

Canada emerged as India's largest supplier of lentils during India's 2022/23 financial year, with shipments totaling 485,492 metric tons valued at $370 million—comprising more than half of India's total lentil imports, as per India's trade ministry data. This trend continued, with Indian imports of Canadian lentils from April to July surging by 420% compared to the previous year, reaching 190,784 tons.

Bimal Kothari, Chairman of India Pulses and Grains Association, highlighted that India's annual lentil consumption stands at approximately 2.4 million metric tons, while local production falls short at 1.6 million tons. As a result, Indian buyers are now exploring lentil sources from Australia while slowing their purchases from Canada, according to a Mumbai-based dealer with a global trading firm who preferred to remain anonymous.

The dealer also emphasized that inflation within the pulses group is currently high, making Canadian lentils a critical necessity for India. Any measures taken to restrict imports would likely contribute to inflation, and New Delhi is expected to exercise caution to avoid such actions that could exacerbate the situation.