Tariffs in India, China hit pulse producers
FARGO, N.D. — Tim McGreery hasn't seen prices this low for pulse crops in 12 years. Peas, he says, are down 25 percent, lentils 40 percent and chickpeas 50 percent.
McGreery, chief executive officer of the USA Dry Pea & Lentil Council, based in Moscow, Idaho, says tariffs in India and China — formerly the two top international destinations for U.S. pulse crops — are "definitely having an impact."
"We've been completely shut out of those markets until this tariff issue gets resolved," he says. "When you take your two top markets, and they are combined taking 40 percent of your exports — wow, that's a big lift."
"Over the last four marketing years, India has imported approximately 170 million pounds of lentils and 13.5 million pounds of chickpeas from the United States," says Prithviraj Lakkakula, a Research Assistant Professor in Agribusiness and Applied Economics at North Dakota State University.
India already had put tariffs on chickpeas and lentils from all countries in an effort to help their own farmers toward the end of 2017. But on on June 21, India announced additional tariffs, which went into effect Aug. 4, specifically on U.S. chickpeas and lentils in retaliation to the U.S. tariffs on steel and aluminum imports from India.
It's important to note, Lakkakula says, that those additional tariffs are specific to U.S. chickpeas and lentils, making products from other countries — including Canada and Ukraine — more attractive to Indian buyers.
Lakkakula says downward pressure on U.S. lentil prices are possible, depending on supply and demand conditions in the international market, but he believes chickpea prices will see a limited impact.
"Prices could also be impacted by the reduced negotiating position that U.S. lentil exports will have in the international markets. Alternative lentil and chickpea buyers will negotiate U.S. lentils for lower prices because they know that the United States does not have access to prominent Indian lentil and chickpea markets. These price and market effects could have a potential impact on the profitability of U.S. lentil farmers the most," he says.
Lakkakula says an effort to find new markets at relatively competitive prices is imperative. That's an ongoing effort for the USA Dry Pea & Lentil Council.
A few weeks ago, delegations from Naples, Italy, and Madrid, Spain, that had planned to come to North Dakota to learn more about pulse crops announced they were no longer coming. Simon Wilson, executive director of the North Dakota Trade Office, said that trip, along with a trip of potential food-grade soybean buyers from China, were canceled because the groups "wouldn't be able to market this trade mission as a positive to their customers."
McGreery says the cancelation was disappointing, however, his group still is investigating other markets.
"We have a Pakistani team coming into North Dakota, Montana, clear across the northern tier to look at all the pulse production" in September," he says. "We're looking at other markets in Asia to try to expand."
McGreery says domestic markets are increasing, which is helpful. But new opportunities still are needed. South Africa is another possible new market.
"We're just looking for every place that doesn't have a tariff on it right now," he says.
The U.S. product remains "super high quality," and farmers across the Northern Plains have tended to see a premium in the marketplace. That may be changing due to the current situation, he says. And even if the tariff situation clears up, he expects it will take time for trade to return.
"I think you're going to see a lot more stored commodities this year, not just for pulse products, let's be honest, for a lot of agricultural products," McGreery says. "We're not alone. We're all crying together."
On the plus side, McGreery says production this year appears good. After last year's drought in much of Montana and North Dakota, producers are pleased and remain "eternally optimistic," he says.
"They could always have higher yields, but at least they're getting a product," he says. "If the hail didn't hit them, they're getting an average yield on pulse crops, which is good news for them."