Im­port du­ties af­fect pulses

Mar­ket un­cer­tain af­ter gov­ern­ment in­volved

Warwick Daily News - South West Queensland Rural Weekly - - News - ROB BREALEY Pulse Trader, Nidera Aus­tralia

IF YOU grow pulses, you would know of the In­dian gov­ern­ment's re­cent in­ter­ven­tion in the mar­ket; in­tro­duc­ing harsh im­port du­ties to try and lift lo­cal prices. It seems timely then to look for­ward to the po­ten­tial im­pact on new crop Desi Chick­pea prices to see if we can pro­vide Aussie farm­ers with some as­sis­tance in their plant­ing de­ci­sions.

Firstly, do we even need In­dia to buy?

Well... it de­pends on the size of our crop. In ad­di­tion to this, Aus­tralia does ex­port more than 90 per cent of our to­tal chick­pea pro­duc­tion, so we are de­pen­dent on ex­port mar­kets for our sales and price de­ter­mi­na­tion.

Ex­port de­mand out­side of In­dia can fluc­tu­ate de­pend­ing on sev­eral fac­tors and is in the ball­park of 500,000mt per an­num with ma­jor mar­kets be­ing Bangladesh, Pak­istan and the UAE. Add to this an­other 100,000mt for the lo­cal do­mes­tic re­quire­ment and you have a to­tal de­mand of ap­prox­i­mately 600,000mt per an­num out­side of In­dia. In the last three years, our crops have pro­duced 1.2Mmt, 2.3Mmt and 1.0Mmt, so you can see we have needed In­dia to take the sur­plus and pro­vide the mar­ket with price sup­port.

So, what does this mean for prices go­ing for­ward?

Well, of course, there are many fac­tors that will im­pact prices – the least of which is nei­ther the even­tual size of our crop or out­come of the mon­soon sea­son in the sub-con­ti­nent. It's not even what im­port du­ties (or other mea­sures) are in place in In­dia come har­vest time here in Aus­tralia. It seems nei­ther we, or any­body else, can fore­cast with any cer­tainty today.

One of the big side ef­fects that gov­ern­ment in­ter­ven­tion brings in any mar­ket is un­cer­tainty. Who would want to plan ex­ports to In­dia today with­out know­ing if the duty will be zero per cent or 100 per cent? Let’s as­sume for a mo­ment too, that ev­ery­thing re­mains the same. A big as­sump­tion I know, but it will at least give us a guide as to what the price in­flu­ence might be should we need our In­dian friends buy­ing.

The cur­rent im­port duty for chick­peas in In­dia stands at 60 per cent and once you add some taxes to the duty, (that’s gov­ern­ment to you) the real duty is in fact 66 per cent. Cur­rent lo­cal val­ues in In­dia are circa 37,000 Ru­pee/MT (US$570/t) but the Gov­ern­ments am­bi­tion is to push val­ues to above the 44,000 Ru­pee/MT (US$670/t).

Now, let’s as­sume In­dia even­tu­ally achieves this. This will be­come the price we need to beat to cap­ture de­mand in In­dia. Af­ter de­duct­ing the duty, freight and load­ing costs, this comes back to circa A$425/450mt de­liv­ered to the port in Aus­tralia.

To re­it­er­ate, we are not say­ing that this is what the price will be at har­vest. There are many un­known fac­tors that could still in­flu­ence the out­come, both pos­i­tively and neg­a­tively. We do be­lieve, how­ever, that th­ese are re­al­is­tic val­ues to be us­ing for Desi Chick­peas when plan­ning this year’s win­ter crop­ping pro­gram.


CHICK­PEA EX­PORTS: In­dia’s new im­port du­ties may af­fect Aussie farm­ers.

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