Canadian Lentil Sales to India Slow Amidst Diplomatic Tensions

Prime Minister Trudeau had publicly stated that Canada was actively investigating credible allegations linking Indian government agents to the murder of a Sikh separatist leader in British Columbia. In response, India’s foreign ministry swiftly dismissed these allegations as “absurd.”

Lentils, a protein-rich staple used in the preparation of daal curry, constitute a significant import from Canada to India. A reduction in Indian purchases of Canadian lentils could not only impact the prices received by Canadian farmers during the harvest but also have political implications in India. This is particularly sensitive as the country approaches a national election next year.

India had previously imposed bans on wheat and non-basmati white rice exports to safeguard domestic staple supplies, following a drop in output.

Nitin Gupta, Senior Vice President of Olam Agri India, a major importer, expressed industry officials’ concerns over potential trade restrictions between the two countries. Nevertheless, an Indian government official emphasized that there were no such plans in India, and Indian importers have not been instructed to abstain from purchasing Canadian lentils.

Tensions between Canada and India have escalated to the extent of visa suspensions and diplomat expulsions, but Canada is not currently taking actions directly impacting trade with India, according to a Canadian Global Affairs department official.

Kevin Price, Senior Export Merchant at Winnipeg-based crop trader Parrish & Heimbecker, acknowledged Indian hesitancy in the wake of Prime Minister Trudeau’s remarks but noted that global demand for lentils remains robust. India’s poor crop has led to high lentil prices. Since the allegations, Indian offers for Canadian supplies have decreased by 6% to approximately $770 per metric ton.

Canada played a pivotal role in India’s lentil imports during the 2022/23 financial year, accounting for over half of India’s total lentil imports. This trend continued, with India’s imports of Canadian lentils from April to July increasing by 420% compared to the previous year, as per data from India’s trade ministry.

Despite the concerns, it is worth noting that Indian buyers have started exploring lentil sources in Australia while slightly reducing their purchases from Canada, as revealed by an anonymous Mumbai-based dealer with a global trading firm. Inflation within the pulses group is currently high, making Canadian lentils a critical need for India. Any measures to restrict imports may contribute to inflation, which New Delhi is likely to avoid in light of the circumstances.