Business Daily from THE HINDU group of publications
Wednesday, Jul 11, 2007
Agri-Biz & Commodities - Standards & Benchmarks
Industry & Economy - Exports & Imports
Plant quarantine norms worry Canadian pulse suppliers
Winnipeg (Canada), July 10 With a 50 per cent share of the Indian market, Canada has emerged as the biggest supplier of pulses to India, the world’s largest producer, importer and consumer of a wide variety of homegrown and imported pulses (peas, beans, lentils).
To meet rapidly rising demand, augment supplies and rein-in spiralling prices, the Government has completely liberalised pulses imports by eliminating tariffs. Annual imports from various origins are in excess of 20 lakh tonnes. Yet, domestic prices are high and pulses have become unaffordable for many.
Currently, purchases estimated at over 6.5 lakh tonnes have already been committed for arrival during August-October months, the period of maximum demand (because of a series of festivals) and generally low inventory (prior to Kharif harvest).
A very large part (nearly 80 per cent) of this import commitment has been through tenders by Indian Government parastatals.
There is, however, risk that imports may not actually land up in the marketplace smoothly.Risk premium
Although the potential for further growth in trade volumes is well-known, Canadian suppliers are concerned about the possibility of some non-tariff barriers hurting the trade prospect. Indeed, suppliers invariably build a risk premium into their offers because of uncertainty over clearance of imported goods on arrival at the Indian shores.
Indian importers too share the concern because they have to pay a higher price (risk premium) that suppliers demand. In other words, India pays a higher price for imported pulses leading to higher prices in the open market. The burden is eventually borne by consumers, and inflation control measures get watered down.
A major issue engaging everyone’s attention is the phyto-sanitary restriction India has imposed on imported goods; and there is apprehension that if the issue is not resolved soon, it can potentially disrupt inflows and impact prices.
No doubt, as a large grower and importer of pulses, India has certain concerns relating to plant health. In order to eliminate risk of stem and bulb nematode (infestation), Indian plant quarantine regulations require that all imported consignments be treated with methyl bromide.
However, the fumigant has already been phased out in many developed countries, including Canada, which makes it impossible for the suppliers to treat their export goods with the specified fumigant.Suggested solution
Pulse Canada, an organisation devoted to promoting the pulses trade, has come up with some workable solutions. In a detailed discussion with Business Line, senior officials of Pulse Canada emphasised the need to find a practical and effective solution to the import barrier.
They recommend that a ‘management by exception’ principle be followed. Keeping India’s concern in mind, they suggest that all export consignments destined for India should be tested for stem and bulb nematode by the Canadian Food Inspection Agency (CFIA) in the same exhaustive manner as is being done.
If nematode is not present, a suitable ‘non-detection’ certificate would be issued by the agency. If nematode is found, CFIA would issue a certificate of nematode presence, so that Indian authorities are aware of the exact results of the test and status of consignment even prior to arrival in India.
Upon arrival, such infested goods can be fumigated with methyl bromide in the presence of Indian quarantine authorities, Pulse Canada emphasised. This seems to be a perfectly acceptable and workable solution, according to many pulses importers back home. In any case, Indian authorities have the powers to do at random surprise checks on imported goods that come with a clean certificate.Workplan benefits
However, resolution of the problem through removal of fumigation barrier would require a slight modification to the import regulation. Instead of ‘free from stem and bulb nematode’, the regulation should be amended to say, “shipment to be tested for stem and bulb nematode and the result to be specified on the phyto-sanitary certificate (to be issued by CFIA)”. Such a move would smoothen the import process and accelerate arrivals into the country. Why does it make sense for India to accept and act upon this recommendation? For one, the Indian Plant Protection and Quarantine Department will come to know in advance the exact result of the test; and in case of necessity, can ensure proper fumigation at the port in the presence of their officials. Importantly, the uncertainties and risks of trade including higher costs (risk premium) would be removed. The market will be able to access imported goods more readily, without in any manner compromising the plant health and quality considerations.
Fumigation with methyl bromide as specified in exceptional cases of infestation (about which Indian authorities will know in advance) will protect domestic interests and not disrupt imports.
Canadian trade officials assured this correspondent that they are keen India’s genuine concerns are not ignored, and asserted that the transparent system as recommended above (management by exception) would go a long way in benefiting both countries and further cementing trade ties.
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