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Indian Grain Market

Opportunities for Australia

August 2017

Contact: Luke Mathews, GrainGrowers Ltd

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Contents

1. Executive Summary ............................................................................................................................... 3

2. Current Indian Grain Market and Trends .............................................................................................. 4

2.1 General ......................................................................................................................................... 4

2.2 Wheat ........................................................................................................................................... 5

2.3 Coarse Grains ............................................................................................................................... 6

2.4 Oilseeds ........................................................................................................................................ 6

2.5 Pulses............................................................................................................................................ 8

3. Indian Imports by Region .................................................................................................................... 10

3.1 General ....................................................................................................................................... 10

3.2 Wheat ......................................................................................................................................... 10

3.3 Pulses.......................................................................................................................................... 11

4. Current barriers to trade in grains and other challenges ................................................................... 13

4.1 Specific requirements on the export of Australian grains to India ............................................ 14

4.1.1 Import conditions .............................................................................................................. 14

4.1.2 Tariffs ................................................................................................................................. 15

4.1.3 Import Clearance Process .................................................................................................. 16

4.1.4 Import Conditions - Details ................................................................................................ 16

About GrainGrowers ................................................................................................................................... 19

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1. Executive Summary

India is one of the world’s most dominant grain producers and consumers. And India will likely also become a

significant import market for global grains and oilseeds in the future, complementing the current pulse trade.

The Australian grain industry is potentially a strong beneficiary of India’s growing import demand for grains.

Total Indian grain consumption has averaged 232.1 million tonnes over the past five years, and has grown at

an average rate of 3.8 million tonnes per annum over the past decade. Despite strong consumption growth

in recent decades, India has remained largely self-sufficient in grain production. Indian grain production has

averaged 240.5 million tonnes over the past five years.

Despite historic self-sufficiency, increasing rates of demand growth – driven population and changing diets –

combined with slowing rates of production growth, will result in India emerging as a key import market for

grains, oilseeds and pulses in the future. The development of a more intensive livestock industry in coming

years will likely exacerbate India’s need for imports to help meet future grain consumption requirements.

Indian import demand has helped shape both global and Australian pulse markets. India is responsible for

roughly 25% of global pulse production, but also 30% of global pulse trade demand with imports of more

than 6 million tonnes in 2016. India takes around 80% of Australian chickpea exports, and has largely been

responsible for the recent growth in the Australian pulse industry. Furthermore, India currently imports

around 14 million tonnes of vegetable oils, dominated by palm oil. And future growth in protein meal

demand will raise the likelihood of additional imports of “whole” oilseeds, such as Australian canola, in order

to satisfy both vegetable oil and protein meal demand.

Indian demand growth is now also shaping the wheat import market. Historically an ad-hoc importer of

wheat due to local seasonally-induced production shortages, India is now shaping as a structural net-

importer of wheat. After exporting wheat for much of the past decade, over the past two seasons India has

imported nearly 10 million tonnes of wheat. Australia has emerged as a significant beneficiary of India’s

wheat import demand. Australian wheat exports to India reached 920 thousand tonnes in 2016, and have

surged to more than 1.7 million tonnes in the first six months of 2017, including a monthly record of 874

thousand tonnes in January 2017. Virtually all of Australian wheat exports are bulk. However competition

for India’s wheat consumer is intense, particularly from low-cost Black Sea (particularly Ukrainian) exporters.

India’s grain and food industry is subject to a high degree of policy intervention, with partly-opposing

objectives of (1) maintaining farmer incomes; and (2) maintaining food security and affordable grain supplies

to low-income households. Minimum producer support prices, input subsidies, public distribution systems,

import tariffs, changing import conditions and other technical barriers to trade blur true market signals in the

Indian grain market.

This report details the nature of the Indian grain, oilseed and pulse market, with a particular focus on trade

dynamics and current policies impacting the sector.

Contact:

Luke Mathews | Trade & Economics Manager | Grain Growers Ltd E: luke.mathews@graingrowers.com.au | P: +61 0 9286 2000 | M: +61 409 641 427

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2. Current Indian Grain Market and Trends

2.1 General

India is one of the world’s most dominant grain producers and consumers.

Indian grain1 production has averaged 240.5 million tonnes over the past five years, trailing China (498

million), US (440 million) and the EU (295 million). Over the past decade Indian grain production has grown

by an average rate of 3.7 million tonnes, or 1.7%, per year, well below the rates seen in China (11.4 million

tonnes) and the US (7.2 million tonnes). Australian total grain production is 40 million tonnes.

Total Indian grain consumption has averaged 232.1 million tonnes over the past five years, and has grown at

an average rate of 3.8 million tonnes (1.8%) per annum over the past decade. On the other hand, Chinese

grain consumption has expanded by 12.4 million tonnes over the past decade, with overall average

consumption of 499 million tonnes in the past five years. US grain consumption has averaged 352.9 million

tonnes over the past five years, and has grown by an average 7.0 million tonnes over the past decade.

In contrast to Europe, US and China, the Indian grain sector is dominated by the staples of rice and wheat.

Wheat and rice contribute more than 80% of Indian grain consumption, with corn contributing just 10%.

Conversely, wheat and rice contribute 50% of Chinese grain consumption, with corn making up 44%. In the

US, corn contributes 86% to total grain consumption, with wheat and rice making up only 10%. The absence

of a concentrated livestock industry in India, combined with the absence of a biofuel sector, explain India’s

bias toward wheat and rice. Consumption of grain for animal feeding purposes contributes just 9% of total

Indian consumption, well below the rate of 36% observed in China.

Fig 1: Indian Grain Consumption by Type Fig 2: Chinese Grain Consumption by Type

However, rapidly population growth (India’s population is forecast to surpass China by 2025, and is forecast

to be 1.6 billion persons by 2050) and evolving diets will support Indian grain consumption growth in the

coming decades. The strongest rates of growth are likely to be in the feed grain complex. In 20142, ABARES

noted that “cereals remain the largest component of Indian diets, although their share of total national

1 Includes barley, corn, millet, oats, rice (milled), rye, sorghum and wheat. (Excludes pulses and oilseeds) 2 Hamshere, P, Sheng, Y, Moir, B, Gunning-Trant, C & Mobsby, D 2014, What India wants: Analysis of India's food demand to 2050, ABARES

research report no. 14.16, Canberra, November. CC BY 3.0.

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consumption declined from 64% of calorie intake in 1990 to 57% in 2009.” We expect the proportion of

cereals in the Indian diet to continue to decline as diets become more diverse.

2.2 Wheat

India is the world’s second largest individual wheat producer and consumer behind China.

Indian wheat consumption in 2017/18 is forecast at 99 million tonnes, with average growth of 2.2 million

tonnes per annum (2.6%) in the past decade. Strong growth for human consumption purposes has

accounted for around 90% of total demand growth. The remaining 10% of Indian wheat consumption growth

has been driven by the feed wheat market. Total feed wheat demand in India forecast to total 5 million

tonnes in 2017/18, or roughly 5% of total annual consumption.

Despite strong wheat demand growth over the past few decades, India has remained mostly self-sufficient.

After rice, wheat is the most important cereal in India. Wheat is grown mainly in northern regions during

winter months of November to April. Although India’s wheat crop is largely irrigated (~90%), the monsoon

impacts soil moisture conditions and irrigation water availability during planting and critical growth stages,

thereby affecting harvest prospects. India’s need to import wheat has been ad-hoc, driven by seasonally-

induced production shortages. India has in the past been a net-exporter of wheat to world markets.

However, there are signs that India may in the future become a structural net-importer of wheat. Slowing

rates of yield improvement, combined with competition for land use and water, are constraining growth in

Indian wheat production. Over the past decade annual growth in Indian wheat production (1.9 million tonnes

or 2.3% pa) has lagged consumption growth. And in the past five years, Indian wheat production has lagged

domestic consumption by roughly 2.6 million tonnes per year, resulting in a sharp drawdown in local wheat

inventories. Indian wheat imports are rising as a result. Indian wheat imports in 2017/18 are currently

forecast at 4 million tonnes, following the 5.9 million tonnes import program in 2016/17. Weak international

prices, combined with high internal costs of transporting grain from northern production regions to southern

consumers has contributed to the growth in Indian wheat imports in recent years.

Fig 3: Indian Wheat Production and Consumption Fig 4: Indian Wheat Trade

Wheat production in India has a high level of policy intervention, with two broad, partly-opposing objectives

of (1) maintaining farmer incomes; and (2) maintaining food security and affordable grain supplies to low-

income households. The individual policies include:

Wheat procurement program, including Minimum Procurement Prices;

a Public Distribution System;

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subsidies on inputs to wheat production (especially fertiliser); and

additional wheat bonuses to farmers in some states.

2.3 Coarse Grains

Compared to wheat and to most other large grain consuming countries, India is a small consumer of coarse

grains. Nonetheless, Indian coarse grain use is still forecast at 44 million tonnes in 2017/18, and has shown

strong growth of 800 thousand tonnes per annum over the past decade. Corn demand is ~26 million tonnes

(60%), followed by millet (11.2 million tonnes), sorghum (4.6 million tonnes) and barley (2 million tonnes).

Virtually all growth in Indian coarse grain consumption in the past decade has been attributed to corn used

for livestock feeding purposed. This growth has been most pronounced in the past five years.

Coarse grains in India are used for both livestock feeding and human consumption purposes. Roughly 40% of

total coarse grain consumption in India is used for livestock feeding, particularly for poultry. The remaining

60% is used for human food, starch and industrial purposes. For corn, the most important coarse grain, 60%

of demand is for livestock feeding purposes. Barley is a very small crop in India with annual demand of 2.0

million tonnes, of which 600 thousand tonnes is used for livestock feeding purposes.

India was traditionally a net-exporter of coarse grains. However strong domestic demand growth in recent

years is curbing exports and resulting in increasing imports. Between 2007/08 and 2014/15 India was a net-

exporter of 3.7 million tonnes of coarse grains per annum. However, this was cut to less than 200 thousand

tonnes in 2016/17. In 2017/18 India is expected to be a small net-importer of coarse grains. In particular,

India is expected to import 250 thousand tonnes of barley in 2017/18, and 400 thousand tonnes of corn.

There is significantly less government intervention in the domestic Indian coarse grain market, with public

procurement and distribution limited.

Fig 5: Indian Coarse Grain Consumption Fig 6: Indian Corn Consumption by Demand Type

2.4 Oilseeds

India has emerged as one of the world’s fastest growing vegetable oil consumers in recent years, supported

by a growing population and changing diets.

In the past decade Indian vegetable oil consumption has surged by more than 900 thousand tonnes per year,

or 6.5% cagr, and now totals 21 million tonnes per year. Demand is being driven by human food use, rather

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than industrial demand as observed in other parts of the world such as Europe. India imports roughly 75% of

its vegetable oil requirements.

Palm oil is the dominant vegetable oil consumed in India with nearly 50% market share, followed by soybean

oil (27%), rapeseed/canola oil (13%), and sunflowerseed oil (9%). Palm oil consumption is also the fastest

growing at 600 thousand tonnes per year, followed by soybean oil (300 thousand tonnes) and sunflowerseed

(120 thousand tonnes). Indian rapeseed/canola oil consumption growth has been relatively sluggish at just

40 thousand tonnes per annum during the past decade.

Fig 7: Indian Vegetable Oil Consumption Fig 8: Indian Vegetable Oil Consumption Growth

As with any country, India’s demand for vegetable oil could be satisfied through either domestic production

of oilseeds (such as soybeans which are then “crushed” to produce two separate products of vegetable oil

and vegetable meal), imports of oilseeds, and/or direct imports of vegetable oil.

For India, domestic vegetable oils production (from both local and imported oilseeds) has stagnated between

6-7 million tonnes over the past decade, while consumption has increased by 9 million tonnes to current

levels of around 20 million tonnes. As a result, Indian vegetable oil imports have surged by 9 million tonnes

over the past decade to 14 million tonnes per annum, equating to average annual growth of 12%.

Fig 9: Indian Vegetable Oil Balance Sheet Fig 10: Indian Vegetable Oil Consumption Growth

India’s focus on importing vegetable oils, as opposed to “whole” oilseeds like China, is a direct result of

India’s small domestic consumption of vegetable meal. Vegetable meals are high in protein and most

commonly used for livestock feed. And India’s currently small and immature intensive animal sector means

demand for livestock feed, and therefore vegetable meals, is relatively small. For example, in 2017/18 India’s

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total meal consumption3 is estimated at 15 million tonnes, and has grown by an average rate of 500

thousand tonnes per annum over the past decade. In contrast, China’s total meal consumption is estimated

at 93 million tonnes and has grown by 4.3 million tonnes each year over the past decade.

In India, meal has been a somewhat unwanted by-product of the local oilseed industry, and has meant that

India has historically been a net-exporter of vegetable meal to the rest of the world. Between 2005/06 and

2013/14 India was a net-exporter of around 6 million tonnes per year, predominantly comprising soybean

meal (~80%) and rapeseed/canola meal (~20%).

However India’s demand for protein meal is starting to rise strongly, supported by the development and

growth in the livestock sector. In the past three years, Indian protein meal demand has risen by over 900

thousand tonnes each year, nearly double the annual growth seen in the past decade. As a result India’s

meal supplies are becoming more tightly balanced, and exports have declined precipitously. In the past three

years India’s net-exports of meal have averaged just 1.2 million tonnes.

If India’s protein meal consumption continues to grow at rates seen in recent years, India will likely have a

net-import requirement for meal. This in turn implies that India will likely import more whole oilseeds, which

will then be crushed domestically to produce both oil and meal, as opposed to their current practice of

focussing on vegetable oil imports. Australia’s canola-based oilseed industry has the potential to benefit

from these evolving dynamics.

Fig 11: Indian Protein Meal Production and Use Fig 12: Indian Protein Meal Exports and Imports

2.5 Pulses

India is undoubtedly the home of pulses. Pulses are grain legumes produced mainly for human consumption

and include dried peas, chickpeas, lentils, mung beans, faba beans and lupins. Pulses are nutritionally rich,

high in protein, and help form the backbone of India’s predominantly vegetarian diets.

In 2014/15 India produced around 20 million tonnes of pulses, accounting for over a quarter of global

production. Canada followed with ~6 million tonnes or 8% market share. Australia was the ninth largest

pulse producer with 2.2 million tonnes in 2014/15. Indian pulse production has grown rapidly in recent

years, lifting from 14 million tonnes in 2009 to 20 million tonnes in 2014/15.

3 Includes copra, cottonseed, fish, palm kernel, peanut, canola, soybean and rapeseed meals.

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Despite strong production growth, India has become an ever important importer of pulses, driven by

insatiable demand growth. In 2012 and 2013 India imported roughly 3.5-4.0 million tonnes, equating for

nearly 30% of global trade. However, Indian pulse imports surged to 4.5 million tonnes in 2014, 5.4 million

tonnes in 2015 and 6.2 million tonnes in 2016. Canada is the world’s largest pulse exporter with ~35%

market share, followed by Australia with 15% market share.

Fig 13: Global Pulse Production by Country Fig 14: Global Pulse Imports by Country

Indian pulse production4 is dominated by chickpea (gram) with 9 million tonnes or 43% market share in

2016/17, followed by pigeon pea (tur) 18%, and black gram (urad) with 9%.

In 2016/17, peas are expected to contribute half of all India’s 6.2 million tonne pulse imports, followed by

chickpeas (14%, 870 thousand tonnes), lentils (12%, 750 thousand tonnes), pigeon peas (10%, 650 thousand

tonnes) and mungbeans (9% or 580 thousand tonnes).

A rebound in Indian pulse production in 2016/17, particularly for pigeon peas, black gram and mungbeans,

resulted in lower import needs in late 2016 and early 2017. Indeed, in August 2017 the Indian government

announced import limits on pigeon peas, black gram and mungbeans as prices paid to farmers fall below

designated minimum support prices5. There has been no announcement regarding chickpeas and lentils.

Given India’s importance in the global pulse market, year-on-year changes in Indian production, prices and

import conditions have a significant bearing on global trade and prices.

Fig 15: Indian Pulse Production by Type Fig 16: Indian Pulse Imports by Type

4 Source: http://agricoop.nic.in/statistics/advance-estimate-apy-english 5 https://www.graincentral.com/cropping/pulses/export-run-out-limits-aussie-exposure-to-indian-pulse-policies/

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3. Indian Imports by Region

3.1 General

India’s total grain imports (excluding vegetable oils and meals) rose to 8.5 million tonnes in 2016, up from

just 3.8 million tonnes in 2012, with value of US$4.5 billion. Pulses contributed roughly 73% of the volume,

and nearly 90% of the value of Indian grain trade in 2016.6 Wheat contributes 22% of Indian grain trade by

volume in 2016 after being virtually nil from 2012 to 2014.

Canada remains the largest supplier of grains, oilseeds and pulses to India, driven by the pulse trade, with

27% market share by volume. Australia is the second largest supplier with 18% market share, followed

closely by Ukraine with 17% market share.

In addition, India imports 28-30 million tonnes of vegetable oils per annum, comprising 58% palm oil and 27%

soybean oil. The value of India’s vegetable oil imports is around US$10.5 billion in 2016. Indonesia and

Malaysia have ~60% market share of the Indian vegetable oil market, driven by palm oil trade, followed by

Argentina with 22% share driven by soybean oil trade.

Fig 17: Indian Grain Imports by Commodity Fig 18: Indian Grain Imports by Origin

3.2 Wheat

Indian wheat imports in 2016 were 2 million tonnes according to the United Nations, with imports from the

Ukraine surging to over 1 million tonnes (from virtually nil the year prior). Australian exports to India in

calendar year 2016 reached 660 thousand tonnes, up from 457 thousand in 2015, however Australia’s market

share fell from 90% to 35% on the back of Ukraine competition.

Monthly export data from the Australian Bureau of Statistics (ABS) indicates Australian wheat exports

reached 920 thousand tonnes in 2016, and have surged to more than 1.7 million tonnes in the first six

months 2017, including a monthly record of 874 thousand tonnes in January 2017. For the 2016/17

marketing year (1 Oct to 30 Sep), Australian wheat exports to India have already surpassed 2.2 million

tonnes. Virtually all of Australian wheat exports are bulk.

In India, wheat is mostly used as 'atta' (whole wheat flour) in the form of rotis, chapatis, and similar flat

breads. However there is a significant growing trend towards western foods such as burgers, pizza and

6 Source: UN Comtrade https://comtrade.un.org/ (August 2017)

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breads that do not favour the performance of many locally produced wheat, which in turn supports demand

for Australian APW and ASW style wheats.

Fig 19: Indian Wheat Imports by Origin Fig 20: Australian Wheat Exports to India

Fig 21: Australian Wheat Exports to India, Monthly Fig 22: Aust Wheat Exports to India, Cumulative

3.3 Pulses

Indian imports of Australian pulses are forecast at 870 thousand tonnes in 2016 according to the UN

Comtrade database, equating to 15% of India’s 6.2 million tonne total pulse import market. Australian’s

export of pulses have grown by 11.5% pa from 500 thousand tonnes in 2012. Chickpeas dominate Australia

pulse exports to India with over 80% market share, followed by peas (8%), mungbeans (6%) and lentils (4%).

Australia’s export mix is in contrast to Canada – the largest supplier of pulses to India with ~2.0-2.5 million

tonnes per year– which is dominated by peas (71%) and lentils (28%).

Fig 23: Indian Pulse Imports by Country Fig 24: Indian Pulse Imports from Australia

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In terms of market share for India’s major pulse import, pea imports are dominated by Canada (50% market

share); Chickpea imports are dominated by Australia (80% share); lentils are dominated by 82%; and

mungbeans are dominated by Myanmar (63%). Australia ranks in the top five suppliers for each major pulse.

Fig 25: Indian Pea Imports by Origin Fig 26: Indian Chickpea Imports by Origin

Fig 27: Indian Lentil Imports by Origin Fig 28: Indian Mungbean Imports by Origin

The latest ABS monthly export data shows Australia’s chickpea exports to India at 1.36 million tonnes in the

2016/17 marketing year-to-date (nine months from 1 Oct to 30 Jun), already surpassing the previous full year

record of 685 thousand tonnes in 2015/16. Australian exports of chickpeas to India display very strong

seasonality, peaking in December. Traditionally, 75% of Australian chickpea exports to Indian are shipped in

the five months between October and February.

Fig 29: Australian Chickpea Exports to India Fig 30: Aust Chickpea Exports to India, monthly

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4. Current barriers to trade in grains and other challenges

There is significant government intervention in the Indian agriculture and food sectors. The following box is

abridged from the 2014 ABARES Report, What India wants: Analysis of India's food demand to 2050.7

7 Hamshere, P, Sheng, Y, Moir, B, Gunning-Trant, C & Mobsby, D 2014, What India wants: Analysis of India's food demand to 2050, ABARES research report no. 14.16, Canberra, November. CC BY 3.0. http://data.daff.gov.au/data/warehouse/9aat/2014/aifd50d9aat/AnalysisIndiaFoodDemandTo2050_v.1.0.0.pdf

Indian Agricultural and Food Policies

India's agricultural and food policies have three broad objectives: food security, food self-sufficiency and income

support for farmers. Among the many policies employed to meet these objectives are the subsidised prices of

staple grains paid by consumers and the guaranteed minimum support prices (MSP) received by farmers for their

grain. These policies insulate consumers and producers from market price movements. However, their financial

cost to the Indian Government is significant and increasing.

Minimum support prices (MSPs)

Grain producers in India are eligible to receive MSPs, which are underpinned by procurement by the Food

Corporation of India (FCI), state governments and other state agencies. Producers are able to sell as much as they

wish to procurement agencies at set prices, subject to quality. Procured grain is stored in government stocks.

The minimum support prices for wheat, rice and coarse grains (maize, barley, grain sorghum and millet) have

generally been raised each year. MSPs are set by the Commission for Agricultural Costs and Prices. The commission

takes into account factors such as the costs of production and the condition of domestic and world markets.

Input subsidies

The Government of India also supports farmers through a range of input subsidies. Fertiliser support is one of the

largest input subsidies, whereby the government controls fertiliser prices and pays the difference between the

controlled prices and market prices. Other subsidised inputs include irrigation, electricity, diesel and seeds. One

example of a program that administers such subsidies is the National Food Security Mission, a targeted program

aimed at increasing wheat, rice and pulse production. Through this program, producers of these commodities

receive subsidies for seed, inputs and product-specific investments, such as water pumps and sprinkler sets.

Import tariffs

Import tariffs, which are applied to most imported food products, keep domestic food prices above world levels. In

the case of grains, increased prices support the purchasing operation of the FCI. For most other commodities, there

is no effective mechanism, such as stockpiling policies, to maintain the minimum support prices. While applied tariff

rates have declined significantly since 1991, they remain among the highest in the world.

Food subsidies

The Indian Government operates a subsidised food distribution program to combat food insecurity. Under the

scheme, low cost food grain is made available to Indian consumers through the Targeted Public Distribution System

(TPDS). The FCI provides grain to the TPDS from government stocks. The need for subsidised food in India arises

from two sources: the existence of a section of the population living in poverty and the impact of policies (such as

the maintenance of MSPs and tariffs) that keep food prices high.

India's consumption, production and trade of agricultural products will continue to be influenced by the

government's agricultural policies.

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4.1 Specific requirements on the export of Australian grains to India

There are a range of reasons why increased exports of Australian grains to India could benefit both India and

Australia. However, there are also a range of practical issues to consider in the import process.

4.1.1 Import conditions

Indian import conditions are based on the Plant Quarantine (Regulation of Import into India) Order, 2003.

India does not require import permits for plants and plant products including grains and seeds. For detailed

information on the import conditions for all plants and plant products for export to India, refer to India’s

Plant Quarantine (Regulation of Import into India) Order, 2003 (India’s Plant Quarantine Order)

(http://plantquarantineindia.nic.in/pqispub/pdffiles/pqorder2015.pdf). A summary of these import

conditions is provided in Section 4.1.4.

If a commodity does not have import conditions set in India’s Plant Quarantine Order, India requires the

Department of Agriculture and Water Resources (DAWR) to negotiate for market access so that India can

develop import conditions under their Plant Quarantine Order. DAWR is the Australian Government agency

responsible for negotiating import and export agricultural market access with Australia’s trading partners.

To obtain market access for a grain commodity that does not currently have access to India, industry will

need to submit a market access proposal to the Grains Industry Market Access Forum (GIMAF). GIMAF is the

body responsible for liaising with the Australian industry sectors it represents and advising DAWR on the

national priorities for market access activities across all of these industry sectors.

Once DAWR has prioritised a commodity based on GIMAF’s advice, it will start negotiations with India. India

will assess the biosecurity risk associated with the import of that commodity and consult with DAWR to

finalise import conditions that will address these risks. Once market access has been granted and these

import conditions have been published in India’s Plant Quarantine Order, trade can commence.

Key Concerns

The key concerns relating to India’s import conditions for grains and seeds are India’s nil tolerance for the 31

weed seeds of quarantine concern, the nil tolerance for ergot in wheat and the mandatory requirement for

methyl bromide fumigation for quarantine pests.

India have released draft import conditions for wheat for consumption where they intend to align the current

import conditions for wheat for consumption to the more stringent ones for seed for sowing. The

Department of Agriculture and Water Resources (DAWR) has provided Australia’s feedback to India on these

draft import conditions. In this feedback, Australia has requested that India reconsider the list of quarantine

pests that India has identified as being associated with wheat for consumption and the requirement for total

freedom from the weed seeds of quarantine concern and ergot. DAWR continues to discuss this submission

with India.

Since 1 January 2005, all uses of methyl bromide, other than for certified quarantine and pre-shipment (QPS),

approved feedstock applications, or approved under critical use exemptions, have been prohibited in

Australia under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 (the Act). The

manufacture, import and export of methyl bromide are also controlled under the Act and associated

regulations. DAWR has approached India to discuss alternatives to methyl bromide fumigation such as a

systems approach to manage live insects in grains, phosphine and sulfuryl fluoride fumigation. To date, India

has not approved any alternative to mandatory methyl bromide fumigation.

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4.1.2 Tariffs

As described in previous sections, India subjects agricultural commodities to high levels of tariffs on import.

Tariffs facing exporters are generally unclear, with very high bound rates, statutory duties reported to the

World Trade Organization, and an actual applied rate which is paid on import.

Of particular interest for Australia are the tariffs on grains and pulses. These are bound between 50 and

100%, and are frequently changed based on Indian domestic production levels and market prices. A range of

grain and pulse tariffs are summarized in Table 1 below.

Table 1: Tariffs on Australian Grain Imports to India

Applied Tariffs faced by Australian Imports

(%)

Other

Wheat Seed 10 MFN 0% SAFTA LDC

Grain 0 MFN

Barley Seed 0 MFN

Grain 0 MFN

Sorghum Seed 50 MFN 0% LDC

Grain 50 MFN 0% LDC

Oats Seed 0 MFN

Grain 0 MFN

Maize Seed 50 MFN 0% LDC

Grain 50 MFN 0% LDC

Canola Seed 30 MFN

Grain 30 MFN

Pulses Lupins 15 MFN 0% LDC

Chickpeas 0 MFN 0% LDC

Lentils 0 MFN 0% LDC

Peas (various) 0 MFN 0% LDC

Pigeon Peas 30 MFN 0% LDC

Broad Beans 0 MFN 0% LDC

LDC: Preferential duty scheme for least developed countries (LDC)

MFN: Most Favoured Nation under WTO

SAFTA LDC: South Asia Free Trade Agreement LDC Countries: Afghanistan, Bangladesh, Bhutan, Maldives, Nepal

Source: WTO, TAO

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4.1.3 Import Clearance Process

One of the key risks exporting grains to India is the import clearance process. In order to expedite cargo

through ports, pre-clearance is undertaken. However, if receipt of goods is not subsequently undertaken and

payment made, there is no mechanism for the re-export of grains from India. This results in distressed cargo

and the need to quickly find an alternative Indian buyer, generally at a significantly lower price.

Exporters to India cite this as a significant risk of trading grain to India, and only negated if you have a long

standing relationship with a local agent, which itself comes at a cost. Such a cost and arrangement is

generally not sustainable if the trade presents itself only opportunistically.

4.1.4 Import Conditions - Details

As per MICoR Plants on 20th August 2017

N.B. This information was only current at time of publishing and exporters must always check MICoR Plants

for current importing country requirements.

Wheat (Triticum spp) for consumption

Wheat exports to India require a phytosanitary certificate with declarations endorsing freedom from Granary

weevil (Sitophilus granarius), Rye ergot (Claviceps purpurpea) and the quarantine weed seeds as per schedule

VIII of India’s Plant Quarantine Order. The phytosanitary certificate also needs to endorse that the wheat has

been undergone treatment with methyl bromide at 32 g/m3 for 24 hours at 21˚C or above.

New quarantine conditions have been proposed by Indian Plant Quarantine for following pests:

Ephestia elutella

Trogoderma variable

Erwinia rhapontici

Pseudomonas fuscovaginae

Magnaporthe oryzae subsp. Triticum

Note: All of these pests with the exception of the last one are present in Australia.

Barley (Hordeum spp) for consumption

It requires a phytosanitary certificate with declarations endorsing freedom from Granary weevil (Sitophilus

granarius), nil tolerance for Rye ergot (Claviceps purpurpea) quarantine weed seeds as per schedule VIII of

PQ order 2003 and soil. It has to be fumigated with Methyl bromide at 32 g/m3 for 24 hours at 21˚C or above.

Alternatively, fumigation with Alimimium phosphide at 9 g/tonne (2.25 g/m3 when using aluminium

phosphide tablet). The details of the treatment are to be endorsed on a phytosanitary certificate.

Malting Barley (Hordeum spp) for processing

It requires a phytosanitary certificate with additional declarations endorsing freedom from Granary weevil

(Sitophilus granarius), nil tolerance for Rye ergot (Claviceps purpurpea), quarantine weed seeds as per

schedule VIII of PQ order 2003 and soil. It has to be fumigated with methyl bromide at 32 g/m3 for 24 hours

at 21˚C or above. The details of the treatment are to be endorsed on a phytosanitary certificate.

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Sorghum (Sorghum spp) seed for sowing

We have market access for Sorghum seed for sowing which is not a big market. It requires a phytosanitary

certifiacte with additional declarations endorsing freedom from (a) Bacterial blight (Burkholderia

andropogoni), Bacterial leaf streak (Xanthomonas vasicola pv. holcicola), Milo disease (Periconia circinata),

Striga weed (Striga harmonthica), Sorghum chlorotic spot virus, and Sorghum mosaic virus.

No access for sorghum for consumption.

Oats (Avena sativa) for consumption and stockfeed

It requires an import permit and treatment with Methyl bromide at 80g/m3 for 24 hours at 21˚C. The details

of the treatment are to be endorsed on a phytosanitary certificate. It also requires freedom from Stem

nematode (Ditylenchus dipsaci), Culm rot: cereals (Fusarium culmorum), Foot rot: cereals (Monographella

nivalis), Sharp eye spot of cereals (Ceratobasidium cereale), Flat grain beetle (Crytolestes ferrugineus),

Warehouse beetle (Trogoderma variabile), 31 Quarantine weed seeds as per schedule

Chickpeas (Cicer) for consumption

It requires mandatory treatment with Methyl bromide at 32 g/m3 for 24 hours at 21˚C r. The details of the

treatment are to be endorsed on a phytosanitary certificate. Freedom from 31 Quarantine weed seeds as per

schedule VIII of PQ order 2003 and soil has to be endorsed on the phytosanitary certificate.

Mung beans, Adzuki beans, cowpea (Vigna spp) for consumption

It requires an import permit and treatment with Methyl bromide at 32 g/m3 for 24 hours at 21˚C or above.

The details of the treatment are to be endorsed on a phytosanitary certificate. Freedom from 31 Quarantine

weed seeds as per schedule VIII of PQ order 2003 and soil has to be endorsed on the phytosanitary

certificate.

Canola (Brassica napus; Brassica rapa)

Canola exports to India require devitalisation of the seed or freedom from 31 Quarantine weed seeds as per

schedule VIII of PQ order 2003, and soil. These need to be endorsed on the phytosanitary certificate.

Lupins – splits (Lupinus spp) for consumption

It requires manda treatment with Methyl bromide at 32 g/m3 for 24 hours at 21˚C The details of the

treatment are to be endorsed on a phytosanitary certificate. Freedom from Phomopsis seed decay

(Phomopsis longicolla), Stem blight of lupins (Phomopsis leptostromiform) and Phytophthora root, stem rot

(Phytophthora sojae),31 Quarantine weed seeds as per schedule VIII of PQ order 2003 and soil has to be

endorsed on the phytosanitary certificate.

Lentils (Lens culinaris) for consumption

It requires a phytosanitary certificate with additional declaration endorsing freedom from Stem and bulb

nematode (Ditylenchus dipsaci), 31 Quarantine weed seeds as per schedule VIII of PQ order 2003

and.Consignments are tp be treated with Methyl bromide at 32 g/m3 for 24 hours at 21˚C or above. The

details of the treatment are to be endorsed on a phytosanitary certificate.

Millet

Australia does not have market access for millet to India.

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Broad beans/Faba beans (Vicia faba) for consumption

It requires a phytosanitary certificate with additional declaration endorsing freedom from Soybean cyst

nematode (Heterodera glycines), Stem and bulb nematode (Ditylenchus dipsaci), 31 Quarantine weed seeds

as per schedule VIII of PQ order 2003 and soil. Consignments are to be fumigated with Methyl bromide at 32

g/m3 for 24 hours at 21˚C or above. The details of the treatment are to be endorsed on a phytosanitary

certificate. has to be endorsed on the phytosanitary certificate.

Maize (Zea mays) for consumption or processing

It requires a phytosanitary certificate with additional declaration endorsing freedom from Maize ergot

(Claviceps gigantean), Larger grain borer (Prostephanus truncatus), Maize weevil (Sitophilus zeamais) and

soil. Consignments are to be fumigated with Methyl bromide at 32 g/m3 for 24 hours at 21˚C or above. The

details of the treatment are to be endorsed on a phytosanitary certificate.

Peas (Pisum spp) for consumption

It requires a phytosanitary certificate with additional declaration endorsing freedom from Pea cyst nematode

(Heterodera goettingiana), Stem and Bulb nematode (Ditylenchus dipsaci) and Bruchids (Bruchidius spp

Specularis impressithorax), 31 Quarantine weed seeds as per schedule VIII of PQ order 2003 and soil.

Consignments are to be treated with Methyl bromide at 32 g/m3 for 24 hours at 21˚C or above. The details of

the treatment are to be endorsed on a phytosanitary certificate. Freedom from has to be endorsed on the

phytosanitary certificate.

Safflower (Carthamus tinctorius) for Processing

It requires freedom from 31 Quarantine weed seeds as per schedule VIII of PQ order 2003 and soil endorsed

on the phytosanitary certificate OR seeds are to be devitalized by heat treatment at 120˚C for 15 minutes.

Poppy seed (Papavera somnifera) for consumption

It requires a phytosanitary certificate with no additional declarations or treatment.

Various seeds for sowing

Australia has market access for a range of seeds for sowing. Seeds for sowing require phytosanitary

certificate with additional declarations. The endorsement may vary from seed to seed. Please refer to Plant

Quarantine (Regulation of Import into India) Order, 2003

(http://plantquarantineindia.nic.in/pqispub/pdffiles/pqorder2015.pdf) for details.

Page 19

Contact:

Luke Mathews | Trade & Economics Manager | Grain Growers Ltd E: luke.mathews@graingrowers.com.au | P: +61 0 9286 2000 | M: +61 409 641 427

About GrainGrowers

GrainGrowers is an independent and technically resourced, grain farmer representative organisation

with 17,500 members across Australia. GrainGrowers’ goal is a more efficient, sustainable and profitable

grain production sector that benefits all Australia grain farmers and the wider grains industry.

GrainGrowers has three divisions which work cooperatively to achieve improved grain industry

outcomes: 1) Capability Building, 2) Industry Engagement and 3) Policy and Innovation.

Trade & Market Access is a key focus within Policy and Innovation and GrainGrowers has the specific aim

to:

Drive the development and implementation of positive international trade and market access outcomes

for the Australian grains industry and its customers.

Australian grain farmers annually grow some 45 million tonnes of wheat, barley, oats, sorghum, canola

and pulses such as chickpeas and faba bean, which at the farm gate alone is worth value of $13.5 billion.

This production generates more than 170,000 jobs in rural, regional and metropolitan areas across

Australia. Over 70% of Australia’s grain production is exported, earning some $11.4bn in export earnings

annually, and accounting for more than a quarter of all agricultural export earnings. Furthermore,

domestic sales of grain underpin the fortunes of other important export industries such as the red meat

and dairy industries.

Trade is vital for the Australian grains industry, and grains deliver significant export earnings for Australia

and employment across rural, regional and metropolitan Australia. Where there are opportunities to

engage in agreements which assist the competitiveness of Australian grains in international markets, it is

imperative Australia does so.