Will agriculture be a victim of India-Canada standoff?

Canada has historically been a dependable potash source. It possesses the world’s largest potash reserves, a vital mineral for industrial agriculture and muriate of potash (MOP) fertilizer production. Would the current stand-off between India and Canada impact India's food economy? Indra Shekhar Singh, Former Program Director for Policy and Outreach, National Seed Association of India (NSAI) explains.

New Delhi:Amidst the escalating diplomatic tensions between India and Canada over the alleged killing of a pro-Khalistani separatist on Canadian soil by 'Indian agents', it is imperative for farmers and politicians in both nations to refocus on agriculture. Failure to mend relations promptly could have detrimental effects on India’s food economy.

Canadian Prime Minister Justin Trudeau has pointed fingers in both parliament and through the media at the Indian government for this incident, resulting in visa suspensions and other diplomatic measures. However, the repercussions may intensify, potentially involving tariffs, trade restrictions, and even the recall of diplomats. But how does this relate to agriculture?

Since the onset of the Russia-Ukraine conflict, fertilizer prices have soared, with Di-ammonium Phosphate (DAP) prices recently surging by 25% and NPK (nitrogen, phosphorus, and potassium) fertilizers following suit. Here’s the connection: Canada possesses the world’s largest potash reserves, a vital mineral for industrial agriculture and muriate of potash (MOP) fertilizer production. With over 30% of global potash reserves and being a top producer, Canada was the primary MOP supplier last year.

Due to the conflict, Russian fertilizer supplies are constrained, leaving India with limited potash sources. Both China and Canada, major potash producers, closely monitor India’s agrarian situation. As relations deteriorate, Canada might leverage this by seeking concessions from India, potentially even pushing for a complete ban on Canadian potash exports to India.

Such a move could have a detrimental impact on India’s food security and harvests. Recognizing this fertilizer risk, Indian policymakers have appealed to Canada to ensure uninterrupted potash supply. Unless India seeks to increase shipments from Russia and Belarus, we might face potential shortages of crucial agri inputs, significantly impacting Rabi sowing and wheat harvests. Canada has historically been a dependable potash source.

Transitioning from fertilizers to food, Canada has long been a vital supplier of prized agricultural commodities to India, including lentils, oilseeds, canola oil, and feed oil cakes, among others. Pulses, particularly Masroor dal, constitute 95% of Canadian exports to India. In recent years, Canada has been India’s leading supplier of red lentils, stabilizing dal prices. Chickpeas, another major protein source in short supply, saw Canada becoming a significant supplier of white/yellow peas to India. Canada has re-emerged as a top supplier.

Considering the challenges facing Indian agriculture, particularly the downturn in lentils and oilseeds production, domestic supplies are already strained. Given the uncertain harvests ahead, India must prioritize its protein and oilseed supplies. In the event of worsening shortages, maintaining a back channel for agricultural trade between the two countries is advisable.

Regarding exports to Canada, India recorded approximately US$4.25 billion in exports during 2022, according to the United Nations COMTRADE database on international trade. This outflow could also be affected, ultimately impacting both nations.

In conclusion, should diplomatic efforts falter, Indo-Canadian relations may enter a chilly phase. However, it’s vital not to let this turmoil affect our agriculture and food security. Neglecting agriculture would harm not just both governments but also the farmers and consumers within their respective nations.