Diplomatic Tensions Threaten Agriculture and Food Security: The Indo-Canadian Rift

In a recent turn of events, Canadian Prime Minister Justin Trudeau has accused ‘Indian agents’ of being involved in the killing of a pro-Khalistani separatist in Canada. This accusation has sparked an international crisis with far-reaching consequences, touching not only the realm of politics but also agriculture and food security.

By Indra Shekhar Singh , 30 Sep 2023

Canada asserts that it possesses substantial evidence, obtained through the ‘Five Eyes’ intelligence network, which points to the direct involvement of the Indian government in the aforementioned killing. However, the Indian government has vehemently denied these allegations. While the dispute unfolds on the political stage, the repercussions could be dire, affecting three key areas: agriculture, trade, and food security in both nations.

Agriculture as a Diplomatic Lever

From an agricultural perspective, Canada wields a few bargaining chips in its relationship with India, with lentils at the forefront. Canada has become a significant source of lentils for India. Last year alone, India imported $1.4 billion worth of lentils from Canada to meet its growing food needs. The Indian agricultural sector has been grappling with erratic weather conditions, which have adversely impacted lentil and oilseed production. Canadian lentils have played a pivotal role in mitigating inflation and substituting ‘Masoor’ dal for ‘Tur’ dal. Furthermore, Canada has been exporting masoor dal to India in substantial quantities, making it the largest exporter of masoor to the country. In essence, Canada serves as a primary producer of affordable vegetarian protein for India, and the disruption of Canadian supplies may endanger Indian food security.

India has also relied on Canada to address the shortage of white and yellow peas, which are essential in compensating for the shortage of chickpeas. Poor harvests and low yields had exerted pressure on chickpea reserves, and these legumes were distributed through the Public Distribution System (PDS) for some time. Canada has emerged as the leading exporter of these peas to India, potentially averting a deeper food crisis.

Canada is also a source for oilseeds, edible oil (canola oil), and feed cake for poultry and cattle. As many of us already know, edible oils and lentils are both major forex drains for India. Yet, we bear the expense to ensure Indian granaries are well stocked. With sesame and groundnut production already affected early this year, there is additional pressure on the edible oil sector. We are actively looking for more exporters of edible oil for the Indian diet.

Lentil Crisis and Trade Implications

On the issue of lentils, the Indian government, apprehensive about an imminent lentil crisis, has taken aggressive measures by implementing stocking limits and, recently, announcing an anti-hoarding drive that extends until December. Additionally, stock limits for retailers and distributors have been reduced from 200 tonnes to 50 tonnes. This marks the first time, since the introduction of farm laws, that such stringent measures under the Essential Commodities Act have been enforced. These actions are directly connected to Canada, as India faces a clear shortage of pulses. Oilseeds present a similar challenge, and the government appears to be navigating from one crisis to another, with tomatoes, onions, sugar, and rice adding to the list of election campaign woes. For all practical purposes, alienating India’s major pulses and edible oil supplier in one blow may be detrimental to our food security goals.

Let’s also not forget the trade aspect. In addition to Canadian imports, Canada also serves as a destination for Indian food exports. The Agricultural and Processed Food Products Export Development Authority (APEDA) maintains an annual analysis of the growing food exports to Canada. Should diplomacy falter, the spectre of a trade war looms, which could result in the closure of Canadian markets to Indian exports and Indian markets to Canadian products. This could lead to rising food prices and further inflationary pressure on people’s wallets.

The Potash Predicament

Canada’s second major bargaining chip in this dispute is fertilizer, particularly potash. Canada holds the world’s largest reserves of potash, which is an essential component of the industrial agricultural fertilizer known as muriate of potash (MOP). It is estimated that Canada has over 30% of the world’s reserves and is also the top producer of the fertilizer.

India has heavily depended on Canadian exports of MOP, in addition to imports from Russia and Belarus. Now, given that agri-chemical fertilizer prices have been skyrocketing, with DAP reporting a 25% jump, India has only a few options left to get cheap MOP. Indian officials and the Indian Potash industry have actively courted Canada to ensure the uninterrupted supply of potash because Indian food security depends on it.

Canada, to increase diplomatic pressure, could easily ban all Canadian-origin potash from reaching India. This would be disastrous for Rabi sowing and harvests. The ongoing Ukraine-Russia conflict further compounds global fertilizer prices. Until the Black Sea deal is reached, India will have to carefully navigate the global fertilizer landscape. China, another major producer, remains at odds with us. By pushing out Canada, India has only a few limited options, who wouldn’t fail to extract the maximum they can from an MOP deal with India. Consequently, the Indian food economy is susceptible to substantial inflationary pressure in most scenarios.

Navigating the Path Forward

Years of erratic rains and below-average harvests in India are no secret to the global community. India braces itself for a potential food shock, with the aim of averting a crisis before the upcoming elections.

In conclusion, one must remember Henry Kissinger’s famous strategy for domination: “If you want to control a nation, control their oil, but if you want to control the people, control the food.” India’s food security is currently on shaky ground, with predictions of a lower-than-average Kharif output. So, Canada is playing right into our weak spots. It remains to be seen whether Canada, by leveraging control over food and fertilizers, can exert sufficient pressure on India or whether India will successfully navigate this challenge while ensuring its population remains well-fed and content, without succumbing to Canadian pressure. The outcome of this dispute could have far-reaching consequences for both nations and the global food landscape.