NEW YORK (Reuters) - Trade risks that sprang up this year in India and Pakistan, key markets for the lentils that Canada’s AGT Food and Ingredients Inc sells, look likely to be resolved soon, Chief Executive Murad Al-Katib said on Wednesday, but added the company is maintaining a cautious approach to sales there for now.
Uncertainty about whether India would continue to exempt Canada from its policy that crops must be fumigated for pests in the country of origin caused AGT and other Canadian exporters to halt shipments there in winter.
India gave Canada an extension, but only until June 30. Pakistan has given Canada until November with similar conditions.
AGT has shipped minimal volumes to those markets, but expects sales to gradually increase shipments leading into Canada’s harvest period starting in August, Al-Katib said.
“With uncertainty in the market, at times the best strategy is to pause and see how the chips fall,” Al-Katib said on the sidelines of BMO’s Farm to Market investor conference in New York. “We remain cautious on India and Pakistan.”
Lentils are a protein-rich food part of the pulse crop family. India imports some C$1.1 billion ($808.65 million) worth of pulses annually from Canada, the biggest exporter.
Al-Katib said he soon expects a resolution from India, the world’s largest importer of pulses, given its recent draft policy. Its plant quarantine authority on May 3 circulated a policy that includes monitoring Canada’s system of pest-control as shipments go ahead.
AGT’s shares in Toronto have plunged some 16 percent in less than two weeks, after an analyst speculated that its quarterly performance would miss his expectations. The company hastily released its quarterly results early, including a fall in gross profit.
“The first half of the year is going to be constrained (for AGT), but the rest of the year looks very positive,” Al-Katib said, declining to quantify how the shipping slowdown may affect revenues.
Part of the optimism is due to the fact that farmers in Western Canada have benefited from favorable lentil and pea planting conditions this spring, he noted, after earlier concerns about too much moisture abated.
Sowings are expected to be sharply lower, however, after a big harvest last year weakened prices.
Reporting by Rod Nickel in New York, editing by G Crosse