A dispute between two agricultural traders in Mozambique is hitting the pockets of consumers thousands of miles away in India.
Prices of pigeon peas — a crop used to make tur dal that many poor families turn to for protein — had already surged in India as bad weather hurt local harvests.
Now, they’re getting even pricier as imports from Mozambique have been delayed. That’s because of a legal spat between Mitsui-backed ETC Group — known as ETG — and Mozambican company Royal Group.
Royal in December began seizing ETG’s cargoes in the port city of Nacala, and then last week did the same in Beira. They followed what Mozambique’s finance minister has labeled “technical barriers” that he said had unnecessarily blocked exports of the crop.
The battle between ETG and Royal goes back to 2022, when India impounded a Royal shipment of crops from Mozambique, saying Royal misdeclared the cargo as non-genetically modified. ETG has said Royal wrongly accused its employees of tipping off Indian authorities, while claiming almost $61 million in damages from ETG.
The fight also puts at risk hundreds of thousands of small-scale farmers in Mozambique, one of the world’s poorest countries. Some 1 million growers exported more than $120 million of pigeon peas in 2016, after Indian Prime Minister Narendra Modi signed a deal for his country to source supplies from Mozambique.
India normally imports as much as 200,000 tons of the pulse from Mozambique, but has removed a quota to allow for unlimited imports. Prices jumped almost 30% in the past year in India’s capital.
That’s happening as output in the world’s most populous nation is likely to be affected by the El Niño weather phenomenon.
El Niño Watch
The weather pattern has a history of disrupting agricultural powerhouses, and it has returned with a vengeance to Brazil, unleashing torrential rains in parts of the country and leaving others uncommonly dry.
Prices of staples like rice and potatoes are soaring as a result, challenging both the central bank’s plans to continue the interest-rate cuts President Luiz Inacio Lula da Silva demanded and his campaign promises to deliver cheaper fare to everyday Brazilians.
Economists are starting to revise growth estimates downward.