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Weak prices prompt growers to store, market chickpeas

Henry Wells, March 21, 2018

THE CHICKPEA price bubble has well and truly burst, and the cold, hard reality is growers are going to have to be prepared to market the pulse in the same way as they do their cereals.

Chickpea harvest in Madhya Pradesh, India, 2018.

Until last season, the chickpea marketing regime of recent years involved some forward selling during the growing season, and selling for cash straight off the header into a hot market.

It meant profitability was a given for chickpea growers, when strong demand, good quality, and great prices could secure exceptional gross margins.

Now chickpea growers are going to have to market their product throughout the calendar year or beyond, and be prepared to store the pulse and sell on price spikes, in the same way many do with cereals.

Indian impact

Grain marketing team leader with South Australian-based agribusiness advisor, Rural Directions, Chris Heinjus, recently travelled to India to see the marketplace, meet the people and look into the policies affecting them.

“In India, as in Australia, functioning storage or warehousing is key to maintaining choices along the supply chain,” Mr Heinjus said.

Export-focused producers such as Australia and Canada, have farm-output supply chains which can effectively store pulses.

Canada’s challenge this year has been stock of unshipped field peas and lentils.

“In Australia the immediate stock of lentils is relatively small, but chickpeas this year may need to be held in stock for the right time to execute.”

India is harvesting its own winter crop, including chickpeas, now.

Its farmers are bringing chickpeas load-by-load to traditional cash auctions in country locations, often distant from India’s big cities, which make storage and transport fundamental to its food system.

Mr Heinjus said India’s pulse prices were depressed, and its government was smoothing out the supply curve, including offering growers fumigation and warehouse storage concessions for up to four months.

Domestic drivers

Mr Heinjus said meeting with people on the ground in India drove home the importance of domestic Indian government policies which were affecting its pulse market.

“In domestic policy terms, financial survival of India’s farming communities is a primary goal of India’s minimum support price (MSP) scheme,” he said.

“Farmers would attend a physical auction to sell their goods.   In theory, any deficiency in sale price would be covered by a government payment under the MSP.”

However, one of the pathways towards administering the MSP depended on reform of the money supply (i.e. hoovering up paper money and saving it into bank accounts which could assist also in proper assessment of a Goods and Services Tax).

“Demonetarisation is seen as a negative. The cash economy is very strong,” Mr Heinjus said.

Habits of generations would appear hard to change.

Globally, India’s imposition and hiking of Indian pulse tariffs has decimated Australian and Canadian exports to their key market.

“Canada also has borne the brunt of fumigation rules applied to cargo arriving in India.”

Positive future

Also travelling in India recently was AGT Foods Australia CEO, Peter Wilson.  Mr Wilson has a deep relationship with the international pulse trade, and said there was plenty to be positive about in the longer term.

“Not only are 1.6 billion people in the South Asia region continuing to consume vegetable-based protein mainly in the form of pulses, but evolving pulse consumption among meat- protein consumers is building new demand from an almost non-existent base,” he said.

Mr Wilson said chefs and nutritionists had been promoting meal-based pulse usage, while another entire demand segment was emerging in snack-food innovation using kabuli and desi chickpea and faba bean.

Besan, or pea flour, is also a versatile inclusion in evolving diets outside South Asia.

“While the chickpea market presently is going through an unfortunate and savage blip, it is part of a long journey, and at the end of the day, the long-term demand for pulses is very much intact.”

Mr Wilson said Australian growers were fortunate in being able to access high-quality chickpea genetics, and produced some of the best desi chickpea in the world.

“Its climate with a hot, hard finish helps to produce an even-sized seed with well-preserved colour,” he said.

“Quality chickpea put into quality storage will store and out-turn well, retaining its tan-coloured seedcoat.

“Australian desi chickpeas are valued for processing into a golden-yellowy dhal.”

Mr Wilson said volatility was the new normal in pulses, and there were advantages in growers planning capacity to out-turn from storage.

Container trade is an effective and rapid means of nurturing new markets.

 

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