ExclusiveInterviewHAKAN BAHCECI

FeaturedTopic2016 IYOPINTERNATIONAL YEAR OF PULSES

JAN14

Hakan Bahceci on the International Year of Pulses 22

Australian Pulses: Crop and Pricing Outlook 04

Content

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10 A Conversation with Michigan Bean Commission Executive Director Joe Cramer

38 Brazil’s First Bean Harvest 2014: High Yields, Excellent Quality and Low Prices

34 Statistics Canada Reports Increased Pulse Production In 2013

Argentina’s Garbanzo Harvest Falls on Hard Times 16

Slow Start for 2013 China Bean Exports To Americas 30

DirectorNicole Calzacorta

Copy EditorsDario Bard, Charlie Higgins

Editorial TeamDario Bard, Charlie Higgins, Nicole Calzacorta

Editorial Standards ChairmanDario Bard

Contributors:Dario Bard, Charlie Higgins, Dr. Randall Fairman, Daphne Khin Swe Swe Aye, and Ron Maguire

Editorial DesignDiego Fabbri Arpón

Advertising SalesContact Nicole Calzacorta at nicole@goift.com ©IFT Solutions, Corp. 2013 All Rights Reserved / ISSN 0000-0010

FEATURE

Weak export demand has many farmers holding out for better prices, though overall production remains essentially unchanged.

Australian Pulses: Crop and Pricing OutlookBy Charlie Higgins

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With the bulk of Australia’s pulse harvest winding down, growers across the country are reporting an excellent crop in a year of decreased acreage for most crops.

According to Pulse Australia, Southern Australia will produce “one of their best performing pulse crops in the last few years.” Meanwhile, growers in Western Australia are expecting “an exceptionally kind finish” and some of the best faba bean yields in ten years thanks to mild weather and above average rainfall in September.

The main exceptions to what’s been an otherwise abundant crop have been Queensland and New South Wales, where near drought conditions in October constricted the production of faba beans. Frosts have also been reported in southern New South Wales and Victoria, resulting in decreased yield potential for desi chickpeas and field peas. That being said, Ian Mallon, a trader with Mallon Commodity Brokering, says the decreased production in the north shouldn’t change the game significantly.

“The faba bean crop up here in the north is quite small because they had such a dry season, but overall that should be offset by a bit larger crop in the south. We’ve seen little bits of frost damage here and there, but overall you’d say it’s been a fairly smooth growing season for pulse crops in Australia,” he said.

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In general, demand from Australia’s top pulse buyer, Southeast Asia, has been sluggish, encouraging growers to hold on to their chickpeas and lentils. The Middle Eastern faba bean market, meanwhile, remains steady and on par with last year’s levels.

Here’s a closer look at the current situation among the major pulse groups in the Australian market.

All prices are in AUD.

CHICKPEAS

Overall chickpea production dropped around 84,420 MT this year, with Pulse Australia reporting an estimated total volume of 628,980 MT as of November 27. The desi chickpea variety saw the biggest change, decreasing from 635,400 MT in 2012 to 535,780 MT in 2013. Kabuli chickpeas, meanwhile, saw an increase in production, from 78,000 MT to 93,200 MT. Pulse Australia’s Alan Meldrum noted that chickpea acreage was down 64,000 hectares this year, though the area sown to kabuli chickpea was up 26 percent on the 2012 planting.

Chickpea yields and quality are reportedly solid, though Meldrum says Northern New South Wales and Queensland have experienced below average yields with the best at around 1.2 MT/ha. In Western Australia chickpea yields have been above average at 1.2 to 1.6 MT/ha, with the Meckering area reporting yields of 2 MT/ha. Pulse Australia’s Mary Raynes says this “bodes well” for increased chickpea planting in 2014. High yields are also being reported in South Australia and Victoria. No major disease issues have been reported for Australian chickpea crops.

As with other pulse crops, the chickpea export market has been depressed, resulting in low prices to farmers.This situation is encouraging growers to hold on to what they have until demand from Southeast Asia improves.

“Farmers have just sold what they had to sell to relieve the storage for cash flow purposes and have retained everything else on their farm or in bulk storages, so there’s a lot of chickpeas to be sold in Australia,” said Mallon.

Raynes says desi chickpea prices are hovering around $360-380/MT, while kabuli prices are around $400/MT for the Gensis090 variety and $550/MT for the larger Alamz variety.

LENTILS

According to Raynes, lentil production, especially red type, is booming this year, and acreage increased by 34 percent to 246,000 hectares. Pulse Australia reported an estimated production volume of 240,650 MT for red and green lentils as of November 27, compared to 220,500 MT in October of 2012. This trend is expected to continue into next year.

“Global lentil stocks, which have had suppressed prices for the last three years, are finally cleared. Australia exported 350,000 MT in 2013 and Canada has exported more than its entire 2012 crop. This left their stocks at about 25 percent of the stockpile from 2010, with Australia’s stocks essentially empty,” reported Pulse Australia.

Lentil yields have been average to strong throughout Australia. Raynes reported yields of between 0.8 MT/ha to 1.5 MT/ha in the Mallee regions of South Australia and Victoria, while growers in the Yorke Peninsula have seen high yields between 1.85 MT/ha to 2.35 MT/ha. Meanwhile, lentils in the Wimmera region of Victoria suffered a bit due to frost, with red lentils yielding anywhere from 1.0 MT/ha to 2.6 MT/ha, though average yields were around 1.5 MT/ha. No quality issues have been reported other than crops affected by frost and “very slight” ascochyta blight.

Prices for Australian lentils, whose main markets are India, Bangladesh and Sri Lanka, have been somewhat depressed though not as low as that of chickpeas.

“The Australia lentil market is always consistent, however the price does fluctuate like the surf,” says Raynes. “Red lentil prices for the 2013-14 season have rallied since their relative low price last season, and currently growers are being paid $500-575/MT. Over the last decade prices have soared to $1000/MT and dropped to $400/MT.”

“Demand for lentils is fairly soft and you could see prices in that market come down $40 to $50/MT. If that happens it will be the same situation as chickpeas, that farmers will only sell what they chose for storage and hold on to the rest,” said Mallon.

FIELD PEAS

Production of field peas, which are primarily grown in South Australia, has been estimated at 362,900 MT, up a bit from last year’s volume of 319,680 MT. Meldrum says, like chickpeas and faba beans, field pea acreage is down this year, an estimated 33,000 ha lower than in 2012.

Field pea yields in the Esperance region of Western Australia have been above average, at around to 2.3 MT/ha. “Kaspa type” field peas grown in South Australia and parts of Victoria yielded from 1.02 MT/ha to 1.75 MT/ha, while field pea crops in the Wimmera area reported lower yields of between 0.8 MT/ha and 1.8 MT/ha due to intermittent rainfall. Field peas in South Australia were similar, varying from 0.7 to 1.75 MT/ha.

Most field peas are sold domestically for human consumption or stock food, with the main export markets being Southern India and Malaysia. So far Australia has not been able to break into the Chinese pea market, which is dominated by Canadian yellow peas used in vermicelli noodle production. Prices have been more favorable than some of the other pulse crops but not high enough to woo most farmers.

“Faba beans have looked healthy and vibrant all season,” says Raynes. “However, depending on the area, some crops have struggled to convert to yields greater than 1.43 MT/ha as a result of the cool but dry September and October months. Faba beans grown in the medium to higher rainfall region of Wimmera escaped frost damage and are yielding number one quality anywhere from 1.80 MT/ha to 4.43 MT/ha.”

“The prices that have been bid to the farmers related to exports have not really been attracting much interest at all,” says Mallon. “These equate to around $300-320 for a metric ton delivered into the port facility. That’s $50 to $100 below what farmers have seen for a long time, so they won’t be rushing to sell peas at those sorts of levels. I’m trading peas for stock feed, not in big volumes but at $40-50 a metric ton above export values at the moment,” says Mallon.

FABA AND BROAD BEANS

According to Pulse Australia, this year’s faba and broad bean production is estimated at 315,800 MT and 49,500 MT respectively, which is roughly on par with last year’s figures (329,900 MT and 49,500 MT). Overall faba bean acreage was down a bit this year, with 152,100 ha of faba beans and 26,000 ha of broad beans sowed.

In general, faba bean yields have been comparable to recent years, though growers in Central and New South Wales had a bout with frost that did hurt yields. In the Griffith area of New South Wales, farmers reported faba bean yields of between 2.2 MT/ha to 4.0 MT/ha, which was

08 IFTmag

similar to reports out of Victoria’s Kerang region that were anywhere from 2.0 MT/ha to 3.55 MT/ha. In the low rainfall Malee region of South Australia and Victoria, yields were reportedly 1.0 MT/ha to1.52 MT/ha.

A few isolated cases of of Pea Seed borne Mosaic Virus (PSbMV) on faba beans being received in areas of South Australia and Victoria have been observed.

Despite uncertainty and violence in the Middle East, demand for Australian faba beans in the region, a key export destination, has remained decent, with export volume hovering around 230,000 MT. Still, Raynes says prices have dipped $50-75/MT from 2012-13.

“Some growers were able to lock in fixed prices for their beans at $370/MT mid-season and now prices in New South Wales have dropped to $320/MT. South Australian port prices for Adelaide and Wallaroo are varying between $350 and $375/MT. Victorian faba bean price continues to hover around $360/MT up country around Rupanyup to $375/MT at the port of Geelong or Melbourne,” Raynes says.

“Tight numbers at the moment but on the strength of what I’m told there’s good product coming out of Europe and those sorts of places,” says Mallon.

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By Dario Bard

A below average harvest in the U.S. A large crop expected out of Mexico. A bean shortage in Brazil. What does it all mean? Joe Cramer helps us put these and other recent developments in perspective.

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A Conversation with Michigan Bean Commission Executive Director Joe Cramer

Joe Cramer has lived in Michigan his entire life. He grew up on a livestock farm near Big Rapids and later relocated to Frankenmuth to take a job at the Star of the West Milling Company, where he worked up until last year.

“I was introduced to the bean industry at Star of the West, where I started out in the agronomy division,” Cramer reminisces. “Within a few years, in 1989, I had the opportunity to move into the dry bean trading office. And then in 1992, that became my department, and I did that until a year ago, when, after 27 years with Star of the West, I made the most difficult decision of my life to leave them so I could join the Michigan Bean Commission.”

By the time he left Star of the West, Cramer had become passionate about Michigan’s dry bean industry, and he viewed the position at the Bean Commission as an opportunity to broaden his horizons and expand his interaction with other sectors of the industry.

INTERVIEW

IFT: How did the Michigan Bean Commission get its start and what are its primary functions?

Joe Cramer: It’s one of the oldest bean grower associations in the country; it got its start through an act of the state legislature in 1964, and it’s been in place since 1965. The state is divvied up into eight districts, and the governor appoints a commissioner to represent each of those districts plus a representative from the shipping industry. So I answer to a nine-member commission. The Michigan Department of Agriculture has oversight of our finances because we are funded through an assessment paid by the grower: US$ 0.11 per cwt sold in the state. Of that, US$ 0.02 goes to research and US$ 0.09 goes to promotion.

In terms of promotion, our goal is to participate in activities that can increase the consumption of Michigan dry beans. One of the recent activities we are proud of is the event we hosted for bean buyers and quality assurance people from around

Given his background, it is not surprising, that few people know as much about Michigan beans as Cramer. And, because of the international reputation of his state’s black, navy and small red beans, it follows that few people have as global a perspective on the international bean industry as he does.

Following the conclusion of the Michigan bean harvest, IFT caught up with Cramer to discuss the evolving big picture for the international bean industry, and what to expect down the line from some of the major players.

IFT: Tell me about your recent career move. What has been the hardest part about going from trading beans to leading a grower’s group?

Joe Cramer: Trading is like hunting, and, like many traders, I really enjoy the hunt. So it has been difficult to give that up; I miss it every day. But this is an opportunity to make a difference for Michigan bean growers, given all the food safety issues and the mandates that are coming down the pike. This allows me to stay engaged with the end user, and hopefully I have some experience in that part of the business that can help Michigan dry bean growers transition into a more food-safety minded industry; it’s a mindset that started at the cannery, moved down to the processor and is now getting down to the grower. I think I can help that process.

Also, at my trading desk, I didn’t have a lot of exposure to the world of research. That’s very new to me, and it’s been an intriguing part of the job; it’s been fun getting involved with it at a much closer level.

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the world and across the U.S. at the last U.S. Dry Bean Convention held in Chicago last September. Over the course of three days, we took them on a tour of the growing area, visited five processing facilities and wrapped up with dinner at a research farm. The participation was great and we know that some business was done during the event. It was a great opportunity to show off Michigan’s infrastructure, to showcase some of the better bean growers and processing facilities in the country, and highlight the research component that backs up that industry.

Another promotion activity is our long-standing partnership with the Michigan bean shippers and the annual breakfast we host in Mexico City. That brings together Mexican buyers and Michigan industry participants, from growers to dealers to processors. It’s a great chance to talk about last year and this year, and learn about Mexico’s production from the Mexican participants, and then bring that information back and share it with Michigan growers, and better understand how that impacts a wide range of decisions they have to make, from marketing to their current crop to the crop they plan to plant next spring. It’s an event that provides value and that the Commission has been supporting for many years now.

On research, one of the more interesting areas we are spending time on is a color-retention study that focuses essentially on black beans. We’ve heard loudly from many canneries across the U.S. and some from abroad that expressed disappointment because the beans looked great going in the cans, but they lost some of their color when the cans were opened. The canners tell us that years ago, when beans were first being canned, they held their color better, but now they don’t and so they aren’t selling as well. Now, we don’t know if it’s a water, variety or a chemistry issue that is causing beans to lose their color. So we embarked on a study. We hope to begin to see results after January 1, and so begin to identify some of the reasons why this might be happening and what the possible solutions might be. The consumer wants to see a shiny, wet-looking bean out of the can, and if it comes out brown or purple or not glossy black, there’s disappointment. We have scientists at Michigan State helping us fix this problem.

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to create that type of variety, and today the best yielding varieties are upright in structure and farmers enjoy growing them because they don’t have to go out and pull them at 4 a.m., and they don’t have to windrow. They just direct harvest with their combines, and now they can even harvest in poor and wet conditions under which they couldn’t before, and the quality of the bean that is produced is so much better than it used to be. And now of course that upright structure is something you see across the country.

IFT: Do you think there is a chance for Michigan to grow new bean classes?

Joe Cramer: We’ve got pinto and great northern varieties in our test plots that we are excited about. They have the upright plant structure and good yield potential. Michigan hasn’t been a player in the great northern market, and we don’t expect we’ll be taking it over, but we do have end users that are looking for alternatives in that market. And we think it’s good to be able to offer our growers some diversity.

IFT: What are some of the Commission’s important milestones?

Joe Cramer: In 1986, the Commission went to Washington, D.C. and was active, together with the shippers, on developing disaster relief for Michigan growers who suffered from flooding. Also in the ’80s, the Commission had a small role in the contracts signed with the Mexican government, and that really launched Michigan into the colored bean business in a big way.

More recently, Michigan had a big hand in funding the Pulse Health Initiative that will provide US$ 25 million per year for five years for pulse-related nutrition research. If we get a farm bill signed in the next few months, that may prove to be one of the biggest milestones in the Commission’s history. The Commission worked with the office of Senator Debbie Stabenow (MI-D) and with Michigan shippers and a gentleman by the name of Jim Byrum to facilitate the initiative. I think it’s going to be a game changer for our industry.

And of course there’s the research. It was the research segment of the Michigan Bean Commission that developed the varieties that helped black, navy and small red beans to really flourish in the state. The industry told us that one thing they needed to stay in business was to have beans that stood upright like a soybean, so that farmers could, with minor adjustments, take the same equipment used for corn, wheat and soybean into a field of black or navy beans. The Bean Commission worked with Michigan State University

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IFT: Michigan production this year was reported at 3.4 million cwt. How would you characterize this last harvest?

Joe Cramer: Our yields were slightly above average. If you compare it to yields of a decade ago, we got above average yields this year. But frankly, it’s the kind of yields our growers have come to expect. Historically, our yields are probably around 18 bags per acre, but when farmers include dry beans in their rotations nowadays, they assume they are going to get 20 bags. And I think that the varieties we have, with a bit of help from Mother Nature, are very capable of that.

In terms of acres, we were down a bit this year due to corn and soybean prices (editor’s note: 175,000 bean acres were planted according to the USDA’s December 10 Crop Production Report). This next campaign, we are looking to bounce back to 200,000 acres or more.

IFT: What are the major markets for Michigan dry beans?

Joe Cramer: Most of our production goes to U.S. canners and packagers, and about a third is exported. This year, we’ve seen some non- traditional demand, especially for navy beans, which have become an alternative for large white beans as the global supply there has deteriorated.

We have a great relationship with domestic canners, and we truly appreciate them, but having said that, Mexico is a huge market for us, especially for black beans, and it has been for many years. In terms of volume, Mexico is our biggest trading partner. We also put beans into the United Kingdom and the Mediterranean. We’d like to grow that business. Over the years, we lost some tonnage to China and other origination points, but hopefully we can gain some of that back. What happened there is that a few years ago, China was very aggressive with pricing, and some of our customers, particularly in the Mediterranean, were attracted to those bargains, so we lost some volume. But in recent years, we’ve re-established contacts and business is picking up there again.

IFT: Michigan was selected for a pilot insurance program by the USDA Risk Management Agency. How is that going?

Joe Cramer: Our friends in North Dakota and Minnesota began the work on that two years ago. Last year, they ran a pilot operation that worked well. They were receptive to the idea of allowing us to expand that in Michigan. So we worked with Montana-based Watts & Associates, and we had good collaboration from Michigan shippers who supplied the data to them. Watts & Associates developed a program off that data, and it’s being rolled out as we speak. We don’t think it will significantly impact our acreage, but we do hope it will give growers some of the same assurances and security that they’ve enjoyed with corn and soybeans, but have not had with dry beans. So it begins to level the field between those rotational choices, and we think that is very good for our industry.

IFT: The EPA recently proposed a rule to ease ethanol requirements. What might that mean for the US bean industry?

Joe Cramer: I think you’ll see corn and soybean acreage change because of the market impact, and that would open the door for dry bean growers again. I said earlier that we are looking to bounce back acreage-wise next campaign, and I think that’s where the acreage will come from.

IFT: U.S. dry bean production seems to fluctuate a lot based mainly on soybean and corn prices. Is that likely to continue?

Joe Cramer: There is a definite relationship there. If you take corn and soybean acreage and pricing and overlay dry bean acreage and pricing on that, you’ll see they sort of run in tandem. If you happen to be in a big dry bean year, the market seems to adjust pricing to impact acreage to affect supply so that a two or three year supply of dry beans doesn’t build up. Years ago, we got that build up. There wasn’t the discipline in the market we are seeing now. Today, industry players, independent of each other, are studying the corn and soybean situation and really trying to understand the global supply- demand scenario for dry beans. So the market is being developed around the acreage that is needed, more so than the acreage that is wanted. Last year, for example, it was too late for Michigan growers to respond significantly to issues in Argentina. Had that happened a couple of months earlier, the price would have reacted to Argentina and the market would have been asking for more acreage at the last minute; growers would have responded and those acres would have been planted. Except that, in this case, the timing was off by about 30 days.

IFT: The news out of Mexico is that there is a large bean crop coming this year, and that has led to pricing concerns here in the U.S. How do you see that situation?

Joe Cramer: At the Commission, we understand that the crop in Mexico is bigger than what most people originally expected, but we haven’t seen good, conclusive data on it, so that chapter still has to be written. Having said that, we believe there is a segment of Mexico City consumers who, regardless of the size of the national crop, will still buy Michigan black beans. For this segment, it’s about quality and they have become accustomed to eating Michigan beans. That speaks to the exceptional bean put out by our growers and processors. Now, that’s just a segment of the whole market, and it is a price sensitive consumer, but thanks to them, we can expect to move a couple of million bags a year regardless of the supply-demand equation. Even if the market is saturated with national production and prices are depressed, we can count on this market segment and expect that Michigan production will still be able to command a slight premium. That’s not to say we take this for granted. We appreciate our clients there and we work hard to maintain them, but the statistics suggest that regardless of global supply-demand, there will be buyers for that higher quality bean. That’s something we are pretty proud of, and it is a relationship we very much value. The thing, though, is that price becomes a moving target.

Also, you have to consider the global picture, with Argentina’s issues and the situations in Brazil, Cuba, Venezuela and China; put all those pieces together, and you’ll see that we are not by any means drowning in black beans. So Mexico’s influence on the market may not be as significant as it has been historically. The jury is still out on that. In other words, what I’m saying is that if there was a good year for Mexico to have a big crop, this was probably it, because we need a big crop globally.

IFT: A Brazilian trade delegation visited U.S. bean growing areas a few months ago. Do you see the potential to establish a long-term trading relationship there?

Joe Cramer: We hope they’ll become long-term trading partners. It’s a market we’ve known for years and we have some relationships there, but frankly the logistics out of Argentina frequently trump us. But when Argentina stubs its toe, we get a few phone calls from Brazil. We’d love to cultivate those relationships and develop them into what we have in Mexico, but so much hinges on what happens in Argentina that I don’t know if we can ever have that level of success down there. I appreciate the opportunity to meet with them and I hope Michigan processors can put some deals together. Those deals, incidentally, would come easier if we were in fact drowning in beans here in the U.S., but Michigan’s 3.4 million bags of beans, of all classes, isn’t burdensome. We didn’t have a big carryover, so our guys won’t likely be as aggressive price-wise as I am sure the Brazilians would like us to be. Hopefully, we’ll get a few tons in there and introduce our friends in Brazil to Michigan beans again.

IFT: What other markets offer the most potential for the U.S. dry bean industry?

Joe Cramer: Right now, we’ve got a delegation in Turkey through the U.S. Dry Bean Council, and I always wonder where Michigan can fit in, whether with a larger white bean like a great northern or a large navy. That Middle Eastern market segment is interesting to me.

Long term, I think the U.S. industry and Michigan in particular need to have their eyes on India, which is very new to us. Also, there are opportunities in Europe that we haven’t fully developed yet. Europe is on our radar for this coming year.

IFT: What message do you have for IFT readers?

Joe Cramer: We have a great product with a great health story to tell, and I think IFT can help us tell that story. As consumers become more and more health conscious, it’s going to be great to be in the bean industry. And as the global population grows, I think pulses are going to feed the world. We need to be ready for that.

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Argentina’s Garbanzo Harvest Falls on Hard TimesBy Dario Bard

Planted acreage is down due to drought conditions. Quality has been impacted by harvest rains. And a market glut makes it difficult for Argentina’s garbanzo exporters to compete internationally.

The 2013/14 harvest continues a downward trend for Argentina’s relatively young garbanzo industry. Juan Manuel Garzón, chief economist at IERAL de Fundación Mediterránea, estimates overall production at 40,000 MT to 45,000 MT. Matias Macera of Desdelsur, Argentina’s biggest garbanzo exporter, places the crop at 50,000 MT, with no more than 45,000 MT destined for exports. In either case, this campaign represents a significant drop from Argentina’s 2011/12 record garbanzo production of 114,357 MT. This cycle, Argentina’s garbanzo industry has been hampered every step of the way.

FEATURE

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UNTIMELY RAINS IMPACT QUALITY

The problems started during the planting season, when drought conditions in the northern provinces coupled with low garbanzo prices and higher wheat prices (a competing crop) contributed to significant reductions in the seeded area, explains Garzón. He estimates 23,000 to 28,000 hectares were planted, most of them in the Province of Cordoba. This represents an 80% reduction compared to last year’s 125,000 to 145,000 hectares.

Then rains hit Cordoba during harvest. As a result, notes Macera, quality was adversely impacted. “We are having a hard time finding product because the count for only 15% of Argentina’s harvest; 50% of the crop is comprised of 8mm garbanzos and 7mm garbanzos account for the remainder.

Sergio Casas of Snack Crops, a company specializing in specialty crops and the recipient of the 2013 La Nacion-Banco Galicia “best in the food industry” award, seconds Macera’s quality breakdown. “Most of the crop is 8mm. There are some 9mm, but very few if any 10mm or 11mm.”

Large caliber garbanzos are desirable because of the higher prices they command, but Macera says there is also a market for the smaller calibers. “Argentina’s 7mm and 8mm garbanzos are one of the better options for Italian canners,” he says.

INDIA’S EFFECT ON PRICES

Macera notes that prices have been low this year due to India’s big 2013 crop.

“When it comes to garbanzo, India has the greatest influence on prices. Good production from India brings prices down; if they have a poor harvest, they’ll import product, and prices increase as a result,” he says.

India had a record garbanzo harvest this year, but Macera notes the Indian crop has quality issues and weevil infestation problems. Even so, it has exerted significant downward pressure on international prices, a situation that is likely to be exacerbated in January, when Australia’s garbanzo crop is expected to hit the market.

“All this works to create a glut in a specialty crop market,” says Casas, “and when there is an oversupply of a specialty crop, the effect on price is brutal. Just like we saw with alubias, when there is a scarcity, the price skyrockets disproportionately. Well, this is the inverse situation. We have an oversupply, and so prices are crashing beyond any reasonable extent.”

Australia, says Macera, is experiencing a currency devaluation of 3% to 4% annually, and thus its garbanzo growers are understandably eager to unload old crop and clear the silos for the new crop. As a result, exporters there have dropped their prices to compete with India’s crop. “Australia is selling farmer-dressed old crop garbanzos,” says Macera. “They have 70% at 7mm and 30% at 8mm. The crop is selling for US$ 500 FOB. Pakistan is buying at US$ 530 CYF. That makes it very tough for Argentine garbanzos to compete in that market.”

“Today, the international market is seeing prices for Indian garbanzos that are well below Argentina’s price structure,” adds Casas. “In the Mediterranean, a 9mm is at US$ 1100 to US$ 1120 FOB, and an 8mm is at US$ 740 FOB. It’s difficult for Argentine producers to compete with those prices. My expectation is that, considering the low international prices, our production will remain regional, with exports going to Brazil and other Latin American customers, where freight costs will be lower. The exception will be customers looking for superior quality. Spain, for instance, is likely to continue buying from Argentina.”

THE EXPORT PICTURE

According to Macera, from November 2012 (when exports started for the past campaign) through November 2013, Argentina exported 79,357 MT of garbanzo. Considering a carryover of 12,000 MT to 15,000 MT, he expects the 2012/13 campaign to end up with exports of 90,000 MT to 95,000 MT.

Garzón notes that from November 2012 to October 2013, Argentina exported 73,300 MT, a 15% decrease from the previous cycle’s 86,100 MT. The principal importers of Argentine garbanzo were: Spain (14%); Italy (13%); Turkey (12%); Israel (9%); Portugal (7%); Chile (7%); Jordan (6%) and Brazil (5%).

“At this point last year,” says Macera, “I had already pre-sold a couple of thousand metric tons. But I haven’t even sold a single container of the new crop yet. Not because I don’t have buyers, but because I don’t want to enter into commitments before I know what I’m dealing with in terms of exportable quantities and qualities.”

At the moment, points out Macera, producers are reluctant to sell at current prices. He notes that Argentina has greater storage capacity than both India and Australia.

“Right now, producers are selling the absolute minimum to recover their harvest costs. We have some financially strong producers in Cordoba who do not have an urgent need to sell, and there are others who are speculating, betting on the devaluation that has been taking place in Argentina in recent months to get more pesos per kg.”

Macera doesn’t expect 2013/14 exports to exceed 45,000 MT. Garzón estimates they will total between 30,000 MT and 35,000 MT.

22 IFTmag

THE FUTURE OF ARGENTINE GARBANZO

Growers in the Province of Cordoba account for half of the country’s garbanzo production, and, despite three consecutive poor crops, Macera expects they’ll carry on.

“This year, the crop was progressing well, but then the rains came during harvest. So I think they need to find a variety with a shorter growing season, to cut it down from 120 days to 100 days. In the past few years, the problem has been rains during those last 20 days in November.” INTA, the national agronomy research institute, is presently working on such a variety.

“Argentina could produce between 80,000 and 150,000 MT of garbanzo per year, and that would start to give us some weight in the international market. We just need to have patience for the price situation to settle and for India’s production to normalize. Of course, a lot also depends on climate.”

ARGENTINE FOB GARBANZO PRICES (USD)

2013/14 Argentine Garbanzo Harvest Snapshot

• Overall production: 40,000 MT to 50,000 MT • Export estimate: 30,000 MT to 40,000 MT • Planted area: 23,000 to 28,000 hectares

Source: SAGPyA

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But the best garbanzos, says Macera, come from the northern provinces, which practically get no rain during their October harvest. The problem there, unfortunately, has been inadequate soil moisture due to persistent drought conditions over the past two growing seasons. Even so, Macera continues to see it as a good opportunity.

In terms of price, Garzón says it is difficult to predict what 2014 holds. “There’s a lot of factors to consider, but a key factor is the 2013/14 Indian campaign. If they continue having these large crops, we’re unlikely to see a reversal in the price trend. But if they don’t, and considering the lower production in Argentina and Australia, there’s a chance we’ll see prices recover.”

“I think garbanzo is here to stay in Argentina,” says Macera, whose company supports growers with seed and technical assistance. “It can’t be grown much more in terms of quantity, but we can look to improve quality and varieties. In tests, Argentine garbanzo has demonstrated it performs well when canned and tastes better than even Mexican garbanzo because it is creamier.”

Argentina will plant its next garbanzo crop in June and July.

The UN has declared 2016 the International Year of Pulses. CICILS President Hakan Bahceci discusses the efforts behind it and what the project entails.

Hakan Bahceci on the International Year of PulsesBy Dario Bard

The news came to CICILS IPTIC President Hakan Bahceci by way of a telephone call from the Turkish delegation: the United Nations General Assembly was to decide whether 2016 would be declared the International Year of Pulses the following day. Bahceci didn’t waste any time. He rushed to Dubai International Airport and booked himself on the next flight to New York, a 2:30 a.m. red-eye that got him into JFK at 8 a.m. By 10:20 a.m., he was in the General Assembly chamber, and 20 minutes later, following the reading of the motion, it was done. At approximately 10:40 a.m. on Friday, December 20th, the UN General Assembly officially declared 2016 the International Year of Pulses (IYOP).

“When the motion was being read, my heart was racing,” recalls Bahceci. “And when it passed, it was one of the best moments of my life. It took just three minutes. I flew 30 hours for three minutes of work.”

In reality, those three minutes marked the culmination of two years of hard work by Bahceci and his team at CICILS. Explaining how it all started, he says, “When I assumed the CICILS presidency in 2011, I asked: ‘How can we move forward?’ Promoting production, okay, that’s easy, but we also need to increase consumption.” The questions Bahceci posed led to brainstorming sessions, and from there, the IYOP idea was conceived.

24 IFTmag

INTERVIEW

The UN’s official designation of IYOP may mark the project’s climax, but for Bahceci and his team, it is far from the end. “The real work starts now,” he says.

Soon after his return to Dubai, IFT spoke with Bahceci about CICIL’s work on IYOP and what the UN’s declaration means for the international pulse industry.

IFT: Tell us a bit about the genesis of IYOP.

Hakan Bahceci: The international pulse industry has always been on a sort of traditional leash. We have traditional buyers and pulses are cooked in traditional ways. The greatest consumption of pulses is in India and the Middle East. The volumes and the trade is more or less the same, with only the dynamics changing; for instance, it used to be that Turkey and Syria were the most important pulse exporting nations, but now that’s shifted to Canada, Australia and the United States. The fundamentals, however, have always stayed the same.

So how do we break out of that box? Well, when I assumed the CICILS IPTIC presidency, we decided that increasing consumption was the way forward. To do that, we have to look at what pulses mean to consumers and how we can raise awareness. Many ideas popped up and we used a roadmap to design a strategy, and that’s how we came up with the idea for IYOP.

The year 2016 is perfect for us because it gives us the time we need to do a lot of work. IYOP isn’t simply about informing people of the different ways they can cook pulses. It’s not a picnic. We have to be innovative with our pulse ingredients and encourage the food industry to use them. To that end, together with Pulse Canada, we joined forces with McGill University to create the Pulse Innovation Partnership (PIP), which also includes CGIAR, the United States and large companies like Ferminich, Nestle and Buhler, as well as DSM and communication giant Leo Burnett.

PIP is an alliance of public and private organizations that also includes members of civil society and academia, and is committed to increasing the consumption of pulses in the developing and developed world by optimizing the role that pulses play in delivering sustainable and affordable nutrition and health around the world. PIP partners have engaged to develop science, technology and communications to increase pulse consumption through game-changing, innovative, great-tasting foods, thus offering health ben fits to consumers. PIP uses the power of multi-sector collaboration to strengthen this effect.

The aim is to improve the nutrition of consumers in low- and middle-income countries by offering products that provide nutritional value at an affordable price.

So, in addition to the traditional methods of consumption, the way forward is to introduce pulses into the food industry. There are tremendous opportunities there and I’m personally very excited about them. My term as CICILS IPTIC president ends in 2015 and IYOP is in 2016; we have created a very excited work group in CICILS that includes members of many associations from all over the world and some government members that will carry out all of the IYOP activities.

26 IFTmag

IFT: I understand the involvement of Turkey and Pakistan was key to the passage of the IYOP resolution. Could you tell me a bit more about the role they played?

Hakan Bahceci: Turkey, you could say, is the home of pulses. Its tradition with pulses dates back 12,000 years and it has one of the highest per capita consumption rates in the world. So we approached the Turkish government asking them to lend their support to IYOP, which they did, providing us with very professional personnel to move the process forward at the UN’s Food and Agriculture Organisation (FAO). You see, in the UN process, you can’t do anything as a member of the business-civil community; you need the backing of at least one national government, and so I am extremely grateful to Turkey for their support.

At that point, however, Turkey wasn’t an FAO Council member, and an FAO Council member is needed to move the motion to FAO Conference. So Turkey reached out to Pakistan, which was one of 46 countries on the Council, and that’s how we got unanimous support from the FAO Council to move the motion forward.

Pakistan also has a strong culture of pulse production and consumption. If you take a look at the pulse map, you’ll see there are more than 180 countries involved in the pulse trade, either as a consumer or an exporter. Pakistan, India and Turkey are nations with a pulse heritage; in those nations, pulses are an important part of people’s daily lives. So, like Turkey, Pakistan was pleased to push the motion forward.

IFT: Was there ever a moment when it looked like IYOP wasn’t going to happen?

Hakan Bahceci: We were very nervous about it initially. Right before our application, FAO member nations decided to hold International Years every two years instead of every year; 2013 was the International Year of Quinoa and 2014 is the International Year of Family Farming, so we applied for 2016. Thailand, though, submitted an application for the International Year of Soils for 2017. The FAO Secretariat interpreted the two-year decision as meaning an interval of two years, skipping over 2015 and 2016, which meant that the next International Year would be 2017.

At that point, it looked like our project was going to be scrapped. But we worked out a solution with Thailand and asked the FAO Council to make an exception to policy, moving the Thailand proposal to 2015 and accepting our 2016 proposal. At the FAO Council, the European Union wasn’t too pleased based on principle; they didn’t want exemptions to become the order of the day. But in the end they agreed to abstain instead of voting against it. We also had support from the U.S., Canada and Australia.

A big issue, though, was who was going to pay for it. Normally, the money comes from the FAO budget, but the reason the council decided to no longer have International Years every year was to reduce budgetary expenses. So at CICILS, we responded with a private sector pledge of US$ 1.1 million. This marks the first time in the entire UN process that there is a public-private partnership. Thus, IYOP is also an important pilot project for the future; it doesn’t use any FAO funds, instead relying on our pledge and country donations. Our pledge of US$ 1.1 million is enough to start work on IYOP.

IFT: I understand African pulse production is likely to be a focus of IYOP. Could you tell me more about this?

Hakan Bahceci: Pulses represent a growing export and consumption product for Africa. Take Ethiopia; it is a perfect example of how African countries can benefit from IYOP. Over the past five to ten years, Ethiopia has become an important exporter of products like white beans, desi and kabuli chickpeas and colored beans. Many of the producers there are small family farmers. Now, when PepsiCo took over U.S.-hummus producer Sabra, as part of its corporate social responsibility program, it encouraged the Ethiopian government to grow chickpeas. This wouldn’t have been possible without Africa focusing on pulses.

Tanzania is another example; it has become an important pulse producer and exporter. Mozambique and Malawi are both growing in this regard.

In Africa, you have a favorable climate and farmers eager to sell their product, so we will see African nations emerge as new pulse exporters.

Of course, there are challenges. The industry is still very basic there. Seed is an issue. Ethiopia has developed its own varieties, but other countries still need to work on that. NGOs are partnering with African governments to help them develop their own varieties.

Infrastructure has to be developed, as well. Africa is close to the major pulse consuming nations of India and Pakistan, and the Middle East nations. So Africa has geographical advantages that can be turned into opportunities.

IFT: Looking at the success of past International Years, what are your expectations for 2016?

Hakan Bahceci: The previous years were handled mainly at the governmental level. If you look at 2013, the International Year of Quinoa, you’ll see the results have been very good. I hadn’t even heard of quinoa until I started getting involved in the FAO process. Today, in Dubai you will see quinoa on the shelves of stores and supermarkets everywhere.

For IYOP, we’ll also have private sector involvement, so it will be interesting to see what that dimension adds to it. I think IYOP gives the pulse industry a golden opportunity to shape and promote itself. It gives us the opportunity to raise awareness through channels like IFT. That’ll take care of most of the work, and then it will be up to the trade to put the demand and supply in the pipeline.

IFT: How might IFT readers support IYOP?

Hakan Bahceci: The first thing is to engage in the process and get involved, whether at the farm or processing level. We’ve been working closely with governments and through national associations to create awareness and to connect everyone along the chain, from farmers all the way to the end user; everyone has a role to play. And I’m not just talking about making a financial contribution; that is of course very important and any such contribution would be welcome. But my suggestion is to follow what we are doing at CICILS, find an activity to engage in and get involved.

Support International Year of Pulses

More information on IYOP 2016 is available on the CICILS IPTIC website.

To make a monetary donation in support of IYOP 2016, write to info@cicilsiptic.org and specify the amount you wish to donate (i.e. $100, $250, $500 or any other amount).

28 IFTmag

CICILS IPTICDMCC – Jewellery & Gemplex Bldg 2 – 8th Floor

PO Box 340503, Dubai – UAE, O�ce: +971-04-3633612info@cicilsiptic.org, www.cicilsiptic.org

Eat more pulses,help fight hunger,

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Slow Start for 2013 China Bean Exports To AmericasBy Dr. Randall Fairman, IFT China Consultant

Coming off a big year for bean exports to the Americas, strong harvests in the region are likely to lower demand for beans from China.

REPORT

HISTORICAL CONTEXT

Figure 1 provides some historical context for China’s dry bean exports over the last four growing years. It can clearly be seen that, in a short period of time, the exports to North and South America have gone from somewhere around 30% to somewhere around 60% of China’s total dry bean exports. Brazil is receiving the majority of these shipments. The bulk majority of these beans are black kidney beans.

The figure also shows a corresponding drop in exports, especially to India and Africa, as prices in the Americas have justified the expense of trans-Pacific shipping. There has been some increase in black bean production in China, but a large portion of the increase in exports to North and South America is simply the result of changing export destinations based on prevailing demand and prices. These trends in general reflect a narrowing price gap between beans from China and the Americas. As prices for Chinese beans have risen closer to those from the Americas, they have lost a portion of their market share in Africa, Arabia, Central Asia and India.

30 IFTmag

32 IFTmag

2013 CURRENT SITUATION

At the beginning of the 2012 growing year, Chinese beans to North and South America were shipping at an average of US$ 750 to US$ 800 per ton FOB Dalian. As the year progressed, demand grew and prices went up along with demand. The people that held their beans for the majority of the year and then sold them in August or September were awarded a 40% return on their investment in only one year. These people sent their beans to North and South America for an average of more than US$1,100 per ton.

Figure 2 is a plot of the average price year-to-date (YTD) for the specified growing season. This plot was chosen because in some months there were very small quantities of exports at very high or very low prices. These anomalies tend to skew the appearance of the trends but are not very important to the overall season trends. For example, in September of 2013 there was a fairly limited amount of exports being sold at over US$1,100 per ton. It can be seen on Figure 2 that this caused the average price YTD to increase modestly in that month. Even though the price was quite high, the quantity sold compared to the rest of the year was not very significant. Export price trends over the last four growing seasons are shown in Figure 2.

Figure 2: China Dry Bean Export Trends (Destination North and South America)

Figure 1: China Dry Bean Export by Region [HS 071333]

As the 2013 growing season was harvested and beans were prepared for export, processors and exporters remembered the 2012 growing year trends and they bought up beans as fast as they possibly could. Farmers received good prices to be sure, but these people clearly knew that the current prices were historically high. In October 2013, the situation in North and South America has changed, and the black bean supply from Mexico and Brazil is looking like it will be much stronger. It seems that this year, things might be quite different for Chinese bean exports. Figure 2 shows that the prices at the beginning of 2013 are quite high, but it does not show that there is very low quantity being sold.

Figure 3 shows the tons of beans being shipped from China to the Americas by the associated growing year. In years where the beans begin to run out by the end of the year (2012 and 2010 particularly) the following year tends to start off slowly (2013 and 2011). It is conceivable that the slow start to exports could strictly be a function of being sold out of the 2012 stock before the 2013 export year really gets going.

It is also conceivable that a very strong harvest in Central America with high planting intentions in South America could be putting a significant dent in the demand for Chinese black beans in the Americas. Guatemala is actually exporting to Costa Rica right now when they would otherwise be importing from China. It is conceivable that these market changes are responsible for the slow start to the 2013 growing year exports to the Americas.

It will be interesting to see in the coming months whether the news about a good bean crop in Mexico and high planting intentions in South America will shift these exports back to India and Africa. It will also be interesting to see how this affects the planting intentions for 2014 in China. Currently China is seeing very high demand (and prices) on all varieties of kidney beans and it seems that it is possible that this year could provide a surplus of black beans if these other trends hold.

We are committed to keeping our readers informed about the dry bean situation in China as the situation unfolds.

Figure 3: China Dry Bean Export Trends (Destination North and South America)

Statistics Canada Reports Increased Pulse Production In 2013By Jon Driedger, IFT Guest Writer

Farmlink Marketing Solutions

The Canadian statistics agency confirmed overall increases in last year’s pulse crops, though the differences are mostly small.

Statistics Canada released their latest production estimates for the 2013 growing season in Canada in early December. From a headline perspective the most grabbing figures were the large production numbers for wheat and canola. However, most pulse crops showed bigger crops as well.

Pea production in Canada was estimated at 3.849 MMT, which is above last year’s number but not far off trade expectations going into the report. Yellow peas make up the bulk of production, at 3.25 MMT. At 529,400 tonnes, green pea production saw the larger percentage, which is noteworthy given how extremely tight supplies were entering harvest.

Even though the harvest was larger, total pea supplies are not substantially larger than a year ago due to small old crop stocks. Early season demand has also been brisk. However, the entire western

34 IFTmag

UPDATE

Canadian grain handling system is facing logistical struggles in moving the huge harvest, which in turn impacts the ability for growers to get their peas to market at the pace that they would like to.

The lentil production estimate for Canada was on the high end of trade expectations, at 1.88 MMT, 22% higher than the previous year. In the breakdown by class, red lentils were reported at 1.023 MMT, nearly double that of 2012. Large green lentil production was estimated at 645,000 tonnes, a decline of 10%. Small green lentil production was roughly flat at 169,200 tonnes. Although most of the lentils are shipped in containers instead of by bulk transport, they are not immune from some of the logistical bottlenecks that are impacting peas, which is affecting end user behavior.

Statistics Canada reported a small increase in chickpea production in 2013. But with a crop size of just 169,400 tonnes, Canada will remain a residual supplier to global markets.

Dry bean production in Canada was estimated at 205,900 tonnes, a sizeable drop from the previous year. However, it’s widely believed that this number is too low, and that actual production is likely closer to the 2012 figure near 275,000 tonnes.

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36 IFTmag

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With yields of up to 2.1 MT per hectare and excellent quality, the first Brazilian bean crop this year will surely make up for last year’s shortages.

Brazil’s First Bean Harvest 2014: High Yields, Excellent Quality and Low PricesBy Marcelo Lüders, IFT Guest Writer

With Brazilian carioca beans selling at US$ 680-690 per MT (grower’s price), many brokers say they should be seriously considered as an alternative to pintos.

It’s been a long time since we witnessed such ideal conditions for bean crops in Brazil. The weather in the south has been just ideal so far, and the latest news from the fields indicate yields of up to 2.1 MT per hectare and excellent quality. The output of the first 2014 harvest season in Brazil has been pegged at 1.467 million MT, 31.7% more than last year. This production increase will help partially alleviate last year’s shortage. It will also help with the current low carioca bean prices.

The scenario is the same in the State of Paraná among black bean growers: the crops look excellent.

In the State of Minas Gerais (southeast Brazil), there have been some issues with white fliesbemisia tabaci— and caterpillars— Helicoverpa armigera. Fortunately, the situation has not been as bad as in 2013, and few severe cases have been reported. However, this has resulted in production losses and increased growing costs due to weekly insecticide applications. In northwest Minas Gerais, rains in mid-December put some pressure on the quality of beans. But growers didn’t report any problems in the fields.

After rising to record highs in mid-2013, carioca bean prices have been trending downward. Consequently, domestic demand is returning to normal. Today, the grower’s price has been established at around US$ 680-690 per MT.

If prices continue to fall, many players in the industry say this will result in export opportunities for carioca beans. This is something that happens very rarely but as pinto bean prices hit US$ 1,000 per MT and above, Brazilian carioca beans should be seriously considered as an alternative.

Given this scenario, government officials have stated they will guarantee a reasonable price floor for carioca beans. They don’t want growers switching to other crops such as corn, tobacco or potato next season. And even when bean prices are good, soy and cotton rates are higher due to the high global demand. The bottom line is that the Federal Government doesn’t want a carioca bean shortage in 2014, and seeks to avert trouble in an election year.

38 IFTmag

UPDATE

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