A slight increase in demand from Pakistan for Desi chickpeas has injected some life into the market, but long-term it’s a wait and see approach.
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AGT Foods Australia chief executive officer and Pulse Australia board member Peter Wilson told the Border News the combination of drought and impossibly high tariffs imposed by India has effectively crippled the export market for the moment.
“There are genuine concerns about the fact that India has shut the door on, not just Desi chickpeas, but almost every pulse on the planet,” Mr Wilson said. “They doubled the desi chickpea import duties from 30 per cent to 60 per cent in March, but the 30 per cent tariff, which came into force in December, was effectively trade-halting.
“I sit on the Pulse Australia board and trade and market access sits at the top of our list in terms of engagement with government over trying to get foreign governments to listen to sound, free trade arguments.”
India’s influence has created a single phase market, as the highly populous country is one of the major drivers of pulse economics.
“I would say we won’t get a lot of direction from India until the first or second quarter next year,” Mr Wilson said. “We have to take a bit of a longer-term view on this.”
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Middle East situation
Iran had also been “a pretty genuine destination” for the past 18 months but that changed in May when the US pulled out of a deal signed in 2015 to lift trade sanctions in exchange for Iran reducing its nuclear research and allowing UN weapons inspections. “Therefore we are seeing a winding down in terms of direct shipments to Iran,” Mr Wilson said.
Added to the mix was a bumper chickpea crop harvested in India, which was reminiscent Australia’s 2016 harvest.
Mr Wilson estimated a poor chickpea harvest in India averaged around 6 million tonnes, an average year about 7.5-8 million tonnes and this season he said there was talk the crop was “north of 10 million tonnes”.
“They had a really good outcome and that, of course, compressed prices and caused the reaction from the Indian government,” he said.
“However the northwestern part of India and on up into Pakistan was relatively dry. They didn’t have a great monsoon and it receded early. They ended up with a very sub-par outcome.
“An exceptional crop in Pakistan is probably 900,000 tonnes and an average crop is probably somewhere between 450,000 and 550,000 tonnes. We think their crop this year was probably 250-300,000 tonnes, a much smaller crop outcome.
“Pakistan has been keeping the chickpea market a little bit alive, but just because they seem to be short on paper doesn’t mean that prices here will soar.
“At the same time pigeon peas are cheap and lentils are quite competitive and I’m sure there’s some border perforation between India and Pakistan, even though there’s a technical ban on Indian pulses being accepted into Pakistan.”
In the past three weeks or so, prices have rallied to around $650 per tonne delivered Narrabri, but Mr Wilson said there hasn’t been much support from farmers.
“We don’t think there’s a lot of product [chickpeas] left. That’s keeping things pretty tight, but at the same time we are only dealing with one destination market,” he said. “There’s no doubt our supply and demand in Australia is very, very tight, and getting tighter from the dry conditions and there’s not much prospect of a big crop at the end of this year.
“If we push the market to $700, I don’t necessarily think we would bring a lot more product out, for two reasons. One, I don’t think there’s much left; and two, if you are a farmer and you haven’t been able to seed anything because it’s too dry, then you want to have something to sell next financial year.
“A market opportunity missed today, does not necessarily mean it exists tomorrow.”
Drought impact
It’s dry from Forbes in NSW right through to Mt McLaren in Central Queensland and chickpea plantings were down.
“If we haven’t had rain by now, the chances of getting seeding rain appears fairly slim,” Mr Wilson said. “We are seeing acomprehensive reduction in the seeding of Desi chickpeas, the reality is it’s just bloody dry.
“We need a good profile to comfortably plant Desis, even with deep seeding to seven or eight inches below the surface… the problem is the moisture, for the most part, just isn’t there.
“Desi chickpeas will emerge from as far down as 11 or 12 inches, which is one of the great benefits you have with Desis over cereals where the coleoptile isn’t as long. [Anyone] with moisture and thinking about growing chickpeas, probably should have already had them planted and that doesn’t appear to have happened.”
At this stage no Desi chickpeas were being used as drought feed – except for a few screenings. However, faba beans and field peas were filling the on-farm drought feeding gaps.