Pulse processor optimistic on exports to India

AGT president believes the drop in pulse prices will cause Indian growers to switch to more lucrative crops like wheat

The head of the world’s largest pulse processing company is more optimistic about export prospects to India than some market analysts.

Murad Al-Katib, president of AGT Food and Ingredients, believes India’s crop is not going to be nearly as big as the Indian government and analysts are forecasting.

India has set a target of 20.75 million tonnes of pulse production in 2016.

India harvests two crops every year. The kharif, or summer season, is just wrapping up and farmers exceeded the government target of 7.25 million tonnes, producing a record 8.7 million tonnes of pulses.

Planting of the rabi, or winter, crop is just underway. Growers have seeded 12.15 million acres, which is 14 percent below the recent five-year average.

The government expects growers to harvest a record 13.5 million tonne rabi crop of pulses.

In the latest edition of Saskatchewan Pulse Growers’ Pulse Market Report, G. Chandrashekhar, a policy analyst and commodity commentator, expects rabi acres to be up and that total 2016-17 production will be close to the government’s 20.75 million tonne target.

He believes that will lead to a reduction in imports to four million tonnes, down from an estimated 5.8 million tonnes in 2015-16.

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Stat Publishing expects a little more buying from India but not much. It forecasts 4.6 million tonnes of imports.

Al-Katib has a different view. He noted that the monsoon rains were just average this year and that pulse prices are falling in India.

“The 30 percent decline in the wholesale price index in pulses will cause acreage in pulses to be lost,” he said during a recent conference call with investment analysts.

Al-Katib believes pulses will lose ground to wheat and other crops and that growers will end up producing 18 million tonnes of pulses, while consumption will rise to 24 million tonnes.

“There is going to be six million tonnes of import and I think it’s growing by a million tonnes a year,” he said.

That is a good thing because farmers in North America produced a record 9.3 million tonnes of peas and lentils.

There has been plenty of debate about Canadian crop quality but Al-Katib isn’t concerned.

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“Product is good quality even with the late season and (poor) harvest weather,” he said.

“It is well within customer expectations in consumer markets.”

He estimates that two-thirds of the red lentil crop will make the top two grades.

Green lentils are in worse shape, with less than 10 percent making the top grade. However, AGT is able to improve lower quality lentils through processing.

Al-Katib said there are even human consumption markets for sample grade lentils. It is a misconception that sample lentils are only used for feed.

Al-Katib said there was little product available for processing and export in the third quarter. It didn’t help that the shipping season was delayed by 21 days due to the late harvest.

But product is starting to flow and he anticipates a strong export program in the fourth quarter and into next year.

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