An anticipated surge in global desi chickpea supply isn’t expected to dampen price prospects for the crop, say Canadian pulse analysts.
Agriculture Canada has forecast a 12 percent increase in world chickpea supply to 9.8 million tonnes, mainly due to higher production in India and Pakistan, the world’s biggest desi producers.
Three years ago, when there was a surplus of chickpeas, that development would have sent prices spiraling downward. But Greg Kostal, president of Kostal Ag Consulting, said like many other crops, chickpea prices today are being driven by strong demand.
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India’s government is trying to encourage pulse imports to keep domestic food inflation in check.
“They are just a huge sponge,” said Kostal.
So when he sees a Sept. 17 report showing that Australia, a major exporter of desi chickpeas, is forecast to export 436,000 tonnes of the crop, two and one-half times the previous five-year average, it doesn’t get his heart racing.
Kostal said supply increases in Canada and Australia will be easily absorbed by continued strong demand from India, Pakistan and Bangladesh, resulting in continued steady chickpea prices.
Stan Skrypetz, pulse analyst with Agriculture Canada, concurs, although he noted that the giant Australian crop may temporarily disrupt things because of the country’s freight advantage to the Indian subcontinent.
The Australian Bureau of Agricultural and Resource Economics reports that farmers there are expected to harvest 467,000 tonnes of mostly desi chickpeas, obliterating the record of 288,000 tonnes set in 1996.
The report was issued on Sept. 17 and while some of the pulse projections have been lowered since then due to drought, chickpea yields looked secure at that time.
The only thing that could dramatically change that number is rain during harvest, which begins in about two weeks.
“It’s a big crop. If they get it off in decent shape it’s going to provide a lot more competition for the Canadian crop,” said Skrypetz.
But he agreed with Kostal that continued demand from the Indian subcontinent will easily chew through the Australian crop and into Canadian desi and small kabuli supplies.
India’s efforts to restrict pulse exports and encourage imports has so far managed to keep domestic food price increases in check, but its problems won’t be solved overnight and neither will inflation woes in neighbouring countries.
Its not just government programs driving the demand. Incomes are rising in India and as more people enter the middle class more pulses are consumed.
Kostal said India produces five million tonnes of chickpeas annually and when that country is hungry for more product, a surge in supply of a few hundred thousand tonnes from an exporting nation barely causes a blip in markets.
“We could have another 100,000 to 200,000 tonnes of desi chickpeas and find a way to make it work into India with very minimal or arguably no price repercussions,” he said.
But there is one significant market risk for Canadian desi and small kabuli chickpea producers.
Kostal noted that India’s government in April approved public sector agencies to buy 1.5 million tonnes of pulses with a 15 percent subsidy. When that subsidy ends, it will tip the entire yellow pulse market on its head.
