Where are the Chickpea and Faba Bean Markets? - PulsePoint
August 17, 2018
Knowing where to find opportunities for your crops
By Chuck Penner, LeftField Commodity Research
One of dangers in grain marketing is assuming things stay the same and that usage and export channels will just carry on as they have before. Pulse markets have taught us a couple of lessons in the past year or two. The first is that we cannot rely on long-established markets
being there for us. The second lesson is more positive — new uses and opportunities will show up, although they sometimes require a lot of effort.
As chickpeas are a pulse crop, it is easy to assume that India is the main driver of the market. In reality, India is only one piece of the puzzle, especially when it comes to Kabuli chickpeas, and India is only a minor buyer of Canadian chickpeas. For Desi chickpeas, it is a different story, as India dominates global demand, but Desis only make up five to 10 per cent of Canadian chickpea acreage.
The pie chart shows which countries are the largest buyers of Canadian chickpeas in 2017/18. Our most important market for chickpeas is very close to home. The United States (U.S.) was the largest buyer in 2017/18, but that has been going on since 2011/12. In this past year, the U.S. total was only slightly ahead of Pakistan and Turkey, but in 2016/17 the U.S. took nearly 40 per cent of Canadian chickpea exports.
While the U.S. has been a large buyer of Canadian chickpeas, it is also expanding its own production at a good clip. Over the past three years, the U.S. crop has nearly tripled to 313,000 tonnes in 2017, and another 25 per cent increase is expected for 2018.
Between the growing imports and its larger crops, the U.S. market has been chewing through far more chickpeas than in the past. They have been exporting larger volumes but domestic use has also been growing fairly rapidly. Over the past decade, estimates show U.S. domestic consumption has expanded tenfold and is not showing signs of slowing down.
The automatic assumption is that the growth in domestic consumption has come from people eating more Middle Eastern foods such as hummus, but the story is more complex. Increasingly, chickpeas in the U.S. are being broken down into components — protein and starch — and used in a whole range of products. This can be included in many different foods such as pasta and snacks, but have also ended up in pet food.
This type of usage is very positive for the chickpea market as the growth is more sustainable, and fits with the goal of being value-added. That does not mean it is all smooth sailing. The market will still have ups and downs just like any other, but adding more non-commodity uses to a crop is always positive.
Faba beans have been traded globally for many years, and even though they have been grown on the Canadian prairies for a couple of decades, it still seems to be early days for the Western Canadian market. Canadian acreage really started to jump in 2014 and 2015 but that early momentum has been lost as the demand side of the market has been slower to develop.
The dominant export opportunity has been Egypt, but that market is competitive and crowded. Traditionally, that market was evenly divided between Australia, the United Kingdom, and France, but new entrants such as the Baltic countries have emerged, as shown in the bar chart. In 2017, Egyptian imports dropped sharply but the first quarter of 2018 (not shown) seems to indicate volumes are rebounding back to more typical annual levels, close to 300,000 tonnes.
Canada has also become a supplier to the Egyptian market but volumes have remained modest. The conventional wisdom had been that Egyptian buyers are looking for large-seeded tannin varieties. Within the past year, that assumption has come into question with requests from Egypt for Canadian white faba beans. Australian faba bean exports into Egypt are also white varieties. This export market needs to be pursued but, as we know, relying on a single destination is risky.
Canadian export volumes have been relatively small (around 15,000 tonnes in 2017/18) but are increasing. Even so, it leaves most Canadian faba beans destined for the livestock feed channel and that market has not reached its full potential either. With higher protein than other pulses, faba beans are well-suited for livestock feed, but it seems to be in the classic catch-22 situation where farmers need more interest from livestock feeders, and the feeders are waiting for farmers to grow more faba beans.
The high protein content also makes faba beans a good candidate for food use, similar to other pulses that are being fractionated and incorporated into mainstream food products. Once again, this is a situation that requires production and processing to expand in tandem. Based on discussions with farmers in various parts of the prairies, it seems there is considerable pent-up interest in growing faba beans, if only demand could solidify. That means processors either in Canada or the U.S. need to step up to the plate.
Of course, these are only some of the trends that are currently underway. And based on experiences with other pulse crops, the next five or ten years are almost guaranteed to look a lot different.