Building on last year’s successful conference in Salta, CLERA moved this year’s gathering to Córdoba and cast the spotlight on chickpeas.

By Dario Bard

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On September 19th, CLERA (Argentina’s National Chamber of Pulses) hosted the 2017 Pulse Conference at the Holiday Inn in the City of Córdoba. The event marked the second time Argentina’s premier pulse industry body organized a gathering of this magnitude.

“Last year’s conference was held in Salta and focused on dry beans,” CLERA President Marcelo Soto Acebal told IFT. “This year, we decided to change venue and highlight another pulse crop. We opted to focus on chickpeas and held the conference in Córdoba because it is the major chickpea growing area in the country.”

The Province of Córdoba seeds roughly 50% of Argentina’s total chickpea crop.

The 2017 Pulse Conference featured remarks by government dignitaries, among them: Jesús Silveyra, undersecretary for agricultural markets for the nation; Horacio Pennino, deputy director of agriculture and plant health for the Province of Santa Fe; and Juan Cruz Molina, secretary of agriculture for the Province of Córdoba. The presentations covered a wide variety of topics, some of which were oriented towards growers, such as presentations on seed genetics, managing disease, and applying agro-chemicals, and others that had broader appeal, such as a panel on the market outlook for Argentine chickpeas, and presentations on the current mood in major commodity markets and the present state of the Argentine economy.

Soto estimates 350 people attended the conference, which was free and open to the public. Additionally, many others followed the proceedings remotely via live streaming provided by Canal Agrositio.

“Participation exceeded our expectations,” said Soto, adding that attendees represented a diverse cross-section of those involved in chickpea production and commercialization. “We had growers, processors and exporters, of course, but also students and all sorts of individuals associated with the industry, such as suppliers of agricultural inputs, for instance.

“The feedback we received from those who came was overwhelmingly positive,” continued Soto. “At CLERA, we are very pleased with how the conference turned out, and with the amount of interest shown in the topics we covered.”

For 2018, CLERA is exploring the possibility of hosting two conferences: the first in April to be held in Salta and focused on dry beans, and the second to be held late in the year in Santa Fe and focused on dry peas and lentils.

Below IFT provides a summary of selected remarks and presentations made at the conference in Córdoba this past September.

Opening Ceremony

The conference opened with CLERA President Marcelo Soto Acebal welcoming attendees to the event and highlighting the importance that pulses have throughout the world as a source of protein. Global pulse consumption is on the rise, noted Soto during his remarks. This upward trend, he explained, is driven mainly by steady growth in the traditional Middle East and Asian markets, but there is also increasing demand from high-income countries, where health-conscious consumers are looking to add nutritional value to their diets. In this international panorama, Argentina has established itself over the past decades as an important dry bean exporter and has recently emerged as a significant chickpea origin. Soto sees potential for further growth not only in these pulse crops, but also in dry peas and lentils. He envisions Argentina following in the footsteps of Canada, the world’s top pulse exporter. But to realize that vision requires addressing a series of challenges, including the development of improved varieties, the expansion of the growing area, the consolidation of technical packages adapted to different production regions, and the modernization of the commercial apparatus. Argentina, he concluded, currently has the capability to overcome all these challenges.

Following his remarks, Soto introduced Jesús Silveyra, Argentina’s undersecretary for agricultural markets, who began by offering his condolences to Córdoba’s chickpea growers, who lost at least 45% of their chickpea plants to frost. Silveyra also mentioned the plague of locusts that are damaging crops in the northern provinces. Unforeseen events like these, he said, is why his ministry is undertaking efforts to mitigate production risks. In this respect, he mentioned the need to improve the country’s crop insurance program by following the U.S. model to the extent possible. Silveyra then highlighted the measures that the administration of Argentina’s President Mauricio Macri has implemented and which benefit the pulse industry. These include the removal of export duties on pulses and increased reimbursements for exporters. Presently, said Silveyra, the government is looking to lower the high level of logistical costs facing the agricultural sector by investing in infrastructure, particularly in rail transportation. Additionally, the administration’s tax reform plan is oriented toward benefiting the productive sectors, including agriculture. Furthermore, the government is working to open new markets to Argentine agricultural products, including important pulse markets such as South Korea, China, Mexico and India; with respect to the latter, Silveyra mentioned the newly signed memorandum of understanding between CLERA and the India Pulses and Grains Association. In closing, Silveyra expressed his desire to work with the pulse industry to increase pulse plantings over the short-term from the current level of 600,000 hectares per year to 800,000 hectares.

Next, Horacio Pennino, deputy director of agriculture and plant health for the Province of Santa Fe, addressed the audience. He spoke of the importance of dry pea and lentil production for Santa Fe and of the provincial government’s commitment to support the industry through research and outreach efforts. Presently, the government of Santa Fe is collaborating with the pulse industry to develop a strategic plan for the sector, stated Pennino.

Photo (left to right): Jesús Silveyra, Marcelo Soto Acebal, and Horacio Pennino opening remarks

Chickpea Market Outlook

Adrián Poletti of Incrementar S.A. led a panel comprised of representatives from Argentina’s top chickpea exporters: Nicolás Karnoubi of Olega; Jorge Reynier of Primore; Matias Macera of Desdelsur; and Pablo Campo of Cono Agropecuaria.

Poletti opened with a presentation that provided an overview of Argentina’s pulse production and put it in the context of the global pulse trade.

Practically all of Argentina’s pulse production is exported. In 2016, Argentina exported 670,000 MT of pulses. Brazil is the top destination for Argentine pulses, and last year Argentina placed 250,000 MT of its pulse exports there (215,000 MT of black beans and 35,000 MT of dry peas).

Considering that the world’s annual pulse production totals 79 million MT, Argentina’s share is relatively minuscule. The major pulse producing nations are:

  • India: about 26% of world total
  • Canada: about 8% of world total
  • China: about 6% of world total
  • Myanmar: about 6% of world total
  • Brazil: about 4% of world total
  • U.S.: about 3% of world total

Figure 1: Argentina Pulse Production in MT and World Pulse Production in MT

Argentina Pulse Exports as Share of Global Chickpea Production

Following this summary of the supply side of the equation, Poletti turned to the demand side. He noted that annual pulse consumption averages 7 kg per capita worldwide. In Argentina, however, domestic pulse consumption is a mere 700 grams per capita, with lentils comprising 50% of the typical Argentine’s pulse diet and dry peas comprising the remaining 30%. This compares to annual per capita pulse consumption of 18 kg in India, 15 kg in Brazil and 4 kg in Chile. As Poletti sees it, increasing internal consumption should be a priority for the country’s pulse industry. If Argentina were to boost its per capita consumption to even half of Chile’s, Poletti said, then its internal demand would amount to 80,000 MT, which would be enough to mitigate the price impact of any potential surplus production.

Poletti then focused specifically on Argentina’s chickpea production. He highlighted last year’s record crop, which, at an estimated 187,974 MT, was 145% above the 10-year average and nearly doubled the previous year’s output (which was the second largest crop in the past 10 years). Given the elevated production, Poletti expects exports to hit an all-time-high of 159,500 MT for the 2016/17 campaign. Even so, Argentina has yet to hit its ceiling, he added.

Figure 2: Argentina Kabuli Chickpeas Exportation / Production

Typically, Poletti noted, the peak export window runs from November to March, but in years when India is not an active buyer, movement is spread out over a longer period of time. Currently, chickpea prices are high, but, Poletti warned, the sky is not the limit, and those in the market should be aware that if prices climb too high, consumers will turn to substitutes.

Figure 3: Argentina Chickpea Prices in US$ per MT FOB

In closing, Poletti painted a positive future for the global pulse industry. Consumption is trending upward, the nutritional and environmental benefits of pulses are being recognized at the global level, and food manufacturers are increasingly incorporating pulses in their food products, he said.

During the Q&A that followed Poletti’s presentation, the panel was asked whether Argentina had the processing capacity to handle the increased volume of chickpeas. The consensus was that the current capacity should be able to handle this year’s crop during the ideal loading window (from November to January, before India’s crop enters the market), but that as the volume of Argentina’s chickpea exports continues to grow, it will be necessary to certify new plants.

Responding to a question about the possibility of Argentina’s chickpea exports hitting the 200,000 MT mark, Macera of Desdelsur observed that the global trade in kabuli chickpeas amounts to 1 million MT. With today’s high prices likely to motivate increased plantings across all origins, Macera sees the 200,000 MT mark as the ceiling for Argentine exports at present. But, he added, the worldwide demand for kabuli chickpeas is trending upward, and if Argentina maintains its reputation as a reliable supplier of high-quality product and continues to develop improved varieties, that ceiling could be elevated over the long-term.

On a question about how prices might evolve this campaign, Karnoubi of Olega said he saw them remaining firm through February/March, at which time markets will have a clearer picture of production in India and Mexico. Prices, he noted, have been strong for more than a year, and that likely incentivized increased plantings, which in turn should lead to a market correction. Campo of Cono Agropecuaria added that at current prices one should also expect production to increase in chickpea-importing countries, and therefore exporting countries may well begin to compete with local sellers at their destinations. Sharing his thoughts on prices, Reynier of Primore made a distinction between the various caliber sizes; he sees a greater chance of prices remaining firm for Argentina’s larger caliber chickpeas (9 and 10 mm) than for the smaller calibers (7 and 8 mm), where there is greater competition with other origins. On this point, Macera was of the opinion that the price gap between large and small caliber chickpeas could very well increase this campaign.

On the possibility of Argentina producing desi chickpeas for export, Macera said that it is an interesting idea, but that he does not see the desi type as competitive with the higher-priced kabuli type for planted area. Therefore, desi seedings would likely be limited to marginal areas that would have to be near ports in order to remain competitive on the international market. The big question, then, is, given these circumstances, can Argentina generate enough volume for export?

Fielding a question about the development of future kabuli chickpea varieties, Reynier said that the yields generated by the current varieties are already good, and that therefore he would like to see efforts focused on developing larger caliber product of 10, 11 and even 12 mm.

Reynier also responded to a question about the market outlook for dry beans this campaign. On black beans, he noted that Brazil, the top buyer, is currently absent from the market due to its ample supply of low-priced carioca beans. He cited prices at the border at US$ 700 to US$ 750 per MT. On alubia beans, he said the pace and volume of exports is about the same as last year. He estimated exports at 60,000 MT as of September, leaving 80,000 MT of product still available. Prices for alubia beans out of Argentina stand at around US$ 1,000, but this may change depending on Egypt’s white bean harvest in November, he said.

Outlook for Major Commodity Markets

Market analyst Diego de la Puente of Novitas provided a global market outlook for the major agricultural commodities, namely corn, soybeans and wheat. He began by pointing to two factors that drive commodity prices: the weather in the U.S. and the strength of the U.S. dollar.

This year, important growing areas in the U.S. were hit by drought conditions. The impact of these dry conditions were reflected in poor USDA crop ratings, but not in yields. Due to this apparent incongruity, de la Puente suggested that the USDA may be manipulating the data in order to overestimate production and keep prices low.

Furthermore, he noted that weather conditions were also less than favorable beyond the U.S. Drought has also hit parts of Europe, Australia, Brazil and China’s Manchuria region. The latter observation led de la Puente to project that China’s imports of corn, for instance, would be in the millions of metric tons this campaign. In Argentina, meanwhile, the major growing areas were hit by excessive moisture. All this could have implications for major commodity markets, said de la Puente.

Faced with this panorama, de la Puente looked at Chicago Exchange prices. He noted that corn and wheat prices have turned upward after having dipped following news of the drought. Soy prices didn’t dip, but are trending upward nonetheless; he attributed this to the volatile nature of the soy market.

De la Puente also explained how the different major commodity markets are structured and discussed possible commercial strategies for Argentina’s agriculture sector.

State of Argentina’s Economy

Dr. Nadin Argañaraz of IARAF, a financial analysis institute, provided conference attendees with an overview of the state of Argentina’s economy.

He began by stating that the new administration of President Mauricio Macri has succeeded in reactivating the economy. As evidence of this, he noted that lending and new car purchases are both on the rise. He also pointed out that there has been growth in the construction sector. In terms of overall industrial growth, it is up 6% from July 2016 to July 2017, although up only 2% when compared to 2015. In general, Argañaraz concluded, economic growth indicators are positive.

Argentina has also experienced growth in investment, which goes in line with the government’s plan to switch the driver of the economy from consumer spending (which was the focus of the previous administration) to investment.

In terms of employment, jobs are being created, noted Argañaraz, though he added the caveat that most of these are unskilled jobs, with the construction sector accounting for a good part of them.

The Macri administration has also taken steps to address the country’s financial deficit, he said. To this end, it has adapted a strategy that calls for taking on debt while reducing public spending. At the same time, the government is tackling inflation, which is trending downward and is expected to continue to do so. These policies are also maintaining a relatively stable exchange rate.

Argentina’s country risk score is the lowest it has been in a decade, and this has given the country access to international loans, which is key to the government’s strategy. Eventually, however, the country will need to attract dollars to be able to pay off those debts. That will require turning around the country’s trade deficit, which is presently the largest it has been since 1910.

In 2017, agricultural exports are expected to bring in US$ 25 billion. But US$ 10 billion are expected to leave the country as many Argentines opt to vacation abroad. That is a problem that must be addressed, said Argañaraz.

For 2018, the government is projecting economic growth of 3.5% and expects to reduce inflation to 10% by the end of the year. It expects to see investments up by 12% and consumer spending up by 3.3%.

In conclusion, Argañaraz said the government has succeeded in reactivating the economy. The next step is to grow it. To do so, Argentina will need to implement the necessary reforms to improve its competitiveness. This, he emphasized, is the biggest challenge facing the nation today.

Closing Ceremony

The conference concluded with remarks by Juan Cruz Molina, Córdoba’s secretary of agriculture. He began by thanking and congratulating the organizers and the team that made the event possible. He then noted the importance of specialty crops like chickpeas to the province’s economy, and applauded Cordoba’s pulse industry for its focus on quality and the success it has had in pursuing trade with India. In this respect, he mentioned the trade mission from India that visited Córdoba earlier in April.

In closing, Soto thanked the conference’s sponsors as well as those who delivered presentations and especially all those who attended and helped make the 2017 Pulse Conference a success.

Videos of the sessions summarized in this article as well as several others are available at Canal Agrositio. All videos are in Spanish.

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Dario Bard, IFT Journalist