Grains Research and Development

Date: 01.07.2013

Pulses – more profit than pitfalls

Author: Deanna Lush
Map of GRDC Southern Region Thumbnail

With the right planning and management practices, pulses can be profitable. That was the message from consultant Peter McInerney from 3D-Ag at the recent GRDC Farm Business Update in the southern grain-growing region. 

Mr McInerney said that in the past, many growers considered pulse crops difficult to grow due to limited herbicide options for weed control, disease susceptibility, volatile and limited markets, and low gross margins. For some, canola appeared to be an easier alternative, he said.

“Today’s pulses have better disease resistance and much improved weed control options, and market volatility is arguably no worse than wheat or canola prices, which now halve and double in the space of a couple of seasons,” Mr McInerney said.

He said the value of a pulse crop needed to be considered in the context of the whole rotation and across an entire property. Flow-on benefits after incorporating a pulse into cropping systems include:

  • weed, disease and pest breaks in cereal crops;
  • slow release of nitrogen into the soil for subsequent crops – all pulses generally leave 40 to 60 kilograms of nitrogen a hectare in the soil for the following crop;
  • for the next wheat crop, less disease, as well as savings in reduced fertiliser requirements and no seed dressing;
  • lower business risk because of reduced input costs;
  • increased potential for subsequent crops to yield higher-quality grain, such as Australian Hard varieties (H1 and H2), and therefore provide higher returns;
  • extra nitrogen, with phosphorus and sulfur, which can help retain and build soil carbon, improving soil resilience, water availability and productive potential;
  • pulses require lower upfront inputs in a dry season, and can be manured to conserve soil moisture and nitrogen – conserved moisture has been the difference between profit and loss on many crops following pulses in recent seasons in southern Australia; and
  • a more sustainable farm and a stronger balance sheet through improved productivity outcomes without increased inputs, and even the potential to lower inputs over time.

Markets

Mr McInerney said marketing decisions began with crop and variety choices made at the start of the season. 

He said understanding market drivers and having access to good sources of market intelligence could help manage price risk exposure. 

“A balanced rotation has diversity and flexibility to allow for a response to pricing signals or other information when the farm program is being planned for the year,” he said.

“To avoid marketing pitfalls be counter-cyclical – if everyone else is growing albus lupins, grow another variety. For example, there is potential to substitute albus lupins with angustifolius lupins for the stockfeed market.”

Mr McInerney said investing time in sourcing alternate markets was worthwhile for growers who grew lupins routinely. 

“This could be either on-farm through a sheep enterprise or by establishing a relationship to sell direct,” he said. 

“New market opportunities are also appearing, with faba beans providing an increasingly important protein source for fish food in the Tasmanian salmon industry, as well as in developing countries such as Vietnam.”

Economics

Mr McInerney said making a profit from pulses started with good preparation and sound agronomy. Growers should consider climate and market information, plus available farm resources (physical, financial and management capacity) to help estimate realistic yield targets, the inputs required to achieve them and prices for the season.

He said paddock preparation for pulses started with broad-spectrum weed control in previous crops and selecting paddocks based on suitable soil types. All retained or non-certified seed should be tested for germination, vigour and, in the case of albus lupins, bitterness.

To gauge the value of pulses, input costs and crop returns need to be considered in terms of the revenue per hectare a year per rotation sequence. 

“Gross margins account for less than 40 per cent of the cost of doing business, so they need to be used carefully, especially for forward projections. Whole-farm financial analysis is an increasingly necessary tool. 

“For many years the focus has been at the paddock level, and it is time we focused on the whole farm.”

Estimates versus actuals

If the actual yield of the example in Table 1 is only 1.7 tonnes per hectare or the price is less than budgeted – at $380 per hectare – the gross margin return of $670/ha drops by $154/ha to $516/ha. So the question to consider is: Is this result still above your true cost of production?

TABLE 1 Gross margin return estimate from the albus lupin variety LuxorPBR logo.
Income
Target yield 2t/ha
Budgeted return $400/t
TOTAL REVENUE $800/ha
Cost
Seed and fertiliser* $82/ha
Herbicide program
Roundup®DST $6/ha
Triflur X®  $10/ha
Simazine 900kg/L (half with above, half PSPE) $12/ha
Select® + Uptake® $14/ha
TOTAL COST $120/ha
Anticipated gross margin return $670/ha
*Using a dual-chute seeding system allows for use of grain legume super fertiliser, which contains phosphorus and sulfur.

More information:

Peter McInerney,
peter@3d-ag.com.au

GRDC Farm Business Updates for Growers in 2013 will be held at Dookie and Horsham, Victoria, on 10 September and 11 September, respectively; and at Parkes, NSW, on 10 October. For details, visit www.orm.com.au or phone 03 5441 6176.

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GRDC Project Code ORM00005

Region South, North