Viable growth in the Australian pulse industry
Author: Peter Wilson (AGT Foods Australia, Pulse Australia) | Date: 09 Feb 2016
Issues affecting viability
Global issues:
- Supply chain integrity
- Government intervention
- Geopolitical instability and conflict
- Market transparency and price discovery.
Domestic issues:
- Industry focus
- Pulse Australia’s role
- Opportunities to flow on from International Year of Pulses (IYP).
2016 International Year Of Pulses
- Managing Director of the Grains & Legumes Nutrition Council and Non-Executive Director of Pulse Australia, Ms Georgie Aley chairs the International ‘Creating Awareness’ theme as well as being the chair of the Australian Steering Committee
- Pulse Australia CEO, Tim Edgecombe is a member of both the global ‘Market Access and Stability’ and ‘Productivity and Environmental Sustainability’ theme committees
- Michelle Broom, Nutrition Program Manager at the Grains & Legumes Nutrition Council, is a member of the global ‘Food and Nutrition Security and Innovation’ theme
- The Australian national IYP committee will continue to hold industry workshops and engage with stakeholders throughout 2016 to capitalise on the opportunities available to the Australian pulse and food industry through the IYOP16.
What’s in it for the Australian pulse industry?
- Greater promotion and awareness of pulses for human consumption
- Greater investment interest for domestic and export demand
- Better asset utilisation – margin improvement
- More options for growers as liquidity improves.
What’s in it for the Australian grains industry?
- More sustainable industry – lighter carbon footprint
- Future model for grains industry integration and supply chain efficiency
- Opportunity for grain and pulse food product collaboration.
Rural renaissance
“A future in which agriculture provides societal solutions to energy supplies, health promotion and climate change.”
“Whatever producers and processors do, they must be done in innovative ways that resonate with their customers.”
Agriculture – not just food anymore
- Agriculture not just hitting the ‘breadbasket’ anymore
- Protein is a key driver of agricultural markets
- Food safety – non negotiable
- Impact reaching far outside Agri-Food:
- health sector
- energy sector
- environment sector
- immigration sector
- economy overall.
Pulse industry growth
Growth
- Traditional price conscious markets are increasingly ‘commoditised’ but ‘more reliable’
- To leverage nutrition, health, energy, food security/safety, and the environment profile to achieve sector growth
- Find new approaches to build on existing strengths in non-traditional markets and products
- To tap into the growth potential for feed in domestic and international markets.
Opportunity
- Food, fibre and feed
- Pulses as ingredients like flour, protein, starch and fibre as well as premium pulses with market demand in consumption markets.
How to realise the potential
- Non-traditional uses for grains and pulses like ingredients and industrial uses
- Move up the value-chain with branded packaged wholesale and retail
- Increase value-added milling capacity for pulses
- The Asian and Middle East and North Africa region (MENA) markets are in close proximity and large in size.
- Research partnerships with industry
- Focus on food safety, logistics, and market development and access.
Factors driving global demand
Benefits of pulses
- Pulses are a sustainable source of protein
- Gluten–free, genetically modified organisms (GMO)-free and low allergen
- Major source of protein and fibre, which developing nations particularly rely on
- Vegetable source for protein and energy requirements
- Lower energy use, reduced greenhouse gas emissions, improved soil health through rotational cropping and increased water use efficiency.
Emergence of the middle class
- Overall food output will increase due to population growth, urbanisation and income growth
- Middle class may increase from 1.8 billion to 3.2 billion by 2020 and to 4.9 billion by 2030, with 85 per cent of this growth coming from Asia
- Global spending by the middle class may grow from $21 trillion today to $56 trillion by 2030.
Health and wellness trend
- Consumer movement towards healthy lifestyles in non-traditional markets
- Pulses offer many benefits for nutrition, health and chronic disease prevention
- As a result, there has been increased interest from food companies in using pulses in product formulations, for cost, characteristic, allergen, GMO-free and other reasons.
Alternative fuels and sustainability
- Pulse production globally is at an all-time high from multiple origins
- Pulses are a rotational crop for cereals and canola which are used in ethanol and biodiesel production
- Pulses lower the carbon footprint and support the sustainability efforts of processors, food companies and they also meet the demand of consumers for sustainably produced products.
Markets for pulses and staple foods
Traditional markets for pulses
Growth driver: population and global demand for food
- 2050 - Global population expected to rise by 30 per cent
- Global food output will have to grow by 70 per cent to feed the world with a growing middle class
- Pulses are a sustainable source of protein; a key nutrient for large numbers of the world’s populations.
New markets for pulses
Growth driver: health, nutrition and sustainability
- High protein, high fibre, nutrient dense, low fat, gluten free, non-GMO and low allergenicity. The latter making them suitable for snack foods
- Lower energy use, reduce greenhouse gas emissions, improve soil health through rotational cropping, increase water use efficiency (WUE).
Pulses and sustainable agriculture
Plant fixing nitrogen
- Pulses produce their own fertiliser by fixing nitrogen.
Figure 1: Pulse crop with root nodules.
Lower energy requirement
- Pulses use less non-renewable energy relative to other crops
- Seventy per cent of the non-renewable energy used in cropping systems in western Canada is attributable to fertilisers.
Source: (Zentner et al. 2004)
Figure 2: Greenhouse gas and energy use for peas compared with other agricultural commodities.
Increased water use efficiency
- 43 gallons of water required to produce one pound of pulses
- 1,857 gallons of water required to produce one pound of beef.
Figure 3: Water use efficiency of pulses compared with other agricultural commodities.
(Source: Hoekstra and Chapagain, Globalization of Water, U. of Twente, Waterfootprint.org National Geographic, April 2010)
Global pulse production rising
Figure 4: Global production of four major pulses from 1991 to 2013.
Relative Australian pulse area, production and value
Figure 5: Relative Australian pulse area, production and value.
Spread prices basis CFR - Mumbai
Figure 6: Spread prices basis CFR – Mumbai.
Indian pulse production, consumption and gap
Figure 7: Indian pulse production consumption and gap.
Challenges for Australian agricultural sector
- Australian crops are almost fully dependent on export markets
- Market access is an ongoing priority for the pulse industry:
- Bilateral free trade agreements (e.g. China)
- Sanitary/phytosanitary issues, other non-tariff barriers.
- Tariff and non-tarrif trade barriers
- Differentiating and capturing market and sales opportunities over competing origins, processors, traders
- Primary versus secondary processing – balance between the two. Need to up value some products and efficiently ship others.
Ocean and intermodal containers
- Transportation advances are creating freight options that were not available before
- Transformational projects like the Toowoomba Range Crossing and the Inland Rail Project will change the way product flows in eastern Australia
- Full containers come in, and therefore empty containers are available for outbound shipments.
- Free-trade agreements (FTA) with key partners will be a big opportunity for Australian businesses
- AGT Foods Australia is one of the largest agri-products container shippers in Australia.
Conclusions
- Agriculture is in the midst of a renaissance impacting many sectors of the economy
- Opportunities as agri-production moves up the value-chain focused on food, fibre, feed and fuel. Additionally, as packaged and retail products and ingredients
- Global race for protein is on and Australia has the opportunity to become the ‘protein-basket' of the world
- Global agri-products markets are strong with need for secure and stable food supplies
- Initial investment follows an idea; sustained investment follows supply and demand confidence.
- International Year of Pulses set to drive supply, demand, and investment in pulses, therefore increasing their margin
- Australia needs to harness the legacy benefits of the 'mining boom’ as it migrates to the sustainable benefits of the ‘dining boom’.
Contact details
Peter Wilson
AGT Foods Australia
Chairman Pulse Australia
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