Pulse industry set to ride global wave
An anticipated shortfall in the global supply of pulses could steer the trade to higher value markets, playing into Australia’s hands because of international confidence in Australia’s scientific capacity to meet more demanding end-user specifications.
Relaxed international trade regulations and wider availability of agronomic data has seen countries in eastern Europe, northern Asia and Africa emerge as stronger competitors in price-driven commodity markets. But industry leaders say Australia is well positioned to take advantage of unprecedented opportunities in the changing Chinese and Indian markets and western health and functional foods markets, as well as in developing nations that are vulnerable to food insecurity.
Addressing Pulse Breeding Australia’s Inaugural Pulse Conference in Adelaide in October, International Pulse Trade and Industries Confederation (CICILS IPTIC*) president Hakan Bahceci suggested Australia could double its pulse output, provided breeders continue to produce high-yielding, low-input varieties suited to a broad range of growing areas and climate variation.
However, speakers at the conference emphasised that other countries could also see the potential for increasing demand for pulses so Australia needs to use its technical capabilities to escape reliance on price-sensitive markets and pursue new high-value markets.
“Rapid changes in the way in which agronomic information and market signals are made available are leading to extraordinary increases in both planted areas and potential yields, which in turn will introduce stronger and more varied competition in what Australia has come to consider traditional markets,” Mr Bahceci said. Ukraine and Ethiopia were named as examples of countries challenging Australia’s ‘traditional’ markets.
“But at the same time, incredible wealth generation in India and China has led to dramatic and permanent [demographic] changes. In India, where the burgeoning middle class is seeking premium-quality and faster meal preparation options, beautifully packaged pulses and pulse-based snack foods are replacing bulk barrels on supermarket floors.
“And in China, the dramatic rise in meat consumption has diverted considerable Chinese pulse exports into domestic stock feed. China was once a major competitor of the Australian beans export trade to the Middle East, but it is emerging as a new market opportunity [with] new quality parameters.”
Mr Bahceci said while consumption in western cultures is low, research confirming that pulses can help to prevent or reduce the incidence of obesity, diabetes and heart disease is generating new demand from health and functional foods markets.
He said regions beset by food shortages also represent a potentially huge untapped market, although a price-sensitive one.
“There are over one billion people in the sub-continent and sub-Saharan Africa for whom pulses of one sort or another are a basic staple, along with a cereal-like rice. These people live on less than half what the Food and Agriculture Organization of the United Nations considers necessary for normal human development,” he said. “If they could afford it, they would double their pulse consumption or more.”
Mr Bahceci rated these opportunities among the most exciting that have been presented to the global pulse industry, “and Australia has the chance to be a major player”, he said.
“Australia’s reputation for excellence in its pulse breeding programs and other pulse-related research is recognised worldwide. And Pulse Australia’s agronomic support services and on-the-ground industry coordination is the envy of our other national association members.”
The founder of Hakan Agro, the world’s largest privately owned pulse processing and trading company, Mr Bahceci said Australian growers have the potential to “economically and practically double production” if breeders concentrate on disease and pest resistance to increase yield and reduce growers’ input costs.
“A combination of careful plant breeding and excellent agronomic packages and advice has seen desi chickpea production in Australia increase in recent years,” he said. “It is now often the highest gross margin product for many growers.”
Mr Bahceci said there were two distinct influences ready to elevate pulses. The first was global food security and in particular the need to lift nutrition at the “bottom of the global health and wealth pyramid”. The second was the increasingly recognised role for pulses in reducing chronic disease in western cultures. It was for these reasons that CICILS IPTIC has been lobbying for the UN to declare 2016 as the International Year of Pulses (IYOP).
“Opportunities for participation by Australia are immense,” Mr Bahceci said.
An open-platform Pulse Innovation Partnership (PIP) has already been formed between the private and public sectors to work on developments in health, nutrition and food innovation – a key plank of the bid to the UN.
Established by the McGill University Centre for the Convergence of Health and Economics, PIP aims to increase consumption of pulses through their integration into nutritious processed foods. Mr Bahceci said Australia’s involvement could open up two major opportunities. The first would mirror initial work using Canadian red lentils and yellow peas to create a healthy mass-market cookie that looks and tastes like the high-fat biscuit it imitates, but using Australian pulses.
The second would use lupin flour – a comparatively low-cost protein source – to develop new products for baseline food security in the world’s poorest countries.
Mr Bahceci said realisation of the proposed IYOP goals, and securing maximum returns for Australian growers over the long term, would depend on successful engagement with other key players in the value chain, including service providers, marketers and exporters, “to maintain market quality requirements”.
Pulse Australia chair Peter Wilson said price volatility in Australia’s export markets reaffirmed that food technology needs to be a key phase in industry development.
“Food technology is where we need to position this industry,” he said, adding that pulses’ light environmental footprint also created new opportunities with demand for sustainable options continuing to rise.
Mr Wilson, also the northern states director for Australia Milling Group, told conference delegates Australia’s $1.1 billion pulse industry needed to “pick winners and narrow the focus”.
“We must look at market opportunities because we are missing out on a potential one-million-tonne yellow pea market in
China,” he said.
“But alongside chickpeas, yellow peas, faba and broad beans and red lentils, Australia could aim to produce smaller but higher-value crops including mungbeans, pigeon peas, albus lupins and guar.
“We are supplying product to highly price-sensitive markets, which is why there is so much market volatility. What’s missing is a broader market base; therefore the link between breeding, commercialisation and food technology is more important than ever.”
Mr Wilson said taking advantage of Australia’s food science capabilities to create pulse-based products targeting premium markets would reduce exposure to unstable commodity markets.
“There are huge opportunities, particularly when we start to look at promoting foods with health benefits,” he said, alluding to prospects in both ingredient substitution and functional foods.
Mr Wilson saw sizeable new markets opening up through the development of specialised products for specific markets, such as the coeliac market. “Creating new staple foods [such as bread] in which wheat flour is replaced with gluten-free lupin flour is an area that has real potential.”
He said if higher-value markets absorbed 10 per cent of Australia’s pulse crop, “all the boats in the harbour would rise”.
“You only need small premium markets to have a positive impact on price,” he said. “If we could create steady markets for lupin and chickpea flour, that would do it.”
While food technology remains “a work in progress”, he said the front end of the supply chain would “continue to do the heavy lifting”.
“Minimising production and cost risks and focusing on quality are key to building gross margins at the farmgate. Pulses have to be competitive or farmers won’t grow them,” he said.
“And we need to focus on supply chain efficiencies. Supply chain integration, cost and industry leadership is our absolute best growth path.”
Geopolitically, Mr Wilson said the power shift from the western hemisphere to the east also worked in Australia’s favour.
“Australia is right in the middle of where the growth over the next 100 years will be and we can expect significant opportunities over the next 20 or 30 years,” he said.
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* CICILS IPTIC is the single, not-for-profit peak body for the global pulse industry. A confederation of 19 national associations, including Pulse Australia, it has more than 600 private-sector members from a broad spectrum of industry value-chain sectors.
GRDC Project Code GCS10362
Region National, Overseas