While area and yield increases continue to put pressure on prices, the fortunes of pulse farmers around the world are likely to depend on demand in the subcontinent, Rabobank says.
Strong growth in the production of pulses in 2016-17 is failing to deter farmers from planting yet more of the crop this year, according to fresh research.
Pulse production has grown more than 50 percent since 2000, driven by an increase in both cultivation area and yields, Rabobank said in a report released today. Following a spike in prices earlier this decade, caused by weather-induced supply shortages, production recovered sharply in the 2016-17 season, with the growing use of seeds in food a major driver behind demand.
This caused prices to collapse. Yet the slump did little to discourage pulse farmers, the Dutch lender argued. “They have not reduced the area farmed under pulses notably for the 2017-18 season – pointing to another year of plentiful global supplies and continued price pressure.”
Stocks are high across major markets. In Canada, the largest exporter, large 2016 crops means piles of pulses are still waiting to be processed despite “massive exports,” Rabobank said. Large areas under plantation mean 2017 output is likely to remain at similar levels.
In Australia, which exports 60 percent of its field peas and 95 percent of its chickpeas, production remains at a record high. The country doubled its output of field peas and tripled its production of lentils during the last season.
In the longer term, however, the market’s fortunes are likely to be determined by demand in India, according to the bank.
The subcontinent – which provides 25 percent of the world’s output, consumes 30 percent of it and accounts for 40 percent of global import flows – has long been influential in the sector. But Rabobank reckons its role is set to become even more important as per-capita production, currently below 1980s levels, catches up and India’s increasing purchasing powers feeds into demand for a greater variety of products.
A major unknown factor, according to the report, is the effect of impending agricultural reforms in the country. “Will ag infrastructure investments pay off?” the bank asked. “India will be the big swing factor – heavily influenced by the monsoon, which has so far been on track in 2017.”