Rabobank: Strong growth global pulse production driven by Indian demand
Strong growth in the production of pulses, which has risen by 50% since 2000, is a result of both area and yield increases. Prices have shown strong volatility in the last two years, driven by weather-reduced supply shortages for two seasons, especially in India. This was followed by a strong recovery of global production in the 2016/17 season, due to very good yields and an expanded area in most key pulse-producing regions. Food use is, and will be, the key driver for demand, mainly in developing countries, according to Rabobank’s report Checking the Pulse.
Pulse markets remain fragmented
In recent years, pulse farmers around the globe have benefited from improved pulse crop margins. And despite a collapse in prices since late 2016, 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.
“Pulse markets are—and will remain—fragmented, made up of many different pulse categories, each with specific characteristics”, according to Stefan Vogel, Rabobank’s Global Sector Strategist – Grains & Oilseeds. “Supply can quickly outpace demand in the case of high prices (and thus increased plantings), while weather-related yield issues in a key producing country can drive prices upward in order to ration demand.”
India plays a key role
India is the key to global pulse markets, both as a producer and importer, producing roughly 25% of the global output, consuming 30% of global use, and importing 40% of the global trade flows. Still, Indian per capita consumption of pulses is below that of the 1980s and provides further growth potential. The country’s large demand and the forecast continued import needs will benefit farmers in key exporting countries like Canada and Australia. Future demand growth in India will benefit from an ever-growing number of new products that contain pulses and the generally low price elasticity of pulses in India, which is well below that of substitutes like vegetables and livestock products, limiting the impact of high prices on consumption reductions.
Meat substitutes, derived from non-meat protein sources, are rising quickly in demand, especially in western regions, but also in Asia. Still, pulses only account for a surprisingly low share of the protein used in those products; soy proteins and wheat protein, as well as egg and dairy protein, make up the majority. Rabobank forecasts meat substitutes to show a strong future growth, but by 2025, the use of pulses for these products is forecast to account for only about 2% of all globally consumed pulses.