Abhishek Kotkar of Gold Star International/
“Destination markets for desis and favas are very limited”

Hi Abhishek, it’s a pleasure to meet you! Tell us a bit about yourself and Gold Star International.

I'm the Director of Gold Star International, which is essentially an exporter of Australian origin pulses and grains that I founded in 2015. The reason I entered the business is because I really enjoy a portion of pulses in my daily intake – I really like daal and eating it on a regular basis got me thinking about how it was produced, how it was grown, where it was grown. So I did some research online and realized that Australia produces a fair amount of pulses on a yearly basis. I thought: "If it's grown in such big quantities, then who are the buyers? How does the trade work?"

I found out that India is one of the major importers of Australian origin pulses, and I’m of Indian background, so in 2015 I moved back to India from Sydney for six months. I wanted to understand the trade in the destination market – how it sold, how it's processed and so on. Basically I wanted to get to know the supply chain.

During my six months I made a fair few contacts with local traders, buyers, and importers then I returned to develop my own network of growers, packers, and sellers here in Australia. Our first small shipment was in 2016 and since then I’ve never looked back!

Could you give me a sense of the capacity of GSI?

At the moment we do a number of commodities including lentils, chickpeas, fava beans, kaspa peas, and green mung beans, and we export to a number of different ports across the globe. Give or take we handle around 40 to 50,000 tons of cargo every year and we have a decent network of growers and packers as well as a good relationship with the shipping lines. We export high-quality Australian pulses at competitive prices in a timely manner.

What are the most important pulses for GSI and which countries are the biggest buyers?

The biggest percentage for us over the last two or three years has been lentils, followed by desi chickpeas, fava beans, green mung beans, and peas. One of the reasons lentils have been big for us is that production has been gradually growing, and there are always multiple destinations for lentils compared to a lot of other commodities. 

Most of what GSI exports is predominantly bought by the Indian subcontinent, followed by the Middle East - Jebel Ali, as well as Southeast Asia and China. 

Talk to me about your experiences trading mung - have you found it  has become less profitable over recent years for some farmers?

Of course. For mung beans, production costs have been gradually growing because of agricultural inputs, and the weather has also been very uncertain and not always conducive for mung beans over the last 2-3 years. As a result, the production in Australia has been declining and the quality hasn't been where it supposed to be either.

We're coming up to the seeding season in Australia. Chickpeas, fava beans, and lupins have all seen a drop in acreage in recent years, but lentil production continues to rise. Do you see this trend continuing this year? 

Lentils have been fairly profitable overall for a lot of growers, and while they've had some bad weather, the crops and prices have still been decent and there are multiple destinations, as I say. In terms of fava beans and chickpeas, destination markets have been very limited, especially with foreign exchange-related liquidity issues for the usual destination markets – this means acreage has gone down for both. However, the main factor for the decline in desi chickpeas is that India has been out of the market for some time now. 

I would expect that this year the acreages for desi chickpeas and fava beans will be similar to or lower than last year l – if you look at the prices, it's not profitable enough for farmers at this point in time and wheat and canola look more profitable.

The foreign exchange reserve issues continue to be a concern for traders in terms of destinations opening up Letters of Credit and importers being able to pay for product. How has this affected the Australian industry?

The main markets we trade in are on the subcontinent, and export destination markets – especially Pakistan, Bangladesh, and Sri Lanka – have had foreign exchange and liquidity issues. In Sri Lanka they have had 18 months or two years of problems, but it is slowly starting to improve.

Until last year, Pakistan and Bangladesh were reasonably good in terms of getting payments and opening Letters of credit, but since the aftermath of Covid they’ve seen a lot of liquidity issues and we weren't able to get Letters of Credit on time from Bangladesh. There was also a severe US dollar price crisis in Pakistan which led to a lot of containers being stuck at Port for a number of days and those traders' cash flow was stuck – it was all over the place.

Do you expect to see more stability moving forward in those countries?

I won't say there is more stability, but traders are more cautious. Traders are selling to buyers who can deliver on their commitments and can open Letters of credit, and make payments on time. Rather than stability, there's simply more cautious trade now than they were 18 months ago. We can only hope that this situation improves, and that things will go back to normal.

The strong dollar must also be affecting demand in those destination countries, is that right?

Yes, especially if we talk about Pakistan and Bangladesh where the US dollar has been appreciating significantly on a regular basis. This means that inflation in that market goes up because of rising food prices, and from an importers perspective, it's definitely impacting their profitability and trade. 

What is happening now is that a lot of the smaller players slowly button to get out of the trade and they'll be only a few players with deep pockets who are operating going forward. There’s a kind of filtering happening in those destinations.

Let's talk about the logistics side of the business. How have you dealt with the knock-on issues from the pandemic?

2020 is when COVID really impacted the logistics sector and a lot of traders like us had priced up deals based on the ongoing freight, but when shipping lines told us that the price had gone up significantly – by maybe two or three times – this led to a lot of the deals that had small margins basically turning into a loss.

A lot of shipping liners were concentrating on routes to China, and it was difficult to get containers for non-Chinese destinations from the ports we export from – Sydney, Melbourne, Brisbane, Adelaide, and Fremantle – but now, we have a lot of options with multiple shipping lines that can give you straight to the subcontinent with plenty of capacity. This gives us flexibility and rates competitiveness.

What are your hopes for the future of GSI and pulse trading in Australia in general? What advances would you like to see in the coming years?

Personally I would want to see a lot of value-added coming to Australia, because at this point in time the majority of our cargo is raw material – from the farms, to the packers, then into the containers sent overseas. Most of it is then processed overseas into a product and consumed elsewhere. I would like to see some of that value addition coming to Australia, rather than it taking place abroad. I know there has been research by various companies trying to extract protein from pulses among other uses.

GSI is one of our sponsors for Pulse 23! What do you see as the main benefits of an event like this?

I think the main advantages are learning about different people, different traders, origins and destinations. Learning about the market overall and getting perspective from other traders is really beneficial, and of course you make a lot of contacts on top of gaining lots of information.