Brazilian pulses and the ever-growing export market/
6 questions with Interco’s Fabricio Giardini

Tell us about Interco. 

• We’re quite a new company, about two years old, and our major market is liquified petroleum gas (LPG). We got into agriculture because we were already trading fertilizer, and the logical next step was going from inputs to production as we were already working directly with farmers.
• I joined two months ago to develop the agriculture market - I’ve been working in these markets for 20 years, not with pulses as such but with major grains and cereals in Brazil.
• Pulses have started to gain a lot of visibility in recent years as an alternative market in Brazil. Of course, our major areas are soybean and corn but there is a lot of potential to work with beans as we have three harvests per year. We see a lot of opportunity now and for the future. Although consumption is large internally, we also understand the enormous potential to supply other countries in the beans and pulses market. 

How is the pulses industry developing in Brazil?

• We are focusing on developing crops that are not for domestic consumption. Brazilian bean production is around 3.3 MMT and of that about 10-15% are special beans that are being developed for external markets, such as green mung beans, black matpe and brown eyed beans, particularly for the Asian markets. Institutions like IBRAFE and some major companies are trying to involve the farmers more and show them the new possibilities in pulses and research institutions are also working to develop better pulses varieties for our climate. 
• Beans are still seen as a secondary crop but for farmers they represent an important option, for the second corn harvest, for example. 
• This year we will see the biggest ever production of black matpe and it’s all for export. Farmers have in general some support from companies and the government in terms of financial systems for their crop production. We haven’t yet seen it in the pulses market but it’s common for soybeans and corn and I think it will be the next step in the promotion of pulses in Brazil.

Do you see a bigger opportunity in the domestic or the external market?

• There is potential in both as there is still some development to be made in the internal market when it comes to ensuring food security and access to nutritious food. That being said, consumption habits are difficult to change and it will be a long process to incorporate new products such as mung beans into Brazilian diets. 
• The biggest opportunity for these “special beans” are definitely in export, mostly for the Asian markets, like India. Brazil also has a strong relationship with China when it comes to corn and soy and we hope the pulses market will be big there as well. We’re also looking at Arabian and African markets; we don’t have just one target, but the whole globe! 

How is carioca bean production this year?

• We are seeing reduced production and this is impacting prices for local consumption. The market is showing some concerns about the total amount of carioca beans. The last numbers I saw were not reflecting this reality because they put the numbers of red beans and black matpe in the same production figure as carioca so it is complicated to say what the total production will be right now. 
• Some production regions had some drought and the soybean crop planting was extended at the time so this affected the other crops. 

How do you foresee shipping and logistics impacting trade this season?

• We have two situations in Brazil: first is the distances from the farms to the ports. There is a lack of logistics, which is a huge problem for agriculture in general. We also have difficulties with warehouses and packaging houses and the quality of machinery. For now, we can work with the systems we have for internal consumption but for the future we have a lot to develop in warehouses to produce better quality beans. The logistics problem is not just at the ports but internally. Transporting pulses from the countryside to the port is very expensive. 
• We are seeing higher prices at container operations yet even with these prices we are seeing some good opportunities for export. The margins for black matpe compared to soybeans, for example, is 10% compared to 3%. 
• We also have some difficulties with the shipping companies and their schedule and this depends on the destination market. There are no problems with China because there are lots of containers to return there from Brazil but some destinations are tricker. To Mersin, for example, prices are not workable at the moment. 
• Of course, we have a lot of inquiries to India and we are seeing some difficulties there for Chennai and Mundra, mostly. But even with this, the balance between the target price for farmers and the importers still works and there is opportunity. 
• The next harvest is in October and I think it will be a good opportunity to develop business at the end of the year and that’s why we’re excited to get in touch with other companies in GPC. Since we joined, we’ve seen an increase in contacts for us to develop in special bean markets. 

What are the challenges in trading pulses compared to other Brazilian crops?

• In soybeans we are used to making contracts for three years because they are a publicly listed commodity while with pulses, for example, it can be difficult to make the initial deal and we can run into some concerns about quality and quantity. 
• At GPC, it’s helpful to have some standardization of business deals and get some advice to guarantee transparency. For soybeans, for example, there are chambers that deal with these issues. We are using the GPC Pulses Contract, which is very helpful. 
• At Interco, we want to make some good contributions to this market and bring the 20 years of experience we have with major crops in Brazil. We understand there’s a lot to do, internally and externally, so it’s exciting! We’ll see you in Macau.