Trade Talk

April 06, 2022

The Mexican market needs stability: The Mexican market needs stability: an early outlook on the chickpea harvest

Luke Wilkinson


At a glance

Aliansa is a Mexican company specializing in Kabuli chickpeas grown in Sonora, Baja California and Sinaloa. They export to countries across the world, with the most important consumers being Algeria, Spain and Turkey although they also have strong markets in the US, Colombia, Peru and Brazil. Ahead of the upcoming harvest, Luke Wilkinson chatted to CEO David Larios about starting from zero carryover and what the future looks like for Mexican chickpeas. 

How did Aliansa get started?

The company began with my father 35 years ago. He lived for some time in Spain in the 70s and had started trading in pulses there before coming back to Mexico at the beginning of the 80s. Once he was here he started to form relationships with the farmers around the region here in Sonora and the production zones on the coast of Hermosillo, starting work initially in the export of chickpeas as they were already a common crop in the region.

Has there been much change in which countries demand chickpeas over the last few years?

The change with the biggest impact on the industry has definitely been in Turkey. If you were to go back 20 years, you would have seen very few imports of chickpeas into Turkey but, despite being a huge consumer of chickpeas, they started to decrease their crops and the demand for imports grew. Turkey has also become a kind of middle-man distributor for the rest of the Middle East as they sell to neighboring states like Iraq, Iran or Syria - countries where it’s difficult for us to export for both commercial reasons and logistical ones, such as the lack of international banking relationships.

Spain and Algeria had always been the biggest buyers, bringing in around 30,000 tons each every year, but now Turkey brings in 30,000 tons easily, some years reaching around 50,000. Spain, on the other hand, has started to bring in less and less and is down to around 15,000 tons a year.

Why do you only work with chickpeas?

They have their advantages, especially their low consumption of water. In Sonora, we have almost a desert climate and, in the past, there was a lot of wheat sown but wheat requires vast quantities of water, which brings costs up and profits down. As a result, there was a slow migration towards chickpeas.

Our chickpeas have some advantages against those of other countries. Mainly, the quality and size of the chickpeas we grow, as the only other country that's been able to grow large chickpeas - of around 12 mm - is India. We grow high-quality products and have on average very high yields - around two tons per hectare with some producers reaching up to 3 tons per hectare. In America, Argentina or even India, yields will be around 1 or 2 tons per hectare.

Could you give us an idea of the average setup for a chickpea farmer in Mexico?

I'd like to differentiate between the different zones - as you mentioned, Sonora, Baja California and Sinaloa are our production zones. Sinaloa is the main producer of chickpeas in Mexico, making around half of the national total, maybe more. It has a very different climate to our desert climate here in Sonora, Sinaloa is much more humid, which means that they're able to vary their crops, adding in things like corn and beans. They're able to rotate their crops, whereas we can't.

Normally chickpeas are a once-a-year crop, with the lands lying fallow in between. The cycle lasts approximately 120 days, but it's only one cycle. A producer in Sonora on average will have 50 hectares of land seeded with chickpeas - a lot bigger than the producers in Sinaloa, where the lands are more divided among smaller producers with crops of perhaps 10 or 20 hectares.

In Sonora, you can find some really huge producers that have up to 500 hectares of chickpeas. There aren't too many of that size but they do exist. The situation changes year on year, this cycle we’ve noticed that some producers have substituted chickpeas for corn. We've seen quite a few years of crops being changed for different things, I'm not saying that chickpeas are on the way out exactly but we have seen a lot of substitution for different crops like pecans and walnuts, all of which require planting trees that make it almost impossible for a future return to chickpeas at a later date. Sinaloan farmers are finding that corn will simply bring them bigger profits so they go ahead and reduce the chickpea acreage.

The price of water here is incredibly high so if farmers feel they can get better profits from selling pecans to China, they'll do it. If things continue in this vein, there is a risk that we could see a considerable drop in chickpea crops over the coming years.

Have farmers seen any new difficulties due to the changing climate?

The most serious problem they have is frost. The worst frosts tend to occur once every five or six years but when they’re really bad they can kill your plants completely. Even if it's not as serious, it can still lower your yield and affect its quality. I'm not sure how much climate change has affected the frosts to be honest - I think that is just a problem we’ll always have.

The availability of water, on the other hand, is a problem that affects everyone around the world - not just us here in Mexico. The financial outlay that farmers need to buy permits for their wells has shot up as the aquifer is a finite resource. This makes alternative crops, such as pecans and other less irrigation-intensive options, an attractive prospect. So, yes, climate change has had an effect on the availability of water and therefore production costs, which clearly has a knock-on effect on chickpea prices.

How is this year's harvest looking so far?

Firstly, the climate has been good. That's really important for ensuring a higher yield and a better quality of product. Another factor is how much land has been seeded, which is something we've been following closely as the worry is often that you haven't sown enough to cover demand. As I say, we are starting with almost no carryover so we do need a strong harvest. 

Looking at the numbers we’ve got from the farmers in terms of acreage, I'd say at the moment we are at about 20% reduction from the production of the previous cycle.

Is it too early to make a comment on prices for this year?

We're just starting to get an idea what the prices are going to be like,because actually one of the best things over the last few years was that we always had harvest accumulated that hadn't been exported but this year we are starting afresh with barely any carryover.

Have you seen an increase in domestic demand in recent years? 

No, not really. We do cover the internal market, mainly moving chickpeas down to Mexico City where they are distributed around the country. There hasn't really been a rise in consumption; it's not part of our culture to eat a lot of chickpeas, even now with the rise of healthier diets. I'd say we haven't really figured out how to properly promote all of their benefits. Take beans, which are the most frequently eaten pulse in Mexico: with them we’re still seeing a drop in consumption despite all the campaigns to promote more health consciousness and better eating habits.

Specialists at the National Autonomous University of Mexico
quote a governmental study that shows pulse consumption has fallen from 16 kg per person per year, down to just 9 kg. Where do you think this drop in demand for pulses has come from?

I'd say the drop in consumption has come from fast food - processed foods are easier and easier to buy. If you look at the statistics, Mexico is one of the countries with the highest levels of obesity and diabetes, all of which can be seen as a result of lower pulse consumption and a higher consumption of sugars, flours and meat.

How has the rising cost of maritime logistics affected you as a company? 

Fortunately for us, the route that we use hasn't been quite as bad as other places. We use the Pacific route which leaves from Mazatlan or Guaymas as they are the closest ports to us and go to Europe via the Panama Canal. We've seen an increase of around 30% in the costs of Maritime freight on our route, more or less.

How has the Mexican system of production managed the new, heightened EU demands for lower pesticide use?

Food safety has long been important to us, so we've had years of quality control inside our processing plants, which now practise a system of Hazard Analysis Critical Control Point (HACCP). This means someone comes to your warehouses to check for cross contamination and we also have laboratory tests where the product is analyzed so that random tests will reveal if there are any contamination problems with pesticides. The tests go to both internal and external laboratories.

As for the producer, it's difficult for us to have control over the behavior of farmers. For that, we have the Plant Health Committees of the Ministry of Agriculture who look at the practices of the producers and make sure that they're meeting the necessary standards. I think those governmental branches have a lot of responsibility and perhaps need to work a bit harder to reinforce the rules that they themselves have set. They need to make sure that they check on the farmers and not just sign the documents, which I think is often the case.

If the European Union is looking for better control of pesticides, then really they have to go through the government and make sure that those branches of government do the work required. We can do our bit with the tests in our processing plants but they need to do their bit as well.

Finally, could you give some predictions for the future of the pulse trade in Mexico? 

Mexico over the last few years has had fluctuating production levels with lots of instability. The farmers are very reactive to the price changes and will seed different things if the price is right. As a seller, these kinds of practices aren't great because it means I don't have a guaranteed average of stock every year. It's an issue of the culture we have here, I think, because other countries set up contracts over the long term as is done in the US. We’ve been trying our best to do that ourselves.

If prices of chickpeas stay high, I think we'll see even greater production quantities in Mexico. The demand for Mexican chickpeas is at around 150,000 tons yearly but, when that drops, the prices go up and up. Stability of both demand and production is what we need in the future. I can't really tell you if that stability will come or not, but I hope so.