Trade Talk

May 10, 2022

“GPC events allow us to share more exact information regarding our harvests

Luke Wilkinson


At a glance

Terminel is a strategic partner of Global Pulses Confederation and a key sponsorship partner for Pulses 22 in Dubai. 

Let's start with the story of Terminel. How did it get started as a pulse trader?

The company is known around Mexico and Internationally as Terminel, however the original name is Agro Servicios a Productores del Valle. It is a company with a long-held reputation after many years in the local market. Since its foundation here in Guasave, Sinaloa in 1970, Terminel has gained a lot of trust, and now works with around 4500 farmers. 
It was founded initially as a wheat and soy trader, then later we broadened our markets to trade corn and in 2019 we began marketing chickpeas. As we already worked with lots of different agricultural products, chickpeas were a natural product to branch out into given our business model. 

What does your day-to-day role entail?

I came to the company in 2019 and work in the export department where I deal with internal and international logistics, the production chain and general international marketing. I also look after our long-term relationships with clients and do a little bit of social networking, like Instagram and LinkedIn. 

Could you give us an idea of some of the markets that are most important for Terminel, and how things have fluctuated over recent years?

As I only started in 2019, I had the task of going back through the years and understanding the chickpea export market. In 2016, Algeria was the main importer of Mexican chickpeas, with Turkey in second place and Spain in third place. In 2017 the roles changed: Turkey was first, Algeria was second and Spain third. Turkey and Algeria tend to change their positions. What we can say for certain is that Turkey has had the greatest increase in demand for chickpeas.|
What I've seen during my visits to Turkish clients, is that they have a very developed system of transportation. As they’re geographically well-positioned, the chickpeas they buy don't stay in Turkey, but instead move around to places like Iraq, or directly to Europe and other countries in the Middle East. Algeria’s demand, on the other hand, is mostly local.

Who are the biggest competitors with Mexico in terms of the production and distribution of chickpeas?

A direct competitor, which produces a very similar size chickpea to us, is India. There are other indirect competitors that produce smaller sizes of chickpeas such as Canada, the United States, and Argentina.

How much of the chickpea crop remains in Mexico and how much is exported? Chickpea consumption remains quite low, is that right?

Yes, it is. Around 90% is exported, and the remaining 10% is of the smaller chickpeas that we use here. Consumption is low despite having a vegetarian population of around 20%.

20%? That’s really high! (*The total non-meat eater figure rises to 28% when including vegans - the highest in Latin America.)

It's something that happened slowly over time but perhaps isn't as obvious as it is in Europe; I lived in France for a while and people there are a lot more careful with their diets. Here, those types of habits are very new, and the pandemic was a huge catalyst for people to be healthier.}The high numbers of vegetarians is very interesting in terms of chickpea consumption because in any vegetarian or vegan meal you can use chickpeas as an ingredient because they’re low in calories, very high in protein and a healthy substitute for the nutrients usually taken from meat. They also reduce levels of glucose in the blood, which helps to prevent diabetes and control your weight. While they do contain fat, it isn't saturated fat so it's good for you.

Sounds like I should be eating more of them. Let’s get back to the production chain for a moment - could you talk us through the panorama of a chickpea producer in Mexico?

Of course. Sinaloa is a purely agricultural area with all kinds of farmers, from bigger ones who have up to 500 ha, to smaller ones of just 10 ha. Historically, we see an average yield of around 2 tons per hectare, although it can fluctuate depending on the year. For example, in 2021 we had very high yields but the quality wasn't as great due to poorer weather. This year we had better climatic conditions so we had much higher quality, but the yield was smaller.

What kind of crop rotation systems do farmers have?

While it's understood that crop rotation is necessary, it doesn't always happen in practice. At the end of the day, the producer is going to seed whatever they perceive as having the best profits for that year. Here in Sinaloa, most producers always seed corn if there is enough water, as there is more stability in the price.

The droughts of the last few years must've had a real impact on producers, what do you expect to happen this year if we see more drought?

The biggest impact the droughts have is on corn. Corn is the crop that requires more irrigation, requiring three or four cycles of irrigation, whereas chickpeas require only one. This means that chickpeas aren't affected in the same way as other crops and become an alternative for farmers if there is a lack of water. There are other options though, like sorghum or cardamom.

You're currently in the process of harvesting this year’s crop of chickpeas. What are your expectations for how this crop is going to turn out?

Last year we had just enough to satisfy demand, because we had carryover from the previous year, but this year there will be no carryover from last year. There will be around 80,000 tonnes to export, which is a sizeable reduction because normally the demand would be around 140,000 tons.

What effect do you think this reduction will have in the market?

It's already possible to see the effect in the market as, at the end of harvest in 2021, we had prices of around $1500 CFR and right now the prices are floating around $1650 CFR. This price increase isn't just for the quantity of chickpeas that are available but also because of the prices in international freight and shipping.
I was talking with a Turkish client recently who was worried about the price of chickpeas and I told him that the one thing he can be sure of is that the price isn't going to go down as, if we have to buy at a higher rate, the price is going to be more expensive. The prices of shipping can also fluctuate but, in the end, those costs just have to be absorbed.

One of the potential issues for the pulses market is going to be the rising prices of commodities such as wheat and corn, as well as the prices of energy and other agricultural inputs for farmers like fertiliser. What repercussions do you think these increases will have on the industry?

Firstly we believe there will be a reduction of yields. I've read that we might expect up to a 50% reduction in yield due to higher fertilizer prices as farmers will be using less fertilizers on their crops. We work with corn, for example, and corn producers this year will buy less fertilizer or buy whatever they can with the amount that they had budgeted and simply apply less, resulting in a lower yield. In terms of pulses, this will mainly affect beans rather than chickpeas, which don't require much application of fertilizer, if any.
Terminel works along the whole production line, from the financing of farmers and engineers who provide technical help with the crops to storage services and financial services like insurance funds to protect harvests. We also work in the sales of agricultural inputs so when we see 139% rises in the price of fertilizer, it has an immediate impact on those sales.}The majority of demand for fertilizers in Mexico comes from abroad and, of the 62% that we import, 27% comes from Russia. As I say, a 139% rise in prices will always make a big difference. These price rises had already started towards the end of 2021, as gas prices had risen and many producers took the decision to reduce their production, leading to the jump in fertilizer price. Now there is even less fertilizer coming from a main producer like Russia, which adds a little more again to the price. That 27% of fertilizer is going to leave a gap in our stock if we don't get it and, if the situation continues, it is all quite worrying.

With regards to trading with Europe, how is the Mexican production chain developing in terms of traceability given the EU’s newer, more stringent demands for pesticide-free, organic crops?

For the moment, things are going quite slowly as this is all very gradual. In fact, here in Terminel we are looking at the ISO 22000 certification, which is something that goes in hand with the improvement of food security. There is still a lot of talking to be done with farmers, but in the end the farmers go with the demand, so they have definitely started to adapt to the new demands.

Tell us about the freight and shipping costs. How have they fluctuated for you over recent years?

We began to feel it properly in the second semester of 2021. The main export dates for chickpeas begin in August and go through September, October and November. We hadn't felt the impact much up to then, but we began to see a lack of containers, more cancellations, or what few boats there were simply didn't come to Mazatlan. 
Mazatlan used to have two shipping agencies: Hapag-Lloyd and MSC, MSC was more expensive than Hapag-Lloyd, but had more boats available. The prices had already gone up by then, from the $70 per tonne we had paid originally, to around $160 in December. Then when August came along we began to see a scarcity of boats, and when you asked for 20 boats, say, they would tell you: “We can only send five of them, so choose which ones you want.” This was even if you had a prior reservation and all of this without any advance warning that you could pass along to clients. The delays pushed on from August to September, to October, to November. Naturally, a lot of clients made claims back for those shipments when they didn’t arrive.
Right now exports are low, but things are going to go up in April after the harvest is collected. Hapag-Lloyd no longer ships from Mazatlan, so we only have MSC now. We currently pay $120 per tonne to ship with them.

Are you expecting a solution to the issue sometime this year?

Not in this semester, at least. Hapag-Lloyd had around 500 containers minimum and all of that will now be passed to MSC so, if we saw delays last year with two shipping companies, then you can imagine what will happen if there’s just one. I think we will see at least another five months of this issue.

Let’s hope things start to resolve themselves soon. Moving on to something a little more positive, why don’t you tell us about the plans Terminel has for the future?

We are interested in organic growth, working alongside a farmers, using our expertise to make the best assessments of the harvests. When clients ask us for information on the harvests, we will provide our clients with the real, daily information straight from the source. For me, one of the core values of Terminel is always maintaining and developing the long-term relationships that we have with our clients.
Traceability is also very important to us, as I mentioned, and we will be working to ensure the best certification for traceability so that our European clients can feel secure in the product they receive.

Finally, as a sponsor of pulses 2022, we look forward to seeing you there! Could you explain why the event is so important to Terminel? What are the benefits of the GPC’s conventions?

I think something that GPC events definitely offer is the possibility for us to share more exact information regarding our harvests as countries, which we’re going to need this year more than ever in order to keep an eye on prices. We already know that there is a lot of fluctuation in shipping and energy costs. Events like Pulses 2022 help us to have a more global understanding so that we’re able to take the right decisions in the right moments.