Returning for a chat with the GPC, Navneet Chhabra, Director of Global Garbanzo, talks to Luke Wilkinson about all things chickpea, from shampoo to innovative new trade routes. Navneet also talks us through the economic shockwave shaking up the pulse industry as a result of the ongoing conflict in Ukraine.
Global Garbanzo is a strategic partner of Global Pulses Confederation and a key sponsorship partner for the upcoming Pulses 22 convention in Dubai on May 10-12. Haven’t registered yet? You can do so here.
Nice to speak with you again Navneet. What are some of the recent developments at Global Garbanzo since the last time we spoke?
The most important development recently is beginning to travel again after this long pandemic. Global Garbanzo sells products to 23 destinations from 10 different origins so it’s important for us to stay up-to-date by going to see farmers and asking them questions directly, maybe about their view on this year's chickpea crop or what the carryover was from last year. We at Global Garbanzo are passionate about understanding the chickpea market globally and our main concern is to be there from seeding to consumption.
Another industry development has been the difficulties with global transportation, which have definitely been the main hurdle over the past few years, having even more impact than the pandemic.
Perhaps we should touch on transportation a little bit. Could you give us your perspective on the effect the container crisis has had on the industry?
A huge effect. I'll give you some examples: we used to ship from India to Jebel Ali at $10-$15 a ton, but now we ship at $50-$60 a ton. We used to ship to Mersin and Karachi at $30-$40 a ton, but now the cost is $200-$250, and there are no containers available. It's the same situation in the US and Canada: where freight would always cost them $60-$70 a ton, now it costs them $150.
Have you seen different reactions from different countries to these increases? Are there any solutions to such drastic price inflation?
Every problem has its solution! Some countries have focused on road transport because it’s easier and faster; it previously wasn't as attractive because the price and availability of containers was simply more feasible. To give you an example from our business, previously we moved all Russian chickpeas by container but now we are moving products to Pakistan by road. We are sending some Indian chickpeas to Turkey via Iran by road.
Obviously there are still logistical issues because sending products by road is limited but we are starting to see some development on that side of things and I think, as time goes on, we will see more innovative ideas and ways to deal with the container issue. I think we need to stay optimistic.
As an important exporter of chickpeas, you must have a clear vision of the rise and fall of pulse consumption, both in India and around the world. How has chickpea consumption fluctuated in recent years?
White chickpeas as a premium product are consumed more in a catering context than in home kitchens. In my family, for example, we cook a chickpea curry maybe once or twice a month, while at weddings or community functions you will see many dishes prepared using chickpeas. Indian weddings are not like European ones, we are talking 2000/3000 people and a ceremony that lasts five or more days. During the pandemic, when hospitality was not working properly, consumption in these places decreased significantly.
Another way that consumption dropped was because people were buying things online instead of going to shopping malls. When you buy things online, you are more direct and tend to only buy the things that you need in specific quantities, while in a shopping mall you often purchase more - stock up. With these new online spending habits and hospitality not functioning properly, consumption went down, but now the second Covid wave has finished we are beginning to see consumption resume business as usual.
In terms of other rising key markets, right now in the US and Canada we are seeing lots of food start-ups using chickpeas as a main ingredient. We've seen big brands like Banza in the US making chickpea pasta, a resurgence of chickpea flour being used to make chocolate, and there's even a company in India using chickpeas to make shampoo!
How drastic was the drop in business?
You can see it in the prices; this time last year chickpea prices were around $1100/$1200 a ton, where I was today the price is around $1600/$1700 a ton - that’s a significant change.
Because of hospitality opening up, we have seen prices increase but, in the end, chickpeas are not a necessity, so this price isn’t a given. If the prices get too high, consumption habits will change again. If the 12mm chickpea price reaches around $1600-$1700 per tonne, people might shift to the 9mm product which is available at $1200 per tonne, or even to Russian chickpeas at $800.
Let's talk about the effect Russia’s invasion of Ukraine is having on the industry. What have been the effects on the chickpea market so far?
The global market of garbanzo beans of all varieties is around 1 million metric tons, more or less, and of this total Russia has about 25% of that trade. Before the sanctions, everyone was exporting chickpeas from Russia but now only those who are able to receive payment inside of Russia can export from there. Before the sanctions, Russia used to export 20,000 tons of chickpeas per month but now they are limited to 5000.
Russian products go all over the world: Turkey, Iraq, Dubai, Jordan, Egypt and especially Pakistan are all big buyers from Russia. Global supply decreasing like this has left a big gap on the supply side, increasing every other chickpea market’s prices by $100-$200 per ton since the war began.
Then we have Ukraine. Ukraine exports pulses to Europe, let's say around 30 to 50,000 tons of chickpeas every year but, because of the war, they did not seed anything for the 2022 crop. That 30 to 50,000 tons represents around 5% of the global chickpea trade so this will be divided between Turkey, India, Canada and Mexico. All of these things are going to make the market panic and force a big change.
Do you expect to see changes in chickpea acreage as a result of the increased wheat prices?
Of course. We take stock of chickpea market sentiment twice a year: once around October/November time then again in April/May when we have the seeding intentions of countries like the US, Canada, Turkey, Russia and Bulgaria. These countries seed between April and June. We keep an eye on these countries and judge how the next six months of the market will proceed.
Now, because of global wheat prices, the seeding intentions of the USA, which we received on the 31st of March, say that chickpea production for 2022 will be 20% less than last year. Even with high chickpea prices, they will be seeding less. Canada and Turkey are also saying that they may reduce their seeding, switching to other current cash crops like wheat and barley, so it's possible we could be seeing a short supply of chickpeas in the near future.
Looking over the long term, could you see a change on import duty for chickpeas in India?
Right now, we have a 44% duty on chickpea imports but I think it's possible that with industry pressure we could see the Indian government reducing duty. The question is: which country is it possible to import chickpeas from? I don't think there are too many countries in a position to supply India with chickpeas, especially bearing in mind what we have said about the gap in global supply due to the issues in Russia.
Lastly, I'd love to know your plans for the future of Global Garbanzo. How do you see yourselves progressing as a company?
We really are more of a passion driven company than a business driven company. We want to continue to be specialists in one product that we are passionate about: chickpeas. We want to bring the best information from the farmer’s fields to the end consumer. We're not looking to increase the amount of origins we export from, in fact we may consider reducing origins by removing those that aren’t performing as well.
Our concept is to work with one product, use the right information and find high-quality chickpeas. One major problem for brokers these days is that, over time, buyers and sellers can connect with each other and do direct business but, because of our profound knowledge of the chickpea industry, people still come to us.