Trade Talk

June 09, 2022

Pulses or pecans?: Pulses or pecans? The situation for Mexican chickpea farmers in 2022

Luke Wilkinson


At a glance

Talk us through what kind of organization Comercializadora Columbia is, and what products does it work with?

Comercializadora Columbia was founded in Mexico in 1991 in order to fulfil the demand for vegetable oils and wheat imported into Mexico after the disappearance of CONASUPO (Compañía Nacional de Subsistencias Populares) from the market, which was previously the main provider of food for government stocks. In the last five years, the company has become one of the biggest players in the export markets from Mexico, working with over 3 million tons of products to different destinations around the world, principally in South America, Central America and Africa. We are also a leading provider to the SEGALMEX (Seguridad Alimentaria Mexicana) program, a social welfare food provision run by the Mexican government.
Principally we work with corn, non-GMO white corn, yellow corn and wheat. We ship boats of approximately 30,000 tons. Around seven years ago the company opened up to pulses and specialty crops. I've been with the company around eight years, and the pulses branch of the company is my responsibility: chickpeas, beans, lentils and rice.


Why did the company begin to deal in pulses?

Basically because of the opportunities that presented themselves in countries that we already dealt with, like Venezuela. We saw the size of the margins and realized that they were a lot bigger than other commodities like wheat and corn, so they started to get involved with pulses and invest in them more. Largely for the margins, rather than volume.


What changes have you seen in the pulse market over recent years?

We've seen a significant change in the markets for beans, with new markets in Africa like Angola. We also export to the Dominican Republic, Peru and Chile in South America, as well as a little bit to Portugal as a newer European market.


Tell me about the Angolan market.

It's an unusual market for us but, due to the low production of beans in America and the resulting prices, the Angolans came to us for their pinto beans. We also send pinto beans to Portugal but very little - around 10 containers per year.


Which are the biggest markets for you internationally?

Our star products are chickpeas, black beans and pinto beans. The chickpeas go in large part to Turkey and Algeria while the majority of our chickpeas go to South America, mainly Venezuela. We send around 2000 metric tons of black beans there every year.


What impact, if any, you expect to see from the rising prices of fertilizers?

For the moment the effect of fertilizer scarcity hasn't been seen in its entirety but chickpeas already saw a rise in prices and we'll doubtless see a bigger effect on the coming harvests.


Could you give us an overview of pulse production in Mexico? How does an average farm look in terms of numbers?

Mexico is ninth in the world in terms of chickpea production with an acreage of 62,000 ha in the 2021 cycle and an overall production of 125,000 tons per year. An average yield for a producer is two metric tonnes per hectare and this year there was a rise in production costs of around 17% compared to the previous cycle, due to rising costs of farming inputs. The chickpeas here are rotated with corn and wheat as well as other grains but in Sinaloa it’s mainly corn and, in Sonora, they rotate mostly with wheat.


How are logistical issues impacting Mexican pulses?

We hoped things would stabilize after the pandemic but it has been just the opposite; things got a lot worse. Lots of shipping companies are no longer offering certain destinations for important ports in Mexico, for example, if we want to ship to Algeria we can no longer do that from Mazatlan. Mazatlan is the most important port for the shipping of chickpeas in Mexico but now they send us to Altamira. (Altamira is an East Coast port just under 1200 km from Mazatlan on the West Coast's Sinaloa region.) This means you have to put the prices to around $1650-$1700, which naturally the customer doesn't want to pay so it is no longer cost-effective for us to send chickpeas to Algeria via that route. It effectively puts you out of the market.
There are a lot of delays also. One day they'll tell you have a booking for a certain date, then they'll delay by up to 3 months. We are also seeing issues with the length of transit time leading to higher rates of pests affecting the product, as the containers are taking up to 60 or 70 days to arrive at the destination, stopping in different ports with different climates with more chance of pests. Some clients have been asking us to ensure that the containers were fumigated a second time or more powerfully at the beginning to be sure.
A lot of clients are asking for price references, but a lot of Mexican companies aren't passing prices to their customers, not because they don't want to but because of these issues with routes and containers. They don't want to get to the point where they have to ship the product and then not be able to. People are saying that the issues could continue into 2023 or 2024, but I don't think it will be quite so long. I certainly hope not.


What impact could a recurrence of the last year’s droughts have on the production of pulses in 2022? Could we see a rise in the planting of crops like pecans and corn if they become more profitable for producers?

In the end, the drought wasn't as predicted; the rains arrived late but still managed to fill the reservoirs. It is possible that we’ll see drought in the next cycle but I wouldn't be that worried given that chickpeas are one of the crops that requires the least amount of water. However, I would be more worried about the other crops like pecans, as you say, that could become more profitable and substitute the pulse acreage or pulse consumption. We've already seen a real drop in the consumption of lentils in Mexico, substituted significantly with other, more economical pulses, given the price rises seen in the last year.


With regards to the most recent harvests of chickpeas and beans, do you think there will be enough product to satisfy the market this year?

In terms of chickpeas, I know there was some carryover from the previous cycle but we saw that being exported from the beginning of the year onwards – depending on the availability of containers. With regards to beans, I know that production was great but, due to increased demand in other countries that didn't have good harvests, I doubt there will be an oversupply. This does depends on the variety.


You talked about Comercializadora Columbia’s involvement as a provider for the SEGALMEX (Seguridad Alimentaria Mexicana) program. Could you tell us a bit more about what that program does?

Of course, it's a governmental program that works in the less developed areas of the country such as the south-east, and distributes basic products to the most vulnerable parts of the population via shops with reduced prices. We are one of the providers and we work to deliver to those shops, sending rice and corn, or sometimes packets of pulses like black beans so they can be distributed from these shops and collection centres.


Finally, let us in on some of the changes you expect to see over the coming years in the pulse industry and what are Comercializadora Columbia’s goals moving forward?

One trend I see growing in importance are the flours made from different pulses, and this is something that we are exploring at the company as well as oils made of certain seeds. That said, our most important goal is to continue working to be able to meet the demands of our clients and continually better our products, services and infrastructure.